THE rural property market is booming, closely aligned to the stellar performance of the cattle industry.
Speaking at the annual Herron Todd White industry breakfast in Brisbane this morning, Rockhampton based valuer Will McLay said there was a strong correlation between current boom values and the beef market.
The current boom is in marked contrast to the roaring property market experienced during 2006-08 when land values ‘decoupled’ from the profitability of grazing enterprises, Mr McLay said.
Compared to the market trough experienced in 2012-13 when unsustainable debt resulted in an notable increase in receiver sales, land values and returns were back in alignment, he said.
Prior to that, during the 1997 to 2004 period, the property market had also been closely aligned with farmgate returns.
“There couldn’t be a better time to be in the beef industry with low interest rates and high cattle prices,” Mr McLay said.
“However, the downside risk is that if there is a significant adjustment in cattle prices, property values could be affected.”
With cattle currently selling to meatworks in the mid-500c range, Mr McLay it was to be seen what impact a drop in prices to the 500c or 450c range would have. The rebuilding of the cattle herd and an increase in the number of sale cattle numbers in three or four years was also a serious consideration, he said.
According to HTW research Central Queensland had been the best performing region, recording gains of 30 percent compared to the 2012-13 market trough. Southern and North Queensland regions had increased 10-20pc during the same period.
Mr McLay said with some areas now experiencing a fifth year of extreme drought, upward pressure would continue to be placed on the value of properties with pasture. He said there had been few properties sold in the past 12 months without pasture. Those that had, including Inverness at Blackall, had still reflected the strength of the market and the relatively limited number of properties being put to the market.