A combination of ageing farmers wanting to retire, banks reluctant to lend and city investors sitting on their hands has led to a sales stalemate across much of the rural property market.
According to national property valuer, Herron Todd White, the impact of these influences has been most apparent in the reduced volume of sales activity, although prices also are coming under pressure.
Addressing the company’s annual rural property market briefing in Sydney, Tamworth-based HTW consultant, Robin Gardiner, said a “two-tiered market” was emerging.
Values were holding more or less firm for properties at the top end of the scale – especially in high-rainfall and pastoral areas – but the “run of the mill” family-type farm was under pricing pressure.
“The reduced number of buyers in the market today are much more discerning in their property selection and there is no urgency for them to act,” he said.
So-called “second tier” properties in NSW had broadly suffered a price check of between 10 and 20 per cent from the market peak, which had occurred in 2008 in the north, and 2007 in the south.
But more dramatic had been the fall-off in sales volumes from the peak trading years of 2001-03: these had dropped by 37pc to 38pc by 2009 (see right).
Mr Gardiner said market conditions varied across the State, largely reflecting seasonal conditions of recent years and buyer perceptions of future seasonal prospects.
In northern NSW, the median price of rural property (based on reported sales statistics) was holding at 2008 peak levels, helped by mining company purchases on the Liverpool Plains and around Dunedoo.
The median price in central NSW was also holding at 2007 peak levels, although this was due largely to the firm demand for western pastoral properties.
Mixed farms in the wheat/sheep zone had fared less well.
Not surprisingly, the median price in southern NSW had fallen by 16pc from the 2007 peak, reflecting the financial impact of prolonged drought and low water allocations.
It’s been a similar story in Queens-
land, where values since the 2007 peak have fallen across the board by five to 20pc, according to Darwin-based HTW rural valuer, Frank Peacocke.
But he said that drop had come after a value hike of between 2.5 and 3.5 times since 2000, much of it occurring in the buying frenzy that followed the Stanbroke Pastoral Company sell-off in 2003.
Mr Peacocke said the price levels established for Queensland cattle country by 2006-07 had clearly been unsustainable and a correction had since been underway.
He said a significant change was that lenders were now focusing on a property’s productive capacity when assessing a finance application, rather than on its prospects for capital growth.
As for 2010 prospects, Mr Gardiner said the present market “softness” was likely to continue, with values either holding or easing further, depending on vendors’ urgency to sell.
Factors influencing the market, apart from the season, would include commodity price movements and government policy responses to climate change.
He said a recovery in commodity prices, especially for grains, would be dictated not so much by world population growth as by rises in per capita incomes in developing countries.
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