11 September, 2020
Soaring cattle prices set to reflect on property values
FORECASTERS who earlier predicted a good year for Queensland grazing property values have been proven correct, with historically high prices likely to bring more country onto the market come spring.
Mounting evidence suggests current values have well and truly eclipsed the 2008-09 period, which was the previous high-water mark for grazing property values in the nation’s largest cattle producing state.
Ray White Rural Queensland Principal, Jez McNamara, estimates agricultural land prices have increased by 10 to 30 per cent this year.
“There has been a market shift, not a premium paid,” Mr McNamara said.
“Strong demand for rural properties over the past year is a result of record low interest rates, a low Australian dollar and good commodity prices.”
Mr McNamara said families were taking advantage of the situation and seeking assets to complement their existing holdings.
“Most foreign interest has left the market, and the higher end is presently driven by Australian corporate funds and wealthy Australian families,” Mr McNamara said.
“Most grazing properties offered for auction recently have sold under the hammer — with two, three and four bidders battling it out right to the very end.
“That demonstrates strong demand and a serious intent from multiple parties seeking to secure a property,” Mr McNamara said.
Elders Central Queensland Rural Property Sales Specialist, Virgil Kenny, said lower interest rates had been a key factor in purchases.
“For producers who qualify, money is readily available to step out and expand to grow their business, and the short supply is creating strong demand for the people who are looking.”
Mr Kenny said country in the better areas was making $3700/ha during the peak of 2008-09, and today’s prices are reaching between $4400 and $4900/ha.
“Most of the current buying is about expansion,” Mr Kenny said.
“Producers are seeking all country types, from breeding to finishing, due to the strong cattle prices.
“Many had to reduce their stocking numbers with drought, but with the arrival of grass, water and good commodity prices, they are looking to run more breeders to subsidise their bullock fattening operations.”
Mr Kenny said other buyers included those trying to re-establish themselves in other areas after the mines or the military had acquired their land.
In the state’s north, Herron Todd White North Queensland Regional Property Valuer, Roger Hill, said grazing property markets were galloping ahead.
“Last year, the market was driven by southern buyers,” Mr Hill said.
“This year, it is being driven by local buyers doing a see-and-raise manoeuvre on last year’s prices.
“That is what has driven the 10 to 30 per cent benchmark jump in the past three to six months.”
Mr Hill said typical buyers were long established, respected and profitable cattle families.
“These families have the ability to compete at this level,” Mr Hill said.
“They have been highly profitable for the last four years — paying down their balance sheet, repositioning themselves, and now they are ready for a business expansion.”
Mr Hill estimated all grazing property market districts in Queensland’s north and northwest were equal to or well above the previous cycle peak in 2008.
“The average market hectare rate is trading at a factor of 1.5 times (or 150 per cent) the value rates of the cycle peak in 2008-09.” Mr Hill said.
“In April, the smaller-scale forest grazing operation, Day Dawn, 70km west of Charters Towers, sold under the hammer for almost $3.7 million or $864/ha,” Mr Hill said.
“A month earlier that 4267ha highly-improved breeding or backgrounding operation had been expected to sell for around $2 million.”
“More recently, Downs country south of the Flinders Highway from Hughenden to Cloncurry has equaled to and now passed peak 2008-09 values.”
Ruralco Property Rockhampton Agent, Bill Hamilton, said he recently sold two properties for about 20 per cent above expectations.
“The Marlborough district property Lexington was sold for $1.885 million or $2288/ha and a small Wowan district property was sold for close to $6 million or $4202/ha,” Mr Hamilton said.
Jez McNamara said the market peak of 2008-09 had been based on lending and the availability of money.
“Back then, there was a credit crisis and that is why the market collapsed,” Mr Hill said.
“But everything that is happening now is based on actual things, not on inflated prices based on people borrowing when they shouldn’t have been.
“If there were credit issues, or people in trouble, we would have seen more receivership sales in the last five months,” Mr Hill said.
Mr Hill said current buyers were looking for anything that stacked up – cattle returns and capital gains.
“Land is a good investment,” Mr Hill said.
“People are realising with the volatility of the share market, land is not a risk. It actually appreciates.”