Farmland value index dips | My Machinery
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Farmland value index dips

NSW, Victoria and South Australia are producing the most optimistic results in a difficult market that has seen Herron Todd White’s (HTW) national farmland value index dip eight per cent in the past four years. Queensland and the Northern Territory in particular have paid the price for a big surge in rural land prices in the decade to 2008, encountering a noticeable post-GFC “correction” in land prices and sales activity and more lending sector emphasis on farmland earnings capabilities and cashflow. In fact the NT, squeezed by the 2011 Indonesian live cattle export bans and weight restrictions and farm debt pressures, had “no meaningful property sales activity at all last year”, said HTW’s rural director, Tim Lane. Based on the historical turnover volumes, the NT now had about five years’ supply of property waiting to sell, with a similar backlog building in Western Australia’s Kimberley region. “That may change if some sales go through and give buyers and sellers a clearer idea of what the market’s new value really is, but nothing’s sold for some time,” Mr Lane said. “Much of what’s for sale isn’t big enough to interest the institutional-sized investors, but is too much for neighbours to absorb given the sort of cashflow they’d need to service the extra debt and return a profit.” Poor earnings in the dairy industry were also behind a slump in sales activity in that sector Australia-wide, despite HTW finding that good quality farmland in safe rainfall zones generally otherwise represented the most sought-afterr country in the market. “The economics of dairying – costs faced by producers compared to the payments from processors – aren’t giving buyers enough confidence in being able to pay for new land investments,” he said. A buyer focus on quality property had seen an average 6pc lift in overall values of property of 2000 hectares or bigger on HTW’s industry index in NSW since 2008, and 10pc in SA. The national index trend was down 8pc. Queensland and NT were seeing lower quality country heavily discounted and driving overall values down about 10.7pc and 12.5pc respectively. In the decade prior to 2008 the HTW farmland price index recorded a jump of almost 18pc in Queensland values; 35pc in NT and 10pc in WA, compared to the national average rise of 15.5pc. “The Land” http://www.theland.com.au/news/agriculture/agribusiness/general-news/farmland-value-index-dips/2649306.aspx

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