THE north and north-western Queensland cattle property market is enjoying a golden era, with cattle country having been re-priced to new levels between March and December last year, says Herron Todd White regional director, Roger Hill in the company’s recent monthly review.
“It’s as if the fuel-to-air ratio in the carburettor of an engine was adjusted to boom mode – the fuel being the cattle pricing and the air being interest rates,” Mr Hill said.
The following graph shows the dynamic shift that occurred during 2020 between the two key drivers of the property market, apart from the wet season. The cash flow margin has fuelled confidence in the north Queensland grazing property market, Mr Hill said.
“Restocker demand from southern areas after they finally received rain, live export demand and processor demand have driven northern cattle prices to peak levels. At the same time, the cost of capital has dropped,” he said.
Forest country overtakes Mitchell grass in value
As a whole, the market had increased substantially in the past year, and since about 2014.
As the graph below shows, 2020 was the first time that the ‘Other North Queensland’ (forest country) category has overtaken the Mitchell grass downs category in value, Mr Hill reported.
“This is largely driven by some smaller property sales in the Charters Towers and Townsville areas. In the absence of those sales, the ‘Other North Queensland’ category is just below the ‘Mitchell grass downs’ market.”
Demand remained strong for both, Mr Hill said.
“Considerable depth of market has been displayed at auctions towards the final months of 2020. There were twelve under-bidders for Gulf breeding property Nardoo last September, who bid between $20 million and $34 million. By December, about 30 sales were either finalised or close to settling across the region during 2020.
“This is a healthy volume of sales. Within those sales, two were re-sales, one year apart. One resale was 40 percent and the other 50 percent stronger than their 2019 sale prices,” Mr Hill said.
Our weekly property review focused on the re-sale grazing property trend in this report a few weeks ago.
Mr Hill noted contrasts between buying patterns in the region between 2019 and 2020.
“In 2019, buyers were from southern areas where their home country was drought affected. Not last year year. Active buying in 2020 was from local, long-established families seeking to make expansions. Certainly, this is a demonstration of the long-term confidence in the industry,” he said.
So what happens in 2021? Mr Hill suggested that perhaps it was time to consider property positions at the current pricing levels – to buy, hold or sell.
“This is a serious question. Yes, the good times may be here. Yes, cattle prices may be strong (and even strong in the opening stages of 2021 than late last year), but those are the risks you take.
“Rural property is a long-term investment, often over generations, which brings the thought process back to what the strategic plan is for the asset and the people involved. Rational and calculated strategic asset planning is required to make good decisions while the going is good.
Seasonal conditions always came into account during such strategic asset planning.