Auctions show strength of local market

Auctions show strength of local market

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At the podium and ready to kick off proceedings, Ray White Rural Albany principal and auctioneer John Hetherington sold South Kaybellup Farm and Takenup Tree Farm in separate auctions to local but different buyers. Photos: Ray White Rural Albany.

At the podium and ready to kick off proceedings, Ray White Rural Albany principal and auctioneer John Hetherington sold South Kaybellup Farm and Takenup Tree Farm in separate auctions to local but different buyers. Photos: Ray White Rural Albany.

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"People are seeing that farming is a safe place to park their money..."

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STRENGTH of the WA rural property market was proven with two successful auctions recently.

Held by Ray White Rural Albany, the successful sales reflected the demand for farmland of various types in high rainfall areas.

About 40 people attended the sales, which were held consecutively, with many seeing the public auctions as opportunities to see where the local market stood.

South Kybellup Farm, Frankland River:

Mixed enterprise property, South Kybellup Farm, was sold on behalf of vendors Martin, Geoff and Mary Anderson to neighbouring farmers Peter and Sharon Beech for $2 million.

Measuring 1179.52 hectares, the sale price equals about $1696 per hectare.

Bidding commenced at $1.5m, with competition among three bidders.

Selling agent of both properties and auctioneer on the day, Ray White Rural Albany principal John Hetherington, said the sale price reflected "fair market value".

"The result was what I expected," Mr Hetherington said.

Interest throughout the marketing campaign was mixed, with Mr Hethington reporting enquiries from locals and people outside the region.

"But because of the nature of the property, it was only locals who could fit it into their program and only locals bid on the day," he said.

With a considerable amount of the property not suitable for farming, there being no infrastructure and the property requiring some work, Mr Hetherington said the fact the property adjoined the Anderson's farm was the primary factor of appeal for them as buyers.

Among the property's other key selling points was it being in a reliable rainfall region, having good quality water from eight dams and good mixed soils, including strong gravels and deep sands.

"It was in a very productive area and was best suited to a mixed cropping and grazing operation, which complements the Anderson's enterprise of sheep and cropping," Mr Hetherington said.

Takenup Tree Farm, Napier:

Blue gum property, Takenup Tree Farm was purchased by local man Thomas Brough for $1m from vendor Michael Kerr.

Spanning 206.7ha, the sale equates to about $4838/ha.

Mr Hetherington said he had more interest in Takenup Tree Farm than the aforementioned property due to its reliable farming and a high rainfall location, proximity to Albany and its size, as it provided an affordable option for expansion.

"There was a huge amount of interest in the property during the marketing process, with (Mr Brough) being the only party that had planned to plant it to blue gums," he said.

"The losing bidder was a cattle farmer and all other interested parties were livestock people."

Like South Kybellup Farm, this property sold for what Mr Hetherington expected.

Bidding started at $900,000, with three parties involved in the auction itself.

This property had no infrastructure and would have required some work to run as a livestock or cropping operation.

Market update:

In the 16 years that Mr Hetherington has been selling real estate, he has never seen the Great Southern market so strong, even when blue gum plantations were booming in the late early 2000s.

"There is high demand for farmland of all types - cropping, grazing and mixed enterprise - but interest in blue gum properties has dropped off a bit," he said.

While the majority of rural real estate agents have reported a lack of listings for this selling season, Mr Hetherington said he has been fortunate to list various quality properties in recent months.

He said the increasingly strong buyer demand was a result of low interest rates combined with strong commodity prices.

"People are seeing that farming is a safe place to park their money, particularly with superannuation funds, corporate buyers and high net worth individuals," he said.

"Corporate buyers and investors look for properties that will generate a good return," which is most evident in areas where lease rates have increased.

Mr Hetherington said growth in leasing rates had been most prolific for cropping properties, making them a bit more in demand from corporate buyers and investors.

Perth investors, on the other hand, tend to hunt for rural properties that are aesthetically pleasing.

Inter-regional demand has also been coming from farming families.

He said Esperance growers, in particular, have been looking to the Great Southern in search of smaller grazing properties as there was even less land available in their region.

"That's why an auction works so well in a situation like this, because it opens it out to a broad range of buyers that you might not have considered," Mr Hetherington said.

With land values at all time highs, leasing can be an alternative method of expansion for farmers who don't want to risk or expend a large amount of capital.

"There is also huge demand for leasing - I get several calls a week from people looking to lease land," he said.

"Generally people would much rather purchase land than lease it, but leasing does enable some a more affordable way to grow their business and have equity in another aspect, such as machinery."

In a market that has been rapidly growing for the past few years, Mr Hetherington encouraged people who were considering selling to contact a real estate agent.

"It's very important to talk to an agent, because all too often I hear of properties that were sold below market value without an agent," he said.

"Your farm is the most valuable asset you will ever sell, so you want to get the maximum price you can."

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