Rain prompts action in northern NSW property market

Liz Wells, May 5, 2020

The Merrimbla Aggregation at Gurley has sold locally through an expressions-of-interest campaign. Photo: Moree Real Estate

THE northern half of New South Wales is pulling out of its longest and fiercest drought in living memory, and rain since December has seen its market for cropping and mixed-farming properties kick into gear on the remarkable turnaround in the season.

While COVID-19, and a gentle credit squeeze brought about by last year’s banking royal commission, are having an impact in parts of the property market in the short term, the outlook for cropping and mixed-farming properties is seen as buoyant overall.

Vendors vary

Farms now listing in northern NSW are coming to the market for a broader range of reasons than normal.

Impending retirement, a change in career away from farming, and restructuring of family partnerships are among the regulars.

Financial pressure after up to three years of drought is causing others to offer part or all of their properties for sale, seek leaseback arrangements to help rebuild their equity, or find lessees to shoulder operating costs.

Those ready to buy are mostly coming from within the wider region.

Some have significant off-farm investments, or have managed to grow some cash crops on limited rainfall since 2017, while others have made money through lotfeeding sheep and/or cattle.

Trading and carting hay and grain for drought-feeding, and contracting with or without plant have kept other operations rolling.

AMPS Moree-based agronomist Tony Lockrey said some farming pockets of north-west NSW were still “a bit light on” for moisture, but most were are in good stead as winter-crop planting advanced.

“Some businesses are under some cashflow and equity pressure, and others are in a good position to expand,” Mr Lockrey said.

“A few have scraped through the drought realising they need to have more equity, and a few families are exiting because their kids aren’t keen to carry on the program.

“Others are short on cash and don’t want to take on the operational risk of farming.”

He said families and individuals looking for expansion of existing farming area had been the volume buyers in recent times.

No forced sales

Sources including Nutrien Harcourts Dubbo-based agent Mat Smith have told Grain Central there was no indication of banks forcing mortgagee-in-possession sales.

“We’re not hearing from banks asking us what the market’s doing and what the values are, and that’s usually the first indication,” Mr Smith said.

“However, there’s certainly some pressure out there, and some chat about banks capping their borrowings.”

Following a massive destocking across northern NSW because of drought, the region now has a huge body of feed available.

This has enabled some mixed farms that cannot afford to restock to take on agistment for landholders who are still in or close to drought, or for livestock traders.

“People have been able to take on agistment cattle and that’s eased pressure.”

Sound investment

Mr Smith said the scope and severity of the drought has eroded farmers’ equity in many cases, and transferred more risk to banks.

“The drought dragging on as long as it did gave the bank the risk on the season as well.”

Offsetting that is the positive outlook for agriculture compared with other forms of investment.

“Money’s cheap and the confidence in ag is enormous.

“If you put your money in the bank, you’ll get half a per cent per annum, whereas 5-7 per cent looks like a realistic return for a season that’s somewhere between great and reasonable.

“If everything’s done right, you’ve got the best opportunity to make as good a return as we’ve seen for years.

“All commodity prices are strong, and there are record lows in stored grain.”

COVID limits access

COVID-19 restrictions have stopped overseas interests from being able to physically inspect properties, and limited the ability of interstate inspections also.

However, entities which have inspected properties pre-COVID, or have been able to enlist someone in proximity to the region, are still very much in the market.

While agencies are using social-distancing measures to enable physical property inspections, and technology for virtual ones, inspections are down in some areas on what would normally be expected with a return to excellent seasonal conditions.

Mr Smith said COVID was limiting the amount of potential inspections.

“When you take a client’s property to the market, you want to put it in front of everyone that’s interested.

“With restriction on travel in place because of COVID, that’s not the case now.

“The majority of agents, including myself, are holding back a significant portion of properties because we’re hesitant to take them to the market in this environment.”

“We’re getting some ready to list now.”

“It’s going to be an awesome spring.”

Moree Real Estate principal Paul Kelly said the positive turnaround in the season has helped to sell listings old and new, and COVID was not having an impact.

“Our market is going pretty well,” Mr Kelly said.

“We’ve got some old stock that’s starting to shift, and some new stock coming on.

“The drought was our biggest stifle and now that the crop’s going in, the job looks pretty good.”

Local, cash advantage

Rural Property NSW principal Michael Guest said most blocks and farms selling in the Narrabri region were staying within district hands.

“There are some investors out there, but principally it’s farmers expanding their operations.

“I’m not seeing more listings than normal, and good farming places aren’t in overabundance on the market.”

Mr Guest said that was unlikely to change now that crops were being planted into full or near-full subsoil moisture and at the ideal time as grain prices remained high.

“I think we’re right on the cusp of a very strong time.

“Where do you put your money? Agriculture.”

The 466ha North Avoca in the Maules Creek district near Narrabri is for sale for $2 million and is leased until March 2021 with a return on investment of around 4pc. Like nearly all farms in NSW, its winter crops are in ahead of or on schedule following excellent recent rain. Photo: Rural Property NSW

A number of agents told Grain Central cash sales were dominating on smaller blocks which prior to the drought often did not make it to market.

“They’d sell to neighbours as an over-the-fence job,” one agent in north-west NSW said.

Now that neighbours may not be in a position to buy a block they have had their eye on, these are being advertised.

“If you had one offer subject to finance and one in cash in hand, you’d be advised to take the cash in hand one if the difference was $50,000 or $100,000.

“There is activity in cropping country, but there won’t be a hell of a lot shifting until the season proves itself.

“It’s the aftermath of the drought.

“It’s rained, but it hasn’t rained money.

“Until harvest comes and stock numbers are up, we won’t be back to where we were before the drought.”

Recent activity

Rodney and Vicki Jericho have recently sold Merrimbla, a prime 2831-hectare cropping property at Gurley, to a neighbour.

Near Moree, the 876ha Willalee at Bullarah and the 2687ha northern portion of Dolgelly Station at Garah have sold in recent weeks to local interests.

A 1289ha leased part of Carlingford at Garah has been sold to corporate interests.

Around Narrabri, places are also changing hands, with the leased 854ha Old Edgeroi selling to an existing operation within the district.


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