Southern Zone Rural Property Update
Elders this month released its half year results for the six months to 31 March 2017, again delivering an increased statutory and underlying profit, and solid progress on FY17 priorities. The Company’s Real Estate earnings improved with high farm land property turnover.
Elders Southern Zone Real Estate market continues to experience buoyancy across most sectors, with strong commodity prices ultimately underpinning the demand for rural property. In a general sense, beef, lamb and wool have been ‘instrumental contributors’, providing outstanding returns to producers, which are ultimately being reflected in land prices. Many areas throughout South Australia, Victoria and Southern New South Wales have experienced record pricing per hectare as a result, with new benchmarks continuing to be set.
Demand for cropping land in the broader grain belts has also continued to strengthen despite an increase in global supply placing downward pressure on cereal prices last season. Notwithstanding the price reduction, the higher than average yields, exceptional pulse and legume prices and favourable seasonal conditions have reinforced the confidence in grower demand, which in turn has reflected positively on land prices.
Most of South Australia has had opening rainfall principally from sub-tropical moisture from northern Australia, not the traditional Autumn SW weather pattern. Pastoral areas in particular had good rain. The rainfall has been erratic with most of Eyre Peninsula and some of Yorke Peninsula missing out on any significant rain. The Bureau of Meteorology (BOM) are predicting a very wet June in the state with well below average rainfall in July and then below average rainfall through to October. Most areas are underway with broad acre cropping programmes. Feed conditions in the pastoral zones is positive, whilst still short across most other areas except for the lower South East.
Most parts of Victoria and the Riverina have welcomed early seasonal rain and are well under way with their respective winter cropping programs, notwithstanding some isolated delays in certain areas due to excessive weather patterns. Pasture growth has benefitted from the early autumn break as germination temperatures have remained favourable and access to early feed will assist livestock producers heading into the winter months.
There are multiple factors contributing to the strength of the current market, including a favourable $AUD, low interest rates, exceptional commodity prices, heightened competition between a larger pool of buyers (both local and foreign), volatility in the equities market and an overall lack of quality stock being presented.
Phil Keen, Elders Real Estate Rural Manager SA/NT says; “strong commodity prices have certainly influenced land owners to continue capitalising on the buoyant conditions, and in turn hold their assets.”
Nick Myer, Elders Real Estate Manager Victoria & Riverina says that in light of alternative investment options available, agricultural assets have proven to outperform other asset classes, which in turn is equating to enquiry from a range of investors wishing to capitalise on available opportunities.
“We are currently working with numerous clients in preparation of presenting their properties to the market in early spring,” he said.
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