Western australia farmland prices stagnate

Farmland values in Western Australia are stagnating, according to new figures, which reveal that agricultural land prices have edged up by an average of just 0.5 per cent per year between 2006 and 2014.

"That's effectively a period of consolidation, effectively allowing the sector to catch up to that huge appreciation you saw in property prices up until that period," comments Will Rayner, general manager of agribusiness for Rural Bank, who produced the index by analysing 40,000 individual sales since 1993.

He explains to ABC that agriculture has a long credit cycle, which means a long-term view is needed to see a less volatile picture.

"Even accounting for what's almost a decade of relative stagnation in property prices, you'll see since 1993 the average increase in property prices is still 4.7 per cent per year, which compares favourably with the CPI increase over the same period of an average of 2.6 per cent per year," he adds.

With the weakening Australian currency and low interest rates, Rayner forecasts a positive outlook for farmland values in Western Australia.