Property

Property market changing with more supply

Property editor Linda Rowley, May 31, 2024

SEVERAL years ago, demand for rural property was outstripping supply, but this has reversed, with a flood of properties on the market.

Are the buyers out there to absorb them? In this week’s property review, industry stakeholders share their thoughts on the current state of play.

Col Medway, LAWD

Col Medway LAWD

LAWD director Col Mr Medway said it is the nature of the beast – supply goes up and supply goes down.

“Supply is significantly higher than it has been over recent years, but is it high compared to history? I’m not sure, but it is not out of the box.

“What we have is a fair bit of carry over stock from last year that agents are working hard at moving through the pipeline,” he said.

Mr Medway said supply is outstripping demand, which is a reversal of what was happening over the last three or four years – when demand was outstripping supply and pushing up prices.

“Values are not at the level achieved in spring 2022 – when they hit the top.

“Prices are down around 10 to 15 percent but are still historically very strong.”

Mr Medway said most of the vendors he is dealing with are happy to transact at those reduced values.

“Vendors accept the property market is not where it was in spring 2022 and yet they are still willing to transact – but it isn’t a case of selling at any cost.”

When asked if property prices will fall further, Mr Medway said there could be a stand-off but eventually buyers will blink before vendors do.

“If a producer reads what is in front of them – in regard to seasonal conditions and livestock pricing – the outlook is pretty good.

So, producers are experiencing a crisis of confidence – which happens when the share market experiences bull runs and bear runs.”

When it comes to the reasons why people are listing their properties, Mr Medway said it is a case of looking too deeply into shallow water.

“When analysing the motivations behind each of the vendors selling, there is no pattern. It is just a matter of timing, succession, health, or change in strategy.”

Describing the current market as “spluttery”, Mr Medway said a property listed for sale can receive a run of good inquiry followed by virtually nothing.

“There is no consistency.

“However, as the year develops, I believe the flow will improve. Inquiry is beginning to increase in the wake of lower property prices as buyers see value and are making figures work,” he said.

“The corporates are still in the market but there is no buyer urgency.”

Matt Horne, Elders Deniliquin

Matt Horne Elders

Deniliquin-based Elders agent Matt Horne has more than 10 properties under contract at present but said several of these sales have been conducted off market.

“Logical buyers have been identified and matched to particular properties bypassing public marketing campaigns.”

Mr Horne said each property is assessed on a ‘case by case’ basis.

“If there are some good progressive locals or outside inquiry, and the circumstances are right, then a deal happens. In some other instances, property has remained on the market longer than the vendor and agent would like.”

Mr Horne said despite uncertainty over interest rate movements and commodity prices, property prices remain sound.

“At present, prices are not softening in our area, and most sellers haven’t had to significantly lower their expectation to get a deal done. It has not been critical for our vendors to sell so they continue to farm on while they wait for a purchaser to surface.”

Mr Horne said recent sales have seen local and interstate buyers acquiring farmland throughout the Riverina.

“Many local farmers have a focus on expansion, as scale is where they are achieving greater machinery, labour and overall operational efficiencies.”

“A mixed farm north of Deniliquin recently sold to producers from Broken Hill who were relocating south for a more reliable climate, security of irrigation, greater schooling options and general services,” he said.

Mr Horne is confident the rural property market will remain firm throughout the 2024 year, with seasonal conditions to play a major hand in clearance rates.

Mike Clifton, Elders

Mike Clifton Elders.

Elders agent Mike Clifton reports plenty of activity, but said buyers have more choice and in the current economic climate, the ones with cash are spending it wisely.

“Medium to large scale family operations looking to invest are taking a cautious approach to what is available and seeking to maximise their value proposition.”

Mr Clifton warned vendors to be realistic and price properties competitively.

“Properties will transact if they are sensibly priced.

“I am not suggesting massive discounting, but the heat has gone out of the market and vendors must recognise that if they want to sell,” he said.

“Sellers are unlikely to make what the neighbour’s place sold for two years ago because prices have come off the boil.

“My advice is not to add a premium because potential buyers will be frightened away,” he said.

Mr Clifton said the market is currently sitting in a very interesting time in the property cycle.

“It is difficult getting people to commit and that is why vendors need to be keenly priced to entice commitment from buyers.

“Two years ago, it didn’t matter what was listed, it would sell in 10 minutes,” he said.

“Now it requires more ‘agency 101’ to work more closely with clients and get

deals across the line.”

Mr Clifton said there will always be strong interest in neighbouring properties, especially in well-located or tightly held areas.

“Generally, the number of inquiries per property has dropped significantly in the last 12 to 18 months, but the level of inquiry is more qualified and looking to transact based on realistic values.”

Mr Clifton advised buyers to be well organised and complete their loan pre-approvals prior to an auction.

“The lending process is more complex these days due to changes in banking requirements.

“There are more boxes to tick which means approval times take longer which can disrupt campaign timelines,” he said.

Banking sector experiencing slow approvals

Brad James – Rabobank

Rabobank southern Queensland regional manager Brad James recently admitted the banking industry is generally experiencing slower approval turnaround times, due to heightened levels of due diligence associated with regulatory requirements and increased level of analysis on any given finance request.

“Banks need sufficient time to fully assess a producer’s ability to meet the proposed finance commitments and while the delivery of approvals or ‘speed to market’ is slower, there are less producers experiencing financial difficulties due to debt load.”

Mr James said solicitors and accountants are showing a greater appreciation of the timeframe it now takes to deliver an approval and agents are gradually coming on board.

“The finance clauses for sizable loans for major property acquisitions (as opposed to an increase for working capital) have increased from seven days to 14 days-plus.”

Mr James said most solicitors recognised this and are notifying clients that approvals can take up to 30 days in rare circumstances.

Mr Clifton said regarding time frames, Mr James makes a valid point, but he expects a push-back from agents.

“Due to the cost of advertising, an auction or expression of interest campaign typically lasts around six weeks.

“There is plenty of inquiry in the first two to three weeks, but a longer campaign runs the risk of losing to another opportunity,” Mr Clifton said.

“People who are keen to make a move typically have their eye on numerous properties – particularly when they are many on the market.”

Geoff Warriner, JLL Agribusiness

Geoff Warriner JLL

When it comes to property prices, JLL Agribusiness director Geoff Warriner said northern markets are holding.

“Property prices are strong despite fewer buyers in the market and a slow decline in the number of properties transacting.”

“Transactions may be taking longer but ultimately they are achieving at or above expectations,” Mr Warriner said.

Late last year, the market slowed as producers adopted a cautious approach, mindful of long-term weather forecasts for an ongoing dry spell and uncertainty around interest rates.

However, Mr Warriner said subsequent rain instilled confidence among buyers and sellers.

“This is paired with a market that has seen interest rates stabilise with short-to-medium term predictions they will fall.”

JLL reports a strong pipeline for the remainder of the year across on and off market campaigns, including Burnbrae (Moonie, Qld), Mudabie (Eyre Peninsula, SA), Coralie (gulf region, Qld) and Noondoomally North and South (Inglestone, Qld).

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