Fencing, carbon, make good agreements up for debate at AgForce property valuation seminar

He was quizzed enthusiastically by participants at an AgForce valuation update at Barcaldine recently, who were all keenly aware both of rising property values and associated rental cost increases for leaseholders.

With over $10m in private and public funds committed to exclusion fencing in the central west at present, there was plenty of interest in the effect that would have on land values.

“It’s seen in the market as a positive, that your’re in a cluster fence or that you’ve excluded yourself by doing your own fencing,” John said.

“I would be sure that the market would recognise that as an improvement and that would have an effect on the market, but like the carbon trading, it’s still early days.

“As valuers, we have to interpret the market and we need market data at this time.”

He said carbon agreements were too new in the property market to be able to gauge their effect on property values.

“We haven’t had any sales as yet to show any positive or negative impacts, but one thing I’d like to stress is that anybody looking at entering into a carbon agreement, make sure they get some very good legal advice, as well as some very good accounting advice.

“A bad carbon agreement could have an effect on your property value.”

As far as make good agreements for water went, John said valuers had to look at what the impact on the property would be, or what percentage of the property landholders couldn’t use.

“You should bring the effects to the department’s attention,” he said. “The same would hold true for prickly acacia or parthenium.”

AgForce and NAB are combining to hold similar workshops in north west Queensland next week, at Charters Towers, Hughenden and Cloncurry, where John will outline the importance of getting unimproved values right because of the flow-on effect on council rates.

John said the property market of the last 18 months was similar to trends in 2007-8, using the example of Northampton and Inverness sales in the Blackall district of $250/acre, which he said reflected similar rises in the Maranoa and Central Highlands areas.

The market has risen 20 to 25pc, in some cases up to 30pc since the bottom in 2013-14, and rises in unimproved values were flowing on from that.

“AgForce told the government it would be appreciated if drought-declared shires weren’t included in the recent revaluations but the government did include some of them,” John said.

“It will be interesting to see what happens in the next 12 months, as I believe Longreach, Winton, all this western country will be looked at.

“Blackall-Tambo and Barcaldine’s unimproved values rose 20pc and I’m pretty sure we’ll see that flow on to the other shires.”

He shared a number of recent property sales, including Fairlea/Linden at Blackall, selling for $314/acre, Jynoomah at Tambo for $165/acre, Linamar at Isisford for $61/acre, Bexley at Longreach for $103/acre, and Politic at Aramac for $140/acre.

When he asked attendees what that reflected, Barcaldine’s Peter Doneley said it was clear that people were chasing improved scrub country.

“The black soil plains have lost their appeal,” he said.

Andrew Donaldson was there from Surbiton Station at Alpha and spoke about the market created by mines in central Queensland.

“That was in the 2000s,” central Queensland NAB agribusiness manager, Darren Kuhl, said. “The later sales have been neighbour to neighbour, or producer to producer, which is good from our point of view, as it means there are no external influences propping the market up.”

Freeholding affordability

On the topic of freeholding, John said the cost to do so was rising each year, but the option to do so was still available.

The first offer was 18 per cent of the unimproved value of the land; now it’s 25pc, according to John.

“My concern is that it will become unaffordable.”

He added that ongoing drought was the likely factor holding people back from undertaking the expense of freeholding, especially as people now need to pay the bulk amount up front.

He contended that freehold tenure was seen as a positive, even though it was not supposed to be any different to leasing country.

“There are no ongoing rent payments or fear of them increasing, but one disadvantage is that it’s not a tax deduction,” he said.

According to Darren Kuhl, it was “no comfort” to banks that properties had freehold title, but conceded that there were significant numbers of buyers who wouldn’t look at leasehold land.

“So it’s probably worthwhile from that point of view,” he said. “It’s just about whether you can service the debt.”

John said that to date, only one third of Queensland’s eligible lessees have been freeholded, with leasehold rents now increasing for those who have chosen not to freehold.