The HFE Aggregation at Lock on SA’s Eyre Peninsula sold recently to local interests in what has been a remarkably quiet period for SA listings and sales due to dry conditions. Photo: Ray White Rural

THE SOUTH Australian rural property market is in a state of paralysis as dry seasonal conditions grip large parts of the state.

Nutrien Harcourts SA manager Andy Edwards said the lack of rain is problematic from a confidence and property presentation point of view.

“The season is making everyone nervous, including lenders, and as a result, they are adopting a wait and see attitude.

Mr Edwards reports property prices are holding up.

“There is no evidence to suggest values are reflecting the current state of the season; however, there have been no recent sales of note.”

Mr Edwards said there is a lack of want based on the season but, at some point in the future, there will be a reaction.

“Rain will give both buyers and sellers confidence and the market will see increased listing activity.

“Hopefully, it will be more of a traditional spring selling season even if we do have average rainfall across winter.”

Mr Edwards said if there is any upside to report in the light of the current seasonal conditions, producers who are destocking are achieving good commodity prices, and these are likely to continue moving north.

Adam Chilcott, Elders

Elders state manager Adam Chilcott said typically in SA, most of the activity occurs in the first quarter, prior to sowing.

“A cropper or a mixed farmer needs to know what they are doing for the coming year, regardless of the rainfall that may or may not arrive,” Mr Chilcott said.

“They need to order seed and fertiliser and prepare for rotations.”

Mr Chilcott said properties are still moving, but price expectations need to be realistic and transparent.

“If vendors are unrealistic, buyers may not participate in areas that have previously experienced strong runs.”

“Many financiers have a big say in what their customers or clients are willing to pay for assets, with the amount of scrutiny on property acquisitions far greater than in the past.”

Mr Chilcott said some areas of SA have experienced a price contraction.

“Elders data shows after four to five strong years on the Eyre Peninsula, the level of buyer activity has slowed and there has been some pull-back in terms of pricing.”

When livestock prices came under pressure in recent years, Mr Chilcott said properties in the South East were the first to fall back after achieving staggering highs.

“At present, areas in the Mid North and further north are very much challenged by the current seasonal conditions, and only opportunistic buyers are willing to have a go.”

Mr Chilcott said while the dry is impacting confidence to an extent, there are still some positive outlooks including interest rates and commodity prices.

“There is a level of optimism, but it is cautious.”

Grant Schubert, Elders

Robe-based Elders agent Grant Schubert said the South East is dry with a bit of a green pick, with some rain forecast.

“The region just needs 15-25mm; if we could get that, we would have a lot of smiling faces, and it would show banks, buyers and landholders that it can still rain,” Mr Schubert said.

“This week, 15mm fell at Kingston that wasn’t forecast, on the back of some rain the previous week, and the mid South East has received 5mm with another 5mm forecast.

“However, north of Adelaide, it is very dry, which makes it hard going for farmers and difficult to stay positive.”

Mr Schubert said the weather is starting to get cold.

“There is no real sub-moisture now and some crops that were sown in the mid to upper South East after early rain have already been lost and may be resown.”

This 444ha property at Lucindale in SA’s South East includes irrigation, and has just sold to a local family to expand its existing operation. Photo: Elders

In terms of property listings, Mr Schubert said they are light on, with just a handful for genuine sale, such as because of retirement, or from deceased estates.

“Lenders are nervous and buyers, who are sitting back and watching the market, are in no hurry to act.

“A number of properties are in the pipeline waiting to list in spring, regardless of the season.”

Mr Schubert said the dry season is not impacting property prices.

“The heat has already come out of the market and prices are steady.

“The general feeling is the longer the dry goes on, the closer we are to having a good season.”

Mike Lind, Elders

Keith-based Elders agent Mike Lind, who covers the state’s upper South East, from the Victorian border west to Murray Bridge and down to the Coorong, reports a cautious property market.

“It is quite dry and the rain has been patchy,” Mr Lind said.

“As a result, potential purchasers are holding off, waiting to see what the season will bring.

“Banks are also being cautious on the money they lend.”

Mr Lind said while many vendors are willing to sell, interested parties are reluctant to pull the trigger until it rains.

“At this stage, the market is in limbo.

However, if the dry conditions continue, there may be an influx of properties offered to the market.”

Mr Lind explained last year, croppers in the Mallee lost $1 million in crops and this year, some farmers are planting crops dry and are hoping for a return.

Hay prices in SA’s South East are reportedly commanding $550-$600 a tonne.

Mr Lind said many larger operators have spent more than $2M feeding their cattle over the past two to three months.

“These producers haven’t had the option of destocking because livestock have been heavily pregnant, or they have had young at foot.

“Also, many who have held their lines for generations aren’t prepared to let them go.”

Phil Schell, Phil Schell Real Estate

Phil Schell Real Estate principal Phil Schell said seasonally, SA has not experienced anything like this before.

“It is late May and the growing period for canola, lentils, beans or hay is disappearing.

As a result, many farmers are changing their management plans.”

On the property front, Mr Schell reports a lack of stock albeit some sales.

“Most people are stepping back from selling and are sitting on their hands waiting for spring to see what the season does: Why would you go to market
now unless you have to?”

“Over the coming months, the property market is usually quiet due to winter cropping in South Australia and that will flow on to grazing properties due to
the cost of feed and hay.”

Mr Schell predicted tough times ahead but urged producers to look outside the box.

“Producers many need to consider changing the way they do business over the next 10 years, and diversifying into carbon should be part of that discussion.”