Commodity prices push up WA values

Emma Alsop, April 19, 2022

Gairdner property, Cawarra, was the largest of a three aggregation proposition that recently went under contact for a record price. Photo: Elders

THE RURAL property market in Western Australia’s cropping country is booming, with high commodity prices and a shortage of offerings setting new benchmarks for land across southern parts of the state.

These record property prices are also pushing prospective buyers from the high-rainfall eastern Esperance region to the lower rainfall Pingrup, Gairdner and Varley district.

An aggregation at Gairdner is the latest offering to set a new price record.

Yet to settle, the collection of properties – Cawarra (2402 hectares), Fairfield (1162 ha), Readers (990ha) and Glenshiel (1167ha) – sold to a local buyer.

Elders Real Estate Albany agent Simon Thomas handled the transaction, said he has never seen the market this hot.

“Rural real estate in Western Australia across the board, is hot,” Mr Thomas said.

“I have been in real estate for 22 years and I’ve never seen the market like this.”

He said traditionally WA rural properties are sold in spring; however, the Gairdner aggregation bucked this trend.

“This one came to market in January, but that didn’t hold back people, so the demand is obviously still out there.”

He said this demand is being fueled by high with agricultural commodity prices and farmers looking to expand their existing operations.

Two WA properties Mt Adams and Lefroy’s were recently sold with another operation, Arrowsmith. Photo: Nutrien Harcourts

Further north near Geraldton, Nutrien Harcourts agents Chad Smith and Craig Walker recently sold an aggregation of three properties to a WA-based company for $26.5 million.

Two properties, Mt Adams and Lefroys – totaling 8258ha – were originally marketed together.

Arrowsmith (3301ha), located about 10 kilometres away, joined the proposition when the buyer showed interest in purchasing further land in the area.

Mr Smith said Arrowsmith was originally put on the market in February 2021 but was later taken off and farmed before selling with the two other properties.

He said some in the industry thought the sale price was too high for the properties.

“It was on par with our expectations, but everyone else thought it was a bit high,” Mr Smith said.

“However, by the time it sold, it was probably cheap buying.”

Mr Smith said the market “has gone bananas” and he believes this might prompt investors to sell their rural land to capitalise on these high prices.

Jump in prices

Ray White Rural Albany agent Kate Jefferies said she has also witnessed large jumps in prices since mid-2021.

In the past year, Ms Jefferies has sold three cropping properties, most recently a 3565ha offering at Varley.

She said in the Pingrup region, prices were sitting at about $2000 per arable hectare but have since climbed to almost $3000/ha.

East of Pingrup, prices are about $3700/ha with Varley region properties going for about $2470/ha.

She said demand for cropping land continues to out-strip supply with buyers having to get in quick to snap up the more reliable properties.

“We have seen quite big jumps in prices which has been driven by a lot of demand from corporate buyers from out of the area,” Ms Jefferies said.

“Some of them were sold in a matter of weeks, which is crazy for rural properties.

“In this market, people are having to move very quickly to secure land.

“We are seeing interest from Esperance and the higher-rainfall areas where they can’t move, and there isn’t land coming on to the market, and what is coming on to the market is very expensive.

“Buyers are coming to look in these other areas.”

Commodities impact market

Ms Jefferies said the high commodity prices may be prompting some potential sellers to hold off putting their properties on the market.

“There is still limited stock, even though we have the huge demand.

“I think that is because commodity prices are at record highs.

Ray White Rural Albany agent Kate Jefferies.

“People still have opportunities to capitalise on having those high commodity prices, which we don’t often have in agriculture.

“I think people are torn between wanting to capitalise on the high land prices and the potential to make good returns.

“Come spring, we will see more movement in the market as people who were sitting on the fence decide to make the most of these high prices.”

Ms Jefferies said growers have had a “cracking start” to the season on the back of a record 2021-22 crop, which will further boost confidence in the sector.

She said this, combined with high demand and commodity prices, will see rural land prices continue to climb.

“With high land prices and high commodity prices, it is a pretty positive space to be in at the moment.

“I don’t think prices will drop back; it might plateau out as interest rate pressures come on and we lose the demand.

“But, with the positive season we are having and another good start, it is fairly buoyant, and people are feeling positive so we could actually see another little jump if we have another good season.”

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