WA FARMLAND DEFIES NATIONAL SHIFT IN GEARS AFTER PROPERTY PRICE BOOM ENDS.

By Chris McLennan and Mel Williams of the Farm Weekly.

Western Australian farmland values have bucked the national trend with a robust 18.7% per cent growth in 2024.

This follows a 9% increase in values in 2023, 4% increase in 2022, 23% increase in 2021 and a slight reduction in 2020.

A new report from Ray White release this week found WA farmland was worth $11,103/ha on average last year.

This was the third highest in the country after Tasmania and Victoria.

Cropping farmland in the west contracted by 5% last year and beef farmland in the southern Meat & Livestock Association region picked up 7%.

Nationally, Ray White Group chief economist Nerida Conisbee said Australia’s farmland price boom had hit the brakes.

In her Ray White Economic Update, she said after explosive growth that saw national agricultural land values more than double since the COVID-19 pandemic began, prices had essentially plateaued at about $9600 per hectare in 2024.

“This marks the end of one of the most dramatic rural property cycles in Australian history,” Ms Conisbee said.

“The numbers tell a compelling story of a market that has fundamentally shifted.”

The Ray White Economic Update indicates property markets are entering a new phase characterised by regional divergence, rather than uniform national growth.

Ms Conisbee said 2021 and 2022 national farmland values had delivered annual growth rates of about 25%, this had slumped to 2% in 2024.

“It’s a dramatic deceleration that signals rural property markets are entering a new phase, characterised by regional divergence rather than uniform national growth,” she said.

“This plateau comes despite continued strong agricultural commodity prices and relatively favourable seasonal conditions across much of Australia. The traditional drivers of farmland demand haven’t disappeared but new dynamics are reshaping how the market operates.”

National transaction volumes collapsed to their lowest levels last year, with just 2258 rural properties changing hands, compared to averages above 4700 annually in the mid-2010s.

This suggests low levels of distress. Ms Conisbee said no one was being forced to sell. But she said there were also lower levels of buyer demand.

“The global economic uncertainty that has characteried 2024 and early 2025 appears to be influencing rural property decisions,” Ms Conisbee said.

“Farmers and investors who might previously have transacted are holding off, creating an unusual combination of price stability and market paralysis.”

A flurry of farm property reports in the past month from banks and rural agencies all agree with the sentiment of the Ray White Economic Update.

Big bank farm lender ANZ said today’s growth in the Australian farmland party market was propped up by a dramatic decline in the number of properties being sold.

NAB forecasts big-ticket agricultural property will continue to attract cashed-up institutional and global investors in the year ahead.

Rabobank said the heat had come out of the farm selling market after a boom period that saw median prices rocketing an “astonishing” 79% between 2020 and 2023. The bank’s RaboResearch division found farmland prices had contracted in 2024, with the median price per hectare across all agricultural land types nationally decreasing by 6% on the previous year.

Bendigo Bank said price moves also varied between land types and cross the country, with WA and even drought-hit SA bucking the national trend and recording prices rises.

The popular Elders Real Estate analysis found both farm buyers and farm sellers were loath to take a risk on the property market in the southern states until it rained.

States chart dramatically different paths.

While national figures show a flattening, State-level data reveals the Australian agricultural land market is fracturing along regional lines.

WA’s robust 18.7% growth in 2024 was in stark contrast to NSW, which experienced a sharp 24.4% correction that wiped out much of its recent gains.

While house prices have stalled in Tasmania, the same cannot be said for agricultural land. Tasmania continues to command Australia’s highest rural land prices at more that $18,000/ha.

The Northern Territory, by contrast, remains Australia’s most affordable rural real estate at just over $5000/ha, though even it managed 11.9% growth in 2024.

“These divergent paths suggest local factors – from mining activity to lifestyle migration patterns – now matter more than broad national agricultural trends,” Ms Conisbee said.

“Australian farmland prices are no longer moving in a unified manner, instead shifting according to local market conditions.”

Land use tells the real story.

Perhaps the most revealing insights come from examining different agricultural land uses. These delivered some genuinely surprising outcomes in 2024, according to Ms Conisbee.

Dairy farming, traditionally one of Australia’s most stable rural sectors, experienced extreme volatility with growth rates ranging from 83% in Tasmania to -45% in South Australia. The decline in South Australia was put down to drought conditions in that State.

Forestry emerged as the standout performer in 2024, with 48.6% growth. Ms Conisbee said this reflected increasiing investor interest in carbon farming.

Meanwhile, traditional cropping land declined 3.8% nationally, suggesting the sector may be entering a more challenging phase after years of exceptional returns.

The hobby farmer sector continues to command extraordinary premiums, with prices exceeding $229,000/ha. Ms Conisbee said this was a reflection of ongoing lifestyle migration trends and the premium city residents will pay for rural amenities.

What happens next?

Australian agriculture is undergoing structural change. Carbon farming, for example, is creating new sources of land value. The uniform national growth story that characterised the pandemic period appears to have ended, and is replaced by a more complex landscape where local fundamentals drive outcomes. For now, it appears to be at an inflection point.

Ms Conisbee said prices may have stopped rising rapidly, but the lack of transaction activity meant fewer options for buyers. She said this holding pattern is likely to continue for a while longer however ongoing interest rate cuts are likely to create more opportunities for both buyers and sellers.

The timing of this shift will largely depend on how aggressively the Reserve Bank cuts rates and how quickly agricultural commodity prices respond to global economic conditions.

“Ongoing geopolitical tensions and supply disruptions globally continue to support agricultural commodity prices, which should underpin farmland values even as transaction volumes remain subdued,” Ms Consibee said.

“If rates fall meaningfully over the coming months we could see transaction volumes recover well before prices resume their upward trajectory.”