People considering an investment in the Gulf’s northern forest country in the face of ongoing drought in other parts of the state need to factor in the rainfall variability of the region, according to Herron Todd White Townsville director, Roger Hill.
Mr Hill, a certified practising valuer, said the general market thought higher rainfall areas, where the wet season has already had some impact, had high seasonal reliability but this wasn’t borne out in modelling he had done.
Testing the detail from the start of the 2002 drought to 2018, a period of 16 years, which took in macro patterns of extreme drought in 2005 and substantial rain in 2010, the highest rainfall areas of Croydon and Almaden also had the highest variability over this period.
“The devil is in the detail,” Roger said.
“As far as variability goes, Normanton, Mount Pleasant, to the north of Hughenden, The Lynd, Charters Towers and Mount Garnet group tightly together.
“Solway Downs, between Richmond and Croydon, has the lowest annual median, yet has the lowest variation.”
Seeing that rainfall at Charters Towers was as volatile as it was at Normanton was one of the surprising things for Mr Hill, who said he now wanted to drill down more into the data, perhaps taking winter rain out to see what difference that would make.
Mr Hill said the wet season had kicked in last December north of a line from around Chillagoe/Mount Garnet west to Normanton, with a narrow band of rain events south along the ranges from Georgetown towards Hughenden.
“Looking forward into 2018, if the rain is patchy or there is no follow-up, then it’s expected that purchasers will be seeking to acquire northern forest country,” he said.
Speaking from Georgetown, he said that was already happening, with buyers looking for country to agist, lease or buy competing with a hot investor market.
Even within that region, Mr Hill said there could be a difference of $70 to $100 per weaner in costs of production, depending on the country type.
“The old-timers always said, where the old diggings are, that’s where good minerals will come through in the grass, more so than the sandier, more deficient country.
“It’s important because you’ve got to think about the rebreed rate.
“It’s a triangle between your land condition, paying the bills and keeping cattle numbers up.”
He expected the entry of the Department of Defence into the market would give it another big shake-up, as stakeholders negotiated for sufficient compensation for their land, and would be likely to offset concerns about rising interest rates.
“2018 is shaping up to be a big year for the north Queensland grazing property market,” he said. “A word of caution – it’s important that due diligence is rational so as to avoid a period of irrational exuberance, to quote Alan Greenspan.”