December 10, 2012
The pulse is returning to South Australia’s rural real estate market, thanks to low interest rates, more realistic vendor reserves and at least an average harvest to entice buyer enquiry. There has been a higher success rate at auction during the spring selling-season than last year, especially where properties are pitched at market rates – although values in many areas have fallen off the highs of three years ago. Post-harvest agents are hopeful of further buyer activity particularly for cropping land as grain cheques flow in. Last week the State’s dearest rural property for the year was the 6876-hectare grazing property Glenstrae at Willalooka in the Upper South East, sold at auction. It is believed to have made more than $9 million, putting it in line with pre-sale expectation of $320-$350 a dry sheep equivalent. Landmark Harcourts SE real estate manager Simon McIntyre, who conducted the auction, said it was a positive sign for the marketplace. Bidding opened at $7m from a crowd of 80 and rose to $8.8m before negotiations with the highest bidder. The successful buyer was an undisclosed southern New South Wales farming business which had previously owned land in pastoral SA. “The vendors were very pleased with the result,” Mr McIntyre said. “In that price bracket there is always a more measured level of interest, but in properties of that scale there is also more scope, and the buyers were looking for good grazing land in a reliable area.” There had been a noticeable lift in enquiry in the past few months from those who believed the time was right to invest in rural land. “The global financial crisis has changed everything, particulaly banks’ attitudes to lending but in the marketplace where people are setting realistic targets they are getting outcomes,” Mr McIntyre said. Elders real estate sales executive for SA Phil Keen said the company’s sales volumes were similar to 2011 and while there had been enquiry, there was still no “excitement” in the market. He expected that several of its expression-of-interest listings would be sold in coming weeks, and plenty of vendors had understood the need to meet the market. Properties were taking long periods to sell and many potential buyers were going to their banks first, rather than putting in an offer subject to finance. “There is no doubt banks’ lending criteria has changed with more focus on their ability to repay rather than just having the equity,” Mr Keen said. In the Mid and Lower North, Ray White rural real estate specialist Geoff Schell said the dry spring had put a dampener on the market, describing buyers as cautious. “In July and August things were looking good but with September and October very dry buyers have been a little subdued,” he said. Mr Schell said there had been a change in recent years in buyer attitude to be more “season responsive” when viewing land purchases. Although in most cases this is a long-term investment, buyers were placing greater emphasis on income potential for the immediate season and considering cash-flow to support a new land acquisition.