Herron Todd White Central Queensland valuers Michael Chaplain, Will McLay and Chris Dyer shared their collective thoughts about the 2017 property year across the region, and what might lie ahead in this report released during December.
WHEN looking back on the year that was for the Central Queensland property market, there were a few distinct sales that set new benchmarks in almost every region.
Throughout the later part of 2016 and early 2017 we found ourselves saying “holy moly, I didn’t see that coming” when speaking of the latest property transaction which stretched parameters to higher levels. As the 2017 year progressed, we found ourselves saying “holy moly, I should be surprised, but I’m not”, as the elastic fibres of the rural property market were again stretched further.
Before being game enough to give our predictions on where things will go from here, we have first put together a schedule of marquee sales in each local government area within the Central Queensland region.
LGAs are grouped together based on their geographical location and similar market traits:
Rockhampton – Livingstone– Gladstone– Isaac (eastern side) Shires/Regional Councils
These regions take in the majority of the coastal country from north of Bundaberg to south of Sarina and saw strong growth during 2017 across all market sectors. We have observed increased demand for smaller scale inferior quality coastal range breeder blocks from starter block buyers up to about $1.5 million due to better quality blocks becoming less affordable.
Demand for larger scale breeder blocks has increased substantially which is likely driven by established operators looking to shore-up stock supplies (weaners) under continued strong competition at market.
- Galloway Plains, via Calliope – $15 million (WIWO) – 12,335 hectares at $892/ha
- Balmoral, via Rockhampton – $3 million – 2507 hectares at $1196/ha
- Tedlands, via Sarina – $9.1 million (WIWO) – 3286ha at $2030/ha
Isaac (western side) – Central Highlands – Banana Shires/Regional Councils
These regions take in the vast majority of the brigalow belt country and have probably seen the strongest competition in Queensland over the past 24 months across all market sectors. We have seen beast area values creep up to $6000 adult equivalent, which is in line with and in some cases surpasses the previous records set in the 2007/2008 boom.
- Mayfield, via Dingo – $8.5 million – 4242ha at $2004/ha
- Murraway, via Moura – $10.025m – 3999ha at $2507/ha
Interestingly, both these sales previously transacted in mid to late 2013 and showed increases in value of 62pc and 47pc respectively. These sales showed the most rock-solid evidence of percentage increases in value over this period.
North/South Burnett Regional Councils
Although a lesser volume of sales, especially at the higher end above $5 million, these regions have also shown strong growth in the grazing sector.
- Camelot, via Monto – $7.45m – 6126ha at $1563/ha (ex. forestry lease)
- Stockhaven, via Gayndah – $3.4m – 3816ha at $460/ha
Barcaldine Regional Council – Blackall Tambo Regional Council
Sales evidence has been very limited with the only sales being properties that were still carrying good feed reserves and consequently set new benchmark parameters for their respective locations:
- Spring Creek, via Jericho – $4.15m – 9254ha at $448/ha
- Isoroy, via Tambo – $6.861m – 9290ha at $739/ha
Longreach / Winton Shire Councils
Despite still suffering from the effects of the worst drought in living history, the property market in these regions has remained relatively stoic, although some sales are showing a slight softening of values from 2016 rates. Again there was a very limited number of transactions over the past 12 months in these areas.
- Pauralos Park, via Winton/Longreach – $2.4m – 10,265ha at $234/ha
- Roseneath, via Longreach – $4.8m – 20,210ha at $238/ha
- Myrtle Farms, via Aramac – $1.85m – 6597ha at $280/ha.
The sale of Myrtle Farms shows a 13.5pc increase in value from its previous sale in mid-2013.
Barcoo Shire Council – Diamantina Shire Council
Even during boom periods these markets show a very limited number of sale transactions, especially as the majority of the larger holdings are corporate owned. There are only a couple of smaller transactions to mention with no great variance in value parameters from previous market evidence. Benchmark/Marquee Sales:
- Juno Downs, via Jundah – $1.7m – 28,932ha at $59/ha
- Maxvale, via Jundah – $1.2m – 13,495ha at $89/ha
We note that Coniston Station, a larger scale holding (28,500ha) relative to the above, is reportedly under contract for $3.6 million after passing in at auction, which at that level would appear to be a new district benchmark.
Unfortunately we do not have a crystal ball, however what we can provide is our opinion on some of the fundamentals which have been driving the rural property market in recent times. For this piece we have broken our commentary up into two main areas: east of the Drummond Range and west of the Drummond Range.
To provide some context for readers not so familiar with our regions, the Drummond Range is located between Emerald and Alpha, with the eastern side being not so affected by drought in recent years and the western side being very heavily drought affected, especially from Jericho west.
East of the Drummond Range: As the cattle market has peaked and interest rates are more likely to go north than south, we believe the property market in this region will begin to plateau. If values continue to rise without any further increase in commodity prices (very unlikely in the short to medium term based on global commodity pricing and the A$) the sustainability of these values would become highly questionable.
This being said there is currently very limited supply which will create strong competition until supply increases.
West of the Drummond Range: Most sales in 2017 showed mixed results as the potential buyer pool declined. The majority of potential purchasers, from the eastern and southern districts of Queensland where drought conditions have been less prevalent, are waiting for the season to break. Northern cattle producers, traditionally active in the central western Queensland land market, are rebuilding herd numbers after severe drought conditions and are not looking to expand at present.
Assuming widespread rains arrive (hopefully sooner rather than later), property listings could outstrip demand as many properties with limited feed supplies have been withheld from market.
However, while interest rates remain low and cattle (along with sheep and wool) prices remain strong, the fundamentals underpinning the property market should see values remain more resilient.
We believe the eastern and southern buyers will play a considerable role in absorbing supply as pricing in their local regions appears relatively inflated at $4500 to $6500 per adult equivalent versus $2500 to $3000 per adult equivalent.
We will politely reserve our comments on what may transpire if widespread rainfall is not received.
- Property editor, Linda Rowley’s Weekly Property Review returns from its summer recess next week.