WA farmland values remain strong despite drop in transaction volumes: Rural Bank

WA farmland has hit the second-highest half-yearly value in the last 29 years, jumping by 24.7 per cent from 12 months ago. It comes after the median price for WA farmland in the first half of 2024 dropped by about 12 per cent from the second half of 2023, to $6846 per hectare. The figures were revealed in Rural Bank’s 2024 Australian farmland values mid-year update, released on Tuesday, October 15. The report also presented the major drivers of farmland values — commodity prices, interest rates and seasonal conditions, which were mixed across the regions as southern and Western Australia face dry conditions, and New South Wales and Queensland experience favourable rainfall. Rural Bank senior manager for industry affairs Neil Burgess said while the current economic and seasonal conditions had slowed the market, there would be more positive outcomes in the long run. “The recovery of livestock prices after a disastrous 2023 and an easing in crop prices helps explain the variety in the median price movements we have seen around the country,” he said. “In general terms, the traditional drivers of farmland values have led to a more subdued buyer appetite. “These factors are set to keep farmland values in a holding pattern for the second half of 2024, however, the longer-term outlook appears optimistic as demand may again strengthen if current rainfall forecasts provide a good finish to 2024 and interest rate cuts begin in early 2025.” As a whole, Australian farmland values have grown through the first half of 2024, with the 2023 median price of farmland now at $10,141/ha — a 12.2 per cent rise compared to the year prior. This number also makes the 22nd consecutive half-yearly period of year-on-year growth. Mr Burgess said the transaction volumes had continued to shrink nationally as buyers fail to meet sellers’ price expectations. “Transaction volumes are now at a record low, down 18.7 per cent year-on-year and 4.8 per cent below the second half of 2023, a consistent trend since reaching a peak in the first half of 2021,” he said. “On the upside, Queensland, particularly in the central highlands and southeast and the Hunter and north coast of NSW saw a continuation of strong growth trends due to more favourable seasonal conditions supporting buying intentions. “Western Australia and South Australia both battled dry conditions in the first half of 2024 which likely translated into median prices falling from the record highs seen in the second half of 2023, however, both these States saw continued growth on a year-on-year basis.” In WA, there were 242 transactions in the first half of 2024, which is a 30.7 per cent decline from the five-year average and the lowest half-yearly transaction volume recorded in the past 29 years. Low livestock prices coupled with a “challenging” end to the 2023 cropping season led to higher interest rates and lessened farmer confidence in the first half of 2024. This caused a drop in demand and less trading activity. PEFORMANCE BY REGION The most expensive region in WA was the South West at $17,236/ha. While the median price has been volatile over the past three years, the overall trend has risen. Transaction volumes dropped in the first half of 2024 after rising over the past three half-yearly periods. Avon-Midland was the second-most expensive region with a median price of $8230/ha, despite the region recording the second largest percentage decline in median price, down from record values set in the second half of 2023. In good news, half-yearly transactions in the region had risen from a “very low” point in the first half of 2023. The Great Southern was the third-most expensive region at a median price of $7270/ha. The current value is a decline from the record high set in the second half of 2023, but is the third-highest half-yearly figure in 29 years. Transaction volumes dropped from the end of 2204, but have remained “relatively stable” year-on-year.