The latest monthly rural property report from national valuation firm Herron Todd White released this week points to increasing evidence of good sales in key agricultural regions and further signs of returning confidence, boosted in part by a week of good general rain across the eastern halves of Queensland and New South Wales last week.
Here is what HTW’s April report has to say about the status of the rural property market across NSW, Qld and the NT:
Country New South Wales
The rural market in central NSW and northern NSW continues to give mixed signals with discussions with agents indicating extremely tough marketing
conditions being encountered. This is predominantly in the smaller sized holdings which would normally be purchased by local landholders looking to expand.
Contrary to this though is the interest we are currently seeing in large corporate entities seeking to acquire broad scale cultivation holdings.
Currently we are seeing some indications of a developing two tier market due to the differing value matrix perceptions from the local landholder looking to expand and the corporate entities seeking to acquire a foothold in their desired areas. The local landholder is being pressured by the financial institutions on their serviceability of loans in addition to the equity requirements.
This and the current extreme lack of appetite for debt within the rural industry itself is seeing it difficult to market smaller sized properties that would not be attractive to corporate entities. Generally we see properties below $5 million as the holdings that would be purchased by local entities looking to expand and larger family farming interests.
The larger corporate entities generally do not have borrowings involved and therefore their perception of the value of the property and the serviceability of that property are different to the local landholder.
A classic example of this is of the recently settled sale of approximately 25,000 hectares to the east of Coonamble which was purchased by a sovereign wealth fund. While exact details of the sale remain confidential our understanding is that the overall sale rate was approximately $2,050 per hectare.
This aggregation consisted of 4,000 hectares of red loam cultivation, 7,500 hectares of better quality red brown and some chocolate loam cultivation, 8,900 hectares of heavy black clay loam cultivation and approximately 4,900 hectares of open to light timbered grazing. This aggregation was substantial and was an amalgamation of nine separate landholders and approximately 20 different
properties. The aggregation was located on Vatua Lane and north to the Baradine Road and then further up Urawilkie Lane.
Overall this sale is in excess of $50 million with the sale equating to approximately $2,600 per hectare for the heavier black clay loam cultivation, $1,900 per hectare for the red brown and chocolate loam cultivation, $1,500 per hectare for the red loam cultivation and approximately $1,150 per hectare for the open to light timbered grazing country.
Interestingly enough individual landholders within this aggregation had attempted to market their properties over the previous 24 months without
success. However when amalgamated with additional landholders the scale of production available became attractive to the acquiring sovereign wealth fund and subsequently a sale has proceeded.
The corollary of this are a group of properties called Iona, Jude’s Creek and Jude’s Park at Curban NSW which is to the north of Gilgandra and south of Gulargambone. These three open general red loam farming blocks varied in size from 518 to 643 hectares.
These blocks received a full marketing program and failed to sell at auction, however after protracted negotiations contracts were exchanged with Iona
selling for $1.1 million. This property had a large volume of improvements and after accounting for the value of these we believe the sandy loam cultivation on this property achieved approximately $1,150 per hectare.
The property Jude’s Creek which was 629 hectares sold for $1.08 million. There was a modest homestead and reasonable improvements across the holding and after accounting for these we believe the red loam cultivation achieved $1,400 per hectare. The final block, Jude’s Park which is 518 hectares sold for $900,000 and had a modest 1950s homestead, small shearing shed and very basic workshop. After accounting for the value of these we believe the cultivation area on this property sold for $1,450 per hectare. Overall we believe this sale shows a slight softening of values for the area.
The recent rainfall events across the central and northern areas will require further follow up rainfall events to have any long term impact on the market’s
perception of the longer term seasonal outlook. Due to the timing of this rainfall, further rainfalls are required to enable pasture that will shoot from this to
be able to grow into the winter period.
Generally speaking, currently we believe the market to be in a tough state for properties sub $5 million with limited interest and current serviceability
requirements impacting on prospective purchaser’s appetite for debt. Properties above $10 million that have broad scale cultivation capabilities are currently attracting a reasonable level of interest from the corporate sector.
Rural sales activity has been relatively slow through March with few notable sales occurring through the district. The main sale of note was ‘Murraguldrie
Station’ a beef cattle enterprise located 22 kilometres south east of Tarcutta which is currently under contract. The marketing agent has requested the price remain confidential, however the price was reflective of the fairly soft market conditions for grazing properties in the district.
Seasonal conditions continue to be relatively dry as many farmers prepare for the winter crop sowing through March and April. Good rains over the forthcoming weeks will be required to assist newly sown crops with up to 50 millimetres predicted for the last week of March which may provide a promising start to the season.
In the irrigation areas allocation prices for New South Wales ans Victoria temporary water has been trading at between $80 to $85 per megalitre.
Victoria High Reliability permanent water is trading steady at approximately $1,400 per megalitre in both the Murray and Goulburn systems, while New South
Wales General Security water is also steady at $880 per megalitre.
The high demand for irrigation water over the summer has resulted in a continued reduction in water storage levels in Hume Dam currently at
approximately 42pc (53% same time last year).
However Dartmouth Dam, the largest capacity dam in Victoria remains nearly full at 89pc (93pc same time last year).
“Better late than never” is an expression that springs to mind with the recent widespread rainfall which has fallen across large parts of Queensland and New South Wales. A break in the season is just what everyone needed as we head into the cooler months. While not all graziers could afford to hang onto stock, those that could will be rewarded with a likely improvement in the market driven by increased competition from feedlot and restocker buyers.
Surface water stocks have been replenished as many creek and river systems run for the first time in well over 12 months.
The recent rain has been also boosted prospects for winter cereal and fodder crops as farmers look to plant over the coming months.
The property market has done little over the past month which comes as little surprise given the drought and tough market conditions experienced leading up this rainfall event. It is expected that more properties will be put to market in the short term with a growing portion of these instigated by mortgagees. This is an unfortunate reality facing the rural property market though allows for some good opportunistic buying for those in a position to do so. We are advised of two properties under contract in the broader southern border area. This includes
Taraweir which is a mixed dryland farming and grazing property in the Billa Billa district and Hunters Hill near Gore which is a trap rock grazing property.
Both properties were under forced sale conditions and had been on the market for an extended period. We are advised that both properties went to contract
March has seen the dry spell across most of Central Queensland continue with the Burnett and parts of the Banana and Central Highlands regions now feeling the pinch of te dry conditions.
The key talking point in the rural property market across Central Queensland has been the sale of the well regarded Bauhinia district grazing property Rangeview. This is a top quality scrub block of around 5,500 hectares (13,500 acres). Rangeview was sold by retiring graziers after a sound marketing campaign and reportedly received a high level of interest leading up to the auction, with a number of parties competing at auction, eventually selling to
well establish district graziers with other properties close by. For these reasons Rangeview is now regarded as the benchmark sale for top quality scrub
values showing around $1,690 per hectare ($685 per acre) or around mid $3,000 per Adult Equivalent.
Following this sale we have seen the listing of a number of other well regarded grazing properties across the Dawson/Arcadia Valley districts, including Rainbow, Lotusvale and Lynora Downs in the Arcadia Valley, and Mount Aldise, Sandra Downs and Billabong in the Bauhina/Moura districts. Agents are reporting there to be reasonable demand from a range of buyers looking to purchase quality properties which illustrates that there is now less
uncertainty in the market and buyer confidence is increasing. Despite this reported increase in market activity, we are still receiving reports from some financiers that there is still a degree of pressure on a number of clients struggling with high debt levels.
We are starting to see the first of the western Queensland properties coming on the market after receiving welcome rain in recent months. These properties are now looking to sell with good feed reserves. Many industry stakeholders will be keeping a close eye on the level of interest surrounding these properties.
There has been a hive of activity in North Queensland as the year gets well underway. While most station managers have helicopters booked to start the first round of mustering, the property marketing period has jumped from the barrier so to speak.
Swans Lagoon sold at auction in early March. The sale price was $7.2 million which is $213 per hectare and $2,400 per advertised breeder (3,000) area and
slightly less on a Beast Area ($/AE) basis.
The Swans Lagoon sale demonstrates that the market is willing to pay for a well improved, well located property with reasonable country types.
While this is a good outcome for the better classes of property, the market appears very quick to discriminate against stations with any perceived issues be they: location, country types, lack of grass, infrastructure, weeds or vendor situation.
Other stations being actively marketed at the moment include the following eleven stations:
• Lolworth – Mixed wet black basalts, red basalts and forest country station northerly of Pentland.
• Goldsborough – Cape River breeder block to the north west of Pentland.
• Chudleigh Park – Well known large scale operation to the north of Hughenden.
• Niall – Breeding station to the north west of Charters Towers.
• Maryvale – Breeding and backgrounding station to the north west of Charters Towers.
• Glenalvon – Mitchell Grass Downs block to the south east of Richmond.
• Baroona – Mitchell Grass block to the north west of Julia Creek.
• Caleewa – Mitchell Grass block to the north west of Julia Creek.
• Fairveiw – Mitchell Grass Downs block near Kynuna.
• Eyriewald – Block near Winton.
• Kilclooney – Forest breeding country near Mount Fox inland from Ingham.
This is an interesting spread of country types, uses and locations. It is not very oftern that blocks come up for sale to the north of Julia Creek so it will be
interesting to see how those two blocks go.
Four of these stations have sold within the last five years. While the marketing period is underway there are some proposed amendments to the Land Act that rural property stakeholders should be aware of.
The Bill has yet to be passed however the proposition involves changes to the ownership limitations of Leasehold tenure and the introduction of rolling leases.
The rolling lease concept proposes an automatic renewal of a lease similar to the term of the existing lease. Longer terms can be applied for.
With the changes to who can own Leasehold Tenure, in particular is the Grazing Homestead Perpetual Lease. These changes suggest that Companies, Trusts, Aboriginals and Family entities will be able to hold this tenure. These changes are designed to remove restrictions to these entities to buying these Leases.
This is interesting, as I can recall a situation where a Downs block near Richmond that fronts the Flinders River was under investigation by a trust for potential purchase for future agricultural purposes. Due to the GHPL tenure, the Due Diligence process did not last long.
So while the property marketing period is underway, changes to the Land Act are underfoot and there are rain clouds in the sky again.