Deteriorating seasonal conditions in southern Queensland have put significant negative pressure on the cattle market in recent months, and questions are now being asked whether land values will now level off, in response.
Writing in the September issue of Herron Todd White’s rural property market report, southern Queensland region valuer Stephen Cameron points to the recent decline in value of the Eastern Young Cattle Indicator, pressured by weather.
The EYCI today (27 September) reached 507.25c, down 211c or 30 percent from where it sat this time last year.
“No doubt the beef market has enjoyed two plus years of solid returns which has provided confidence to the sector and ultimately translated to strong property prices, but the question is now being asked on the back of weaker cattle market conditions whether the fundamentals are aligning for land values to now level off,” Mr Cameron wrote.
“Like any sound business model, with any weakening of business returns there must be some market shift to maintain the link between profitability and associated market risks.
Another influence in the market that has the greater potential to weaken market confidence was seasonal conditions.
“There isn’t any part of the southern part of Queensland that can boast to have had an exceptional season this year. If anything the market for Western Queensland and particularly the red mulga woodland hasn’t seen the same levels of land value growth in comparison to their more easterly neighbours, which can been put down to prolonged dry seasonal conditions.”
The Bureau of Metrology has indicated that for southern Queensland there is a 45pc to 50pc chance of receiving average rainfall between September and November, but a 60pc to 70pc chance of above median maximum temperatures for the same period.
“So with the weakening in cattle prices and poor seasonal outlook this may ultimately weaken confidence at the present level. Will this weaken property values? Maybe, but then if the market reacted to volatile commodity prices and poor seasonal outlook, the property market wouldn’t be where it is today, and hence must be viewed over a medium to long-term economic outlook.”
Property transactions for this time of year are historically down, and agents continue to report the lack of quality listings, Mr Cameron said.
Recent sales of note in the southern Queensland region included Mayfield, a 19,431ha holding 45km west of Charleville and bisected by the Quilpie Road. The property is a typical red mulga block with adequate building improvements and surface dams combined with reticulated bore water. Mayfield transacted off-market for $74/ha and was encumbered by a carbon project.
To the west of Morven, Glenba, a 6057ha soft red and chocolate buffel block has sold for $3.75 million or $619/ha ($250/ac) which continues to show the strengthening in the Morven/Augathella area after Mareto sold earlier in the year for $704/ha ($285/ac).