THE Northern agricultural region was the top performer out of the five regions analysed in Rural Bank's recent 2018 Australian Farmland Values report.
In perhaps the most detailed report on WA farmland prices, the report divided the State's rural property market into five regions: Northern, Central, Eastern, South West and South Coast.
Northern region
After a two-year 35 per cent decline in median price per hectare, the Northern region bounced back with prices rising by 34pc in 2018 to $1194 a hectare, representing the largest growth in WA.
The region showed wide variations in growth and declines, with the standout areas being Irwin (up by 124.7pc to $1644/ha), Dalwallinu (up by 78.4pc to $1188/ha) and Chapman Valley (up by 72.6pc to $1548/ha).
The number of transactions in 2018 increased by 34pc, with the most activity being in Northampton (16), Dalwallinu (13) and Coroow and Three Springs (12).
All but one price range recorded increased levels of transactions, with the lowest bracket of $0-500/ha having 15 fewer sales in 2018.
Transaction volume rose substantially for the middle price ranges, with sales priced $1000-$15000/ha up by 85pc and $1500-$2000/ha up by 91pc.
This result was due to a shift in the profile of transactions towards the upper price ranges in the region's median price per hectare.
Land of less than 1000ha accounted for a larger proportion of sales compared to 2017, rising from 38pc to 54pc in 2018.
Parcels sized 500-1000ha recorded the highest changes in both median prices, up by 93.6pc and transaction volume, which rose by 123.1pc.
Median price growth was echoed in the remaining parcel size segments but on a smaller scale, indicating that all land sizes had increased in value.
Elders real estate specialist Robert Taylor, who services the northern agricultural and Mid West region, echoed the notion of land values increasing significantly.
"There has certainly been a real change, there is no doubt about that, especially with land that has good soil types, fertiliser history etc," Mr Taylor said.
He said the rise in land values mostly occurred for cropping properties, with factors such as high grain prices, strong returns and a good season driving the market.
In his region, Mr Taylor said producers had significantly reduced their stock numbers and hadn't yet restocked due to the high grain prices, which in turn lessened demand for grazing properties.
During the 2019 selling season, Mr Taylor said that growth in land values would depend on the quality of the property.
"This season land values will be split into sections as the 'better country' is already showing signs of increasing and we will see less productive country soften in value," he said.
Mr Taylor said he expected the environment of limited listings increasing market demand to continue but it "will depend on how the season develops".
Central region (encompassing much of the eastern Great Southern)
Following growth in the Central region in 2017 when the median land price per hectare rose by 20.7pc, in 2018 land values increased further by 8.5pc to $2607/ha.
Most municipalities in the region recorded double digit median growth, with Woodanilling (up by 115pc to $3594/ha), Williams (up by 95.7pc to $3125/ha), Victoria Plains (up by 93.8pc to $4075/ha) and Cuballing (up by 63.8pc to $4049/ha) seeing the strongest growth.
The number of transactions also increased in 2018, up by 7.5pc to 257, but remains low from a historical perspective.
Localities with the most activity in 2018 were Boyup Brook with 20 transactions, followed by Kojonup and Cranbrook, with 18 and 17 respectively.
Growth in the number of transactions occurred exclusively for properties priced above $4000/ha, with majority of sales (16) between $4000-$5000/ha.
The median price per hectare increased for all parcel segments in 2018, with the biggest growth for mid-sized segments (250-500ha up by 33.1pc and 500-750ha up by 25.6pc), both recovering from declines in 2017.
Small properties of 50-250ha accounted for 43pc of the region's sales in 2018 and it was also the most consistent median price growth segment for four consecutive years.
For the third year in a row, the median price parcels of larger than 750ha increased, recording growth in 2018 of 10.9pc.
Moora-based real estate specialist Terry Norrish, Landmark Harcourts, said that the 2018 selling season was mostly driven by demand for cropping properties.
"There was strong demand from everyone (family farmers and corporate buyers) looking for cropping land and over the past 12 months, I haven't seen a lot of cropping properties change hands," Mr Norrish said.
"Grazing land had more sales but there was less demand."
Mr Norrish said activity in his local area was dominated by transactions of smaller parcels, with only a few larger properties sold in the 2018 season.
"There was plenty of enquiry and people were willing to pay more for land they purchased, but the land wasn't there," he said.
Mr Norrish's expectations for the 2019 season are that buyer demand will continue.
"I think this year it will be tough to find listings of quality farmland," he said
"Properties that are currently on the market are priced above the market, but we don't know where that market is going, we might meet that market.
"With the rain there is certainly lots of potential for the 2019 season and there's lots of optimism out there."
Eastern region
Within the Eastern region, the median land price per hectare fell by 12.3pc in 2018 to $705/ha.
By far the best performing municipality was Kulin, with median prices increasing by 39.5pc to $1118/ha.
This was followed by Kondinin (up by 8.1pc to $938/ha) and Mount Marshall (up by 8pc to $585).
The volume of transactions also increased by 18.4pc to 122.
Kondinin and Lake Grace recorded the equal highest number of transactions with 20 sales each, followed by Narembeen at 16.
Much of the region's transaction volume occurred in the lower price brackets of the market, with sales of less than $750/ha being 52pc of the region's transactions.
However, land priced from $1000-1250/ha had the largest increase with the number of transactions doubling in 2018 due to higher activity in Kondinin and Lake Grace.
Smaller properties defied the region's average in terms of median price per hectare growth, with land sized 50-500ha being the only segment to see growth in 2018, up by 27.6pc.
Also within this size segment, transactions were higher at 46.7pc on 2017.
Despite increased activity for land more than 1000ha, median price growth was lowest for these two segments (1000-15,000ha down by 26pc and 15,000ha+ down by 42.8pc).
Merredin-based real estate specialist Will Morris, Elders, expects the local market to have steady growth for the 2019 selling season.
"So far since the last selling season, I think we have seen prices up by 20-30pc, but there are also extremes on both ends which is normal," Mr Morris said.
"The rain that we had recently has given the season some hope.
"I'm expecting prices to have steady growth as demand is still very strong from both family farmers and corporate buyers and many of those who bought last year will be looking to buy again."
South West
The South West's market decline continued in 2018, with median prices down 8.4pc, leaving land values at $8772/ha.
Since the market peaked in 2008 at $14,799ha, the South West has been on a gradual downturn, which Garry Harvey, Rural Bank, said was due to low margins.
"The South West has lagged behind other regions with low margins for dairy farms and orchards weighing in the market," Mr Harvey said.
"Sentiment is good among beef producers, but few properties are changing hands."
The largest growth in median land prices occurred in Capel, up 94.6pc, followed by Busselton with 33.3pc and Dardanup's 24.9pc.
Market activity was slightly on the rise in 2018 with 3.2pc more transactions, continuing a six-year period of relatively steady transaction volume.
Lower priced properties had an increase in transactions, with Collie being a major player of properties sold less than $6000/ha.
Sales between $6000-$12,000/ha slowed by 41pc, largely driven by the municipalities of Busselton and Donnybrook-Balingup.
The combined impact of more lower priced sales and fewer mid-priced transactions shifted the profile of the South West to the lower end of the price spectrum, causing the median price to decline.
Parcels between 120-160ha defied the region's downward trend, with an increase in median values of 74.5pc, which was the segment's first rise since 2014.
Following this increase was the smallest parcel segment of 50-80ha, up by 15.6pc.
The remaining parcel segments - 80-120ha and above 160ha - recorded falls of 21.3pc and 41.7pc respectively.
While the region's number of transactions was stable, it was offset by significant increases and drops for certain properties sizes.
Transaction volume for properties measuring 50-80ha remained consistent, while sales for 80-120ha parcels fell by 64.3pc, however transactions of properties of 120-160ha rose by 100pc and those of more than 160ha increased by 83.3pc.
South Coast (encompassing the Albany region)
It was the fourth consecutive year that the South Coast saw growth in median prices, as 2018 values were up by 5.7pc to $3236/ha.
This followed an increase of 2.6pc in 2017.
Esperance was easily the best performing municipality in 2018, with median prices up by 88.8pc to $2453/ha, followed by Manjimup (up by 30.7pc to $10290/ha) and Bridgetown-Greenbushes (up by 23.1pc to $5926/ha).
The number of transactions rose by 3.2pc in 2018, continuing a six-year period of relatively stable sales volume.
Volume was reasonably evenly distributed among municipalities, with Harvey (12) and Donnybrook-Balingup (10) recording the most activity.
There was a shift in the region's profile of transactions, as the highest price range of more than $10,000/ha was the only bracket to record a significant increase.
The lower price ranges all had less or stable levels of transactions.
In terms of parcel size, sales of properties measuring 50-250ha increased by 9.7pc to 79 transactions, representing more than half of the region's sales.
This segment size also had the largest growth in median price, up by 22.1pc in 2018.
The 750ha+ segment was the only other to have an increase in median values, up by 17.7pc and accounted for 32pc of the region's transactions.
Landmark Harcourts real estate specialist Paul Thomason, Esperance, said market growth in his area was driven by a lack of supply of listings.
"Land values were very strong in 2018 due to limited listings and demand from all buyers, especially after having two good seasons back to back," Mr Thomason said.
"I expect the lack of supply to continue for the 2019 season."
He said there is demand for both cropping and grazing land coupled with high confidence among buyers.
