HERRON Todd White valuer Roger Hill says it is premature to suggest there will be an across the board increase in North Queensland rural property values this year.
Writing in HTW’s February monthly briefing, Mr Hill said while the prices for sugar, beef, bananas and horticultural produce was part of the equation, the operating cost and capital structures of each enterprise tier varied and so too the property sub-market segments within each industry.
“To simply say that there is to be a boom across the board this year would indicate scant regard for the effects of seasonal conditions, negativity around debt issues, herd building, or trading stock at current prices and interest rates,” Mr Hill said.
Mr Hill said while the wet season had so far has seen good, frequent falls of rain between Normanton, Julia Creek and the western side of the region of the Cloncurry region, the drought was not over.
“But neither is the wet season,” Mr Hill said. “At this stage the eastern band from Charters Towers up through Greenvale to parts of the eastern side of the Georgetown district has yet to be as lucky.”
Mr Hill said where the rain had fallen, graziers were choosing to hold cattle back from live export boats to increase the weights of sale cattle.
“For these graziers, this is one of the first times that this opportunity has existed since 2012,” Mr Hill said.
“In 2013, the north was forced into one corner – sell. There is no doubt that in some areas, it is going to take more than one wet season for the country to recover.”
Mr Hill said there had been little variation in cane and horticultural property values in recent years.
“With stable commodity pricing and operating costs, there is no real reason for change,” Mr Hill said.
However, Mr Hill said 25 cattle stations had changed hands in 2015.
“Sale volumes have recovered from a low of about 14 in 2009,” Mr Hill said.
“This is a positive sign for the property cycle. The corporate market sentiment has benefited from the exposure of the marketing of the Kidman Portfolio, also the sales of Wollogorang and Walhallow Stations in the Northern Territory.
“While none of these stations are in North or North West Queensland, the exposure has been of benefit to the investment grade sector in the global marketplace.
“At this stage there are no new settled corporate sales to report on that indicates any market value movement. Global investors are seeking positive returns and investment yields. The trade accounts look good at the moment with current cattle prices and land values.”
Mr Hill said in the mid-scale family market, the focus has been on surviving the drought.
“Unlike the corporate market, many families do not have other stations with grass to spread cattle numbers out,” Mr Hill said.
“Some of the family enterprises that have had rain are looking to hold heifers to re stock rather than buy them back in.
“This option will take two to three years rebuild. Therefore it will take some time before those businesses look to buy another station unless it comes with a good herd.
“Given that the drought is not yet broken, there are family owned businesses that are still on survival mode and looking for a break in the season to eventuate.
“This market segment is in a holding pattern while the debt issues are sorted out, the herds are rebuilt or the drought is endured.”
Mr Hill said while there was positivity in the commodity markets and low interest rates, these factors were being offset by seasonal impacts, herd rebuilding and debt issues.
“It would appear that sale volumes will be similar to last year and limited change in values of grazing lands as the recovery/consolidation phase is endured,” he said.