Huge increases in land prices in Western Australia have led to a tug-of-war between farmers looking to expand their businesses and smallholders trying to get in as the market soars. Land owners in WA are sitting pretty.
In the agricultural heartlands of Western Australia, farm buyers are battling to secure more land and sellers are holding out amid a regional price surge due to a hige influx of remote workers looking for a new base outside the city.
While the residential real estate market in the metros is struggling, it’s a different story in the regions, with land hitting record prices as demand outstrips supply.
A national report by the Rural Bank found the median price for agricultural properties in WA had increased by 28.2 per cent in the year to January 2020.
Nationally the median price of farmland rose by 13.5 per cent.
With more buyers looking for more country than sellers are willing to part with, the tight supply of farmland — less than five per cent having been traded over the year — is pushing values steadily up.
Values in WA reached record highs despite last year’s below-average cropping season, with the median price per hectare climbing to $2,569.
South Coast prices up almost 60 per cent
Rural Bank’s manager for the south of WA John Reilly said the report showed the underlying dynamics of the agricultural industry in the state were in robust shape.
“We’ve got really strong commodity prices at the present, which are historically high, record low interest rates, which creates a great base for purchasing land,” he said.
“Families and investors see good opportunities to buy at the moment when properties come up.”
A total of $1.02 billion worth of land changed hands last year, representing a rise of 10.5 per cent.
The South Coast region, which includes Esperance, has outperformed all other regions as buyers look for reliable rainfall.
Median prices per hectare jumped 57.4 per cent to $3,403, with Jerramungup and Plantagenet recording stellar prices.
Ray White agent John Hetherington said the positive farming market, however, meant land for sale was scarce.
“Farmers are making great money so they are not wanting to sell,” he said.
“So the farms that do come onto the market are very sought-after.”
While corporate buyers are looking for larger parcels of land, smaller holdings are being sought by investors, tech workers and family farmers.
“With lamb and beef prices going up we’ve seen farmers all throughout the region desperate to get hold of land,” Mr Hetherington said.
Cashed up and ready to buy
Mr Hetherington has been selling land in the Great Southern for the last 16 years and says hot Australian land properties are “pretty much anywhere where it rains”.
“Low frost areas out through Frankland areas, Darkan, Williams, Kojonup, with very good rainfall, are high on shopping lists,” he said.
“But even with Gnowangerup, Jerramungup, where they can grow very good crops, the Australian land market has really jumped.
“They’ve been sitting on their hands for a few years and they’ve got money ready to go, so they are fighting themselves because we’ve got more buyers than sellers.”
But are the record prices creating a bubble with a potential price crash around the corner?
“No,” Mr Reilly said.
“I think there’s a case to say that prices will be sustained where they are, and into the future.”