DEPENDING on where you were, 2009 was either an excellent year – even, in some cases, a record year – for property sales, or one best forgotten.
It was a year that saw the rural property market in NSW become more than ever a two-tiered one, characterised by strong demand for certain land types and locations, and limited interest elsewhere.
Demand from established farmers – traditionally the lifeblood of the market – remained subdued in most areas, reflecting the run-down state of finances and a tightening of bank credit.
Worse, the city investors whose appetite for rural property largely fuelled the market boom of the mid-2000s were missing in action, still licking their wounds from the global market’s collapse of 2008.
But offsetting this to some degree was demand for quality farmland from institutional investors – a trend expected to gather pace in 2010.
Among the latter, leading players in 2009 were Michael Hintze’s MHFP group, and Sustainable Agriculture Fund, whose combined purchases in the North West and the South West Slopes grossed some $50 million.
Sales of $10m-plus in NSW were a rarity in 2009.
Featured in The Land were “Roto”, Hillston; “South Tahara”, Wagga Wagga, and “Kia-Ora”, Walgett.
Perhaps more symptomatic of the market was the parade of high-profile properties offered but not sold, such as Raby Station, “Ruvigne”, “Murrumbo” and “Merri Merrigal”.
Value trends were dictated largely by supply factors, which in turn reflected the State’s seasonal vicissitudes: a reasonable season in the north, and worsening drought in the south.
A shortage of quality listings, especially of farming country, in the more favoured north of the State kept upward pressure on prices, while a dearth of buyers and some forced sales saw a softening of prices in other areas.
Another indication of the difficult market is the Statewide auction clearance rate, currently running at a low 25 per cent for the year to date.
This low clearance rate – down from a high of 60pc in 2006 – was made worse by the fact it was calculated on a below-average number of listings.
According to valuers, Herron Todd White, the clearance rate would have been lower still if listings had been at levels comparable to previous years, but many had been withheld due to the lack of market interest.
It said negotiations underway on a number of properties in central and southern NSW indicated a softening of values up to 20pc, while in the north values appeared to be holding at the levels of 2007-08.
Herron Todd White blamed the low clearance rate on the widening gap between the perceptions of buyers (seeking value for money) and vendors (many still wanting 2007 prices).
Agents are generally optimistic about the future trend of land values – even those in areas now being discounted – but they say sales activity will remain subdued until seasons and farmer finances improve.
As veteran Dubbo agent, Peter Milling, put it, “The ‘bread and butter’ buyers are just not about: the bloke who would come in wanting to buy a 2000-acre property up the road.
“Established farmers, who have always been our main buyers, will need to recover financially from the drought before they return to the market, and city-based buyers appear to be a thing of the past.”
Chris Meares of Meares and Associates in Sydney predicted a continuing scarcity of good property listings, resulting in values remaining strong at the “top end” of the market.
But, he said properties that lacked economic scale or carried the taint of a forced sale could suffer a discount in the present market of 20pc to 30pc.
He said investors were wary of sinking money into assets that were subject to government policy switches, like water entitlements, and this was driving demand for good dryland properties with reliable rainfall.
Philip Jarvis of Philip Jarvis and Associates in Armidale, whose sale of “Glendon”, Glen Innes, earlier this year was a New England market high point, saw more “big deals” looming.
“Global food security will come increasingly into play, and we will see more properties being picked up by non-traditional buyers (like offshore funds),” he said.
Landmark’s NSW real estate manager, Phil Rourke, saw local investors also returning to the property market next year, their confidence restored by the 2009 share market recovery.
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