A combination of skyrocketing cattle prices and sustained low interest rates have been credited for a series of record-breaking property purchases in northern Australia this year.
Many of the properties were purchased by Australian grazing families, including the $53 million sale of Wollogorang and Wentworth Stations in Northern Territory from a Chinese investor to the McMillan family from Cloncurry.
In contrast, Chinese investment in Australian agriculture has been declining due to changes in the Foreign Investment Review Board and an ongoing trend in recent years.
Heron Todd White rural property valuer Roger Hill said the record sales were driven by high cattle prices and sustained low interest rates.
“The cost of capital has never been cheaper and the price of cattle has never been as good,” Hill said.
“If it’s well-fenced, well-watered, in good land condition, and in good condition around your buildings the market will reward you.”
Hill said about 30 rural property transactions in north Queensland should have settled by the end of the year, which was in keeping with the average.
“There’s a reasonable number of properties coming on the market and there’s a reasonable number of them selling,” he said.
“It’s interesting to note that, throughout this year, there have been one or two places that didn’t sell.”
New investors to the market
Despite most of the purchases this year coming from large families expanding their operations, Dustin Keyes and his brother, Nathan, managed to buy their first property.
Keyes said the purchase came after about 20 years of building a cattle herd and raising the capital to pick up the finance.
“Every year when we went to look at a place, the market was 5 or 10 per cent above where we were,” he said.
“At the beginning of the year when the cattle prices went through the roof we had a few stockpiled that we’d bought for a lesser rate over the years.
“We got good money for them, put a bit of cash together out of that and were able to put a deposit on a block.”
Prices continuing to rise
Keyes said he had to go above what they had considered market value to break into owning land.”What we paid for that place is probably the norm now, but 12 months ago we thought it was well and truly above,” he said.
“It’s probably 30 of 40 per cent above what they would have paid for that place three years ago.”
Keyes said with the rural property market continuing to rise and not as many places being advertised to the public, the pair had doubted if they could own a station.
“A lot of cattle properties, in this region especially, aren’t sold through the papers or through auction. They’re just sold to the neighbours or their friends,” he said.
“You’ve got to be in the know.”
Careful investment still needed
Don McDonald from Devoncourt Station, near Cloncurry, is the head of one of Queensland’s largest privately owned cattle companies.
McDonald said while the low interest rates had done their job and facilitated investment, buyers still needed to be careful.
“We used to look at interest rates less than 10 per cent but it’s right down to the bottom now,” McDonald said.
“These interest rates aren’t going to be here forever and you’ve got to think of the long term and when you’ve got to pay the interest at higher rates.”
McDonald said, along with the purchases of new land, many people were investing in their own operations.
“They’re doing up properties, doing more improvements,” he said.
“It’s terrific to see the industry back in a good state, where people can reinvest and have confidence in reinvesting.”
– ABC / Eric BarkerJump to next article