WHILE rural land values were generally strong across Australia during 2019, Western Australia out-performed all other States, according to Rural Bank's 2020 Australian Farmland Values report.
The median price of WA farmland surged by 28.2 per cent on 2018's land values to $2569 per hectare, which placed the State's land values well ahead of the national average (13.5pc) and other strong States of South Australia (18.4pc), New South Wales, (17.2pc), Victoria (12.1pc) and Tasmania (11.1pc).
The Northern Territory had a major decline in values (53.9pc) while Queensland remained stable (0.8pc).
Focusing on WA, record high farmland values were achieved despite the below-average season and fewer transactions (-4.6pc, almost 20pc below the 20-year average), suggesting that demand significantly outweighed supply and that buyers' appetite for farmland wasn't dampened by the dry season.
Strong commodity prices and record low interest rates also underpinned land price growth and demand for properties.
About 536,636 hectares of WA farmland traded in 2019, which was an increase of 2.7pc.
This accounted for 4.8pc of the total land used for agriculture (apart from outback regions).
Despite less transactions, more farmland was traded as the average sized parcel that changed hands increased by 7.6pc to 764.1ha.
The total value of WA farmland traded was also up by 10.5pc to about $1.02 billion.
"Land values have reached record highs following recent seasons of average to above average growing seasons, high cereal prices and historically low interest rates," said Rural Bank head of sales - west, James Robinson.
"For the coming years, it is expected that land values in Western Australia will continue to follow the trend of the current 20-year compound annual growth rate."
The profile of transactions shifted from lower priced parcels to higher value properties of $2000/ha or more, with the $5000/ha parcels seeing a particular increase of 14.6pc.
Growth in median price/ha was recorded across all parcel size segments except for 750ha+ properties.
The 250-500ha range had the biggest increase of 32pc, with the South Coast region making up 23pc of sales in this parcel size and was a key driver of the median price/ha growth.
South Coast (encompassing much of the Great Southern):
By far the highest performing region of 2019 was the South Coast, incurring a huge surge in farmland values by 57.4pc, bringing the median to $3403/ha.
Jerramungup and Plantagenet were key drivers of the stronger median prices/ha, which was fuelled by strong competition between farmers for tightly held land.
Transactions were down slightly by 5pc, with Albany experiencing the biggest increase in sales volume, while there was a large decline in sales volume in the Kent area.
Limited listings were a key driver for the major increase in land values per hectare.
The region had 87,209ha change hands.
The amount of deals priced below $2000/ha dropped significantly, yet still made up a large portion of the region's sales (61.9pc).
Fewer low value transactions was a key factor in the region's price growth/ha.
There was major growth across all parcel size ranges, with the mid-range 500-750ha segment having a massive increase in median price/ha of 133.4pc.
This was followed by the lower mid-range size segment of 250-500ha, which had a 76.8pc rise in price/ha.
While the smallest and largest size ranges were below the region average, they were still strong with 29.7pc and 42pc respective increases in the median price/ha.
A drop of 7pc in the median price/ha was recorded in the South West region, following a rise of 7.6pc in 2018.
Over 20 years, the South West has had compound annual growth of 3.2pc.
Bunbury-based Rural Bank regional agribusiness manager, John Reilly, said the South West had endured some challenges of profitability in the beef and dairy sectors, which led to a price correction in the region.
"The performance of land values in the South West region was inconsistent across differing land types," Mr Reilly said.
"A contributing factor was that sectors such as beef and dairy struggled to achieve appropriate returns on investment against some of the higher valued, smaller land parcels.
"Conversely, we have seen strong competition for quality large parcels of land which has resulted in increasing economies of scale."
Transaction volume increased by 11.7pc and 18,093ha was traded in the region.
Properties valued greater than $12,000/ha were transacted less.
In contrast, there was increased purchasing activity for properties valued $3000-$6000/ha and $9000-$12000/ha.
Parcels measuring more than 160ha had an increase in median price/ha of 16.6pc, however all other size segments dropped in value, with the smallest range (50-80ha) taking the brunt with a 15.3pc fall.
The median price rose by 11.5pc to $2907/ha, making it the third consecutive year of growth for the region.
Over 20 years, the Central region has had compound annual growth of 5.3pc.
The areas of Brookton and Beverley were key drivers in increasing the median price/ha and made up more than 10pc of transactions in the region.
Sales volume was down by 7pc on 2018's activity, with Corrigin and Dumbleyung being particularly quiet markets.
Less lower value transactions aided in median price growth and all sales of $2000/ha+ increased in volume, including 23pc more deals priced $5000/ha+.
Toodyay and Beverley saw the most higher priced/ha transactions.
All size segments experienced an increase in median price, with the smallest (50-250ha) and largest (750ha+) ranges being equally strong with a 13.1pc increase in price/ha.
The 50-250ha range has been the most consistent driver of median price/ha growth in the region in recent years.
A total of 105,859ha was exchanged throughout the Central region in 2019.
Median price/ha growth was moderate in the eastern region, with an increase of 2pc, bringing land values to $720/ha, however it follows a 12.3pc drop in 2018.
The areas of Westonia and Yilgarn bounced back after the decline in 2018, however were still well below the levels of 2017.
The number of transactions were steady at 0.8pc and 195,625ha was traded.
Compound annual growth across 20 years was at 4pc.
The number of transactions across different price ranges was rather a mixed bag, with parcels priced $1000/ha+ seeing increased activity.
Lower to mid-range priced sales ($250-$750/ha) also increased in volume.
A large reduction for land priced $750-$1000 was fuelled by a decline in this price range in the Kondinin and Narembeen areas.
Median price/ha increased for all parcel sizes except for the smallest range (50-500ha), which was down by 14.3pc, compared to 2018 when it was the highest valued parcel size range.
Interestingly the next segment size up (500-1000ha) had a surge in median price/ha by 26.4pc.
Transactions moving from smaller parcels into larger blocks would typically cause the median price/ha to decline for the region, however the median price increased notably for larger parcels in 2019 and as a result, the median price/ha shifted slightly higher.
All up 195,625ha changed hands within the region during 2019.
Northern (from Moora to the Mid West):
The northern region had the biggest decline across the State's agricultural region, following a bumper year in 2018 when land values surged by 34pc.
In 2019 the median price fell by 8.6pc to $1091/ha, however compound annual growth was up by 4.2pc.
This decline in land values/ha was largely due to a change in transaction mix, rather than decreased demand.
Geraldton-based Rural Bank agribusiness relationship manager, Darren Gooding, said demand remained high for larger properties, with buyers still willing to pay premium prices and look past adverse seasonal conditions.
"Despite some of the worst seasonal conditions in 20 years seen in the Northern region, high quality land appeared to trade a premium in most areas as larger and stronger farms looked to expand following the successful 2018 season," Mr Gooding said.
"The poor 2019 season could put a dampener on land values in 2020, however anecdotal evidence suggests that some are being active in trying to source land despite the currently strong values."
Strong growth was evident at Morawa, Dandaragan and Chapman Valley, while the areas of Carnamah, Irwin, Moora and Perenjori saw large declines.
The poor seasonal conditions also contributed to a 17.5 drop in transactions.
A total of 128,850ha was traded in the region.
Reduced transactions was evident across most price ranges, with the mid $1500-$2000/ha range having the largest decline of 61.9pc.
This led to the profile of transactions shifting to lower priced properties and accounted for 64pc of sales in 2019, which also contributed to the overall decrease in median price/ha for the region.
Smallest and largest size parcel segments saw increases in median prices/ha, with smaller sized blocks rising in value by 17.5pc and the largest segment had similar growth of 15.3pc.
However this growth was not enough to offset the significant declines on median price/ha for mid-sized parcels.