North west property sales 'rationalising'

Sales to locals an indication of stable north west property market

News
The year-on-year north and north west Queensland grazing property market score card.

The year-on-year north and north west Queensland grazing property market score card.

Aa

Despite a "wild start" to 2019 in north west Queensland, Herron Todd White property analyst Roger Hill expects as many cattle stations in the region to change hands this year as were sold last year.

Aa

Despite a "wild start" to 2019 in north west Queensland, Herron Todd White property analyst Roger Hill expects as many cattle stations in the region to change hands this year as were sold last year.

He describes this as a rationalisation after the desperation driven by a need for grass, and a sign of a healthy market.

"The market typically hovers round 25 sales a year in its healthy stage," he said.

"Last year much of the activity was initiated by grass sales; this year it was the flood/drought combination at the start of the year.

"Locals are in the market now - I think people are consolidating after so much upheaval."

In 2018, 26 cattle stations were sold across north and north west Queensland; by the start of June this year, 15 properties had changed hands.

Of the two most recent, Boronta Park at Prairie and Reedybrook at Gordonvale, he said each was sold to locals "on the money", not influenced by the flood market.

Boronta Park was sold to Charlie Holzwarth and family, Rainside, Torrens Creek, for $1.65m or $606/ha ($246/acre), while Pat and Tom Sheehan, Valley of Lagoons, Ingham, purchased the adjoining Reedybrook for $5.67m ($604/ha or $244/acre).

"The property market has been busy to say the least," Mr Hill said. "As the year progresses, there are another nine cattle stations that are likely to sell (and) no doubt there will be a couple of quiet sales that fly under the radar."

Pricing was what would differentiate this year's sales, Mr Hill said, expecting a possible rationalisation of prices for downs country in the Winton/Hughenden/Julia Creek/Kynuna region.

Some of the downs country around Julia Creek in May this year.

Some of the downs country around Julia Creek in May this year.

"It appears that once the expected sales in the forest country to the north of Charters Towers and Mount Garnet, Mount Surprise, Georgetown and Einasleigh settle, then existing value rates from last year will be upheld and perhaps reveal a steady growth rate," he said.

Mr Hill summarised the market region by region:

Downs - Winton, Hughenden, Julia Creek, Kynuna

"Busiest market area in the year to date. Vendors have taken the opportunity to exit while there was good demand post the monsoonal event in the first week of February.

"There was a narrow gap before it rained down towards Longreach, then towards Springsure and then Cunnamulla. In that gap, this district was riding the crest of opportunity for sales activity.

"Interest and enquiry came from central Queenslanders, southern Queenslanders and Northern Territorians.

"As it turns out, only one-third of these sales in this region were local buyers, one buyer is from the Northern Territory and the rest (almost two-thirds) are central Queensland operators.

"Now that it has rained to some extent in these other areas, the spotlight will dim somewhat in this region and the spike will be over.

"Grass growth was not as prolific as first expected. Initially the broader cattle industry sought to agist in this area.

"When the cattle market dropped further at Roma, New South Wales and in the Northern Territory, local graziers saw the opportunity to acquire drought priced stock and do a trade.

"Some local graziers did not take agistment on or do a trade. They calculated that with the grass that actually grew, the grass budget matched the post flood cattle numbers and chose to play the sit card.

Related: North west land values expected to hold

"Going forward, due diligence will need to be prudent for both vendors and buyers. The price ranges have risen strongly by 21 per cent to 29pc year-on-year.

"Given that a portion of the market sales last year were already driven by grass demand, then both the buyers and the vendors should be prudent in the forthcoming price negotiations.

"From here, the market has a choice:

  • Take a breath - no sales get over the line for the rest of the year;
  • Rationalise - vendors recognise that this was a rare event and lower their pricing to last year's levels (or lower);
  • Given the broader regional perception that this market area is so much cheaper than that black soil stuff in central and southern Queensland, trot ahead and grow from here!

"Both buyers and sellers need to be seriously prudent in this next market phase."

North of Charters Towers and Hughenden (including basalt) to Mt Garnet, Georgetown, Einasleigh

"This market area sold well last year. For years, there had been a limited number of transactions, particularly in the basalt areas.

"Last year did see some grass buying from out of district buyers (drought-affected central Queenslanders), however mostly the buyers were locals taking the opportunity to acquire more good country.

"This has happened again this year with most buyers being local districts and just a couple of southern buyers.

There has been interstate enquiry. Only one of these has gone to contract at this stage.

"Demand is moderate (for second grade country) to strong (for blue ribbon country) for breeding stations in this area.

"Given the dry conditions in the south, the higher and more reliable rainfall in the north is attractive.

"Defence has acquired cattle stations in the Greenvale area for the purpose of establishing the Singapore Training Area. The vendors may well enter the market over the next two to three years.

"It is interesting to note that the forest country hectare rates in recent years have risen to those similar to downs country.

"The quality of forest country and apparent seasonal safety of the region have been contributors.

"Forest country hectare rates vary so much with land classification, land condition and infrastructure. This makes the score card look like the lower end value rate has softened.

"This is only because there is a contract on some lighter granite country at present, yet there wasn't a similar type sale last year.

"The top of range hectare rate from last year has yet to be surpassed this year. Given the interest in Boronta Park (Prairie), Rocky Springs (Mount Surprise) and Reedybrook (Greenvale), the top of the range hectare rate parameter is likely to be set very shortly.

"It is likely that there will be another six sales in the area too as the year progresses. Once these sales occur then the parameters for the score card will certainly confirm last year's value rates and perhaps a steady value rate rise at year end."

Central West Queensland

In the state's central west Will McLay and Chris Dyer said values up to 25pc higher than previous levels could be at or near a market peak, saying the possibly brief period of strong demand could be a short-lived price spike.

The severe drought conditions over much of the state had focused attention on properties with grass reserves, they said.

Related: Rush for grass drives western land sales

They summarise the market below:

"Very strong demand saw a rush for grass for properties selling with adequate pasture reserves. Thirteen properties in the central western Queensland region have sold in the past three months, compared to 19 sales for the whole of 2018.

"Values are well above previous levels by up to 25pc or more for the odd isolated sales. We are of the opinion that values are at or near a market peak and we caution that this possibly brief period of strong demand could be a short-lived price spike.

"However, given the widespread drought conditions that have been and still are being experienced over much of the region for the past five to seven years, maybe the region's values are just playing catch-up to other areas of the state.

"Lack of grass has certainly prevented some producers from listing their properties for sale, but reasonable rainfall in some areas of the central west has given those producers wishing to sell an opportunity to get out.

"Initial demand was from drought-stricken producers in the Northern Territory and Queensland, with some New South Welshmen now heading north.

"Some properties have sold to sheep producers for the first time in nearly 30 years. Some of the recent sales have been to producers who have had expansion plans in mind, but drought conditions have brought matters to a head earlier than expected.

"Therefore, once seasons return to widespread favourable conditions, a lot of these recent sales may not hit the market again in the short-term."

Aa

From the front page

Sponsored by