Weather News

Drought not denting NSW farmland values as buyers scout property with promise of rain and water

Tim Fookes, Cara Jeffery, Joshua Becker, Lara Webster, Mike Pritchard, Olivia Ralph and Michael Cavanagh, Monday December 16, 2019 - 11:50 EDT
ABC licensed image
Agents say there are still many inquiries for farmland in the New England region. - ABC licensed

Farmland values across drought-ravaged New South Wales are managing to remain strong as farmers search the state to buy property with guaranteed water supply and the promise of elusive rainfall.

Despite dry seasonal conditions leaving paddocks bone-dry and dams empty, real estate agents were surprised the property market still remained strong, with farms being snapped up.

Despite the central west town of Forbes suffering like so many others from the drought, real estate agent Ainslee Toole has never been busier.

"Most people would assume that it is hard to sell farms at the moment, but our sales are up 30 per cent for what we would normally sell at this time of year," Ms Toole said.

"The values for farms going on the market have actually increased from where they were three years ago, before the drought," she said.

Ms Toole said there was a range of interest, including corporate buyers and those from northern and western NSW keen to move to properties closer to larger regional towns with better facilities and the potential for reliable irrigation when the drought breaks.

"While listings are down, what is going on the market is selling better than in a normal year," she said.

"Properties with underground water supplies are proving particularly popular and when a farm goes up for auction, most of them sell immediately or shortly after.

"Most vendors are achieving the asking price or very close to it, it is surprising how well the market has held up."



Family farmers expanding

In northern New South Wales, properties with good water infrastructure were also proving particularly popular with buyers.

Agent Daniel McCulloch from Tamworth said he was fielding a lot of inquiries for farmland, with the majority of interest from family farmers looking to expand their operations, as well as superannuation companies wanting to invest in land or those waiting to pick up a bargain.



"A lot of the big-ticket items is rainfall and water, they have never been so sought after," Mr McCulloch said.

"When we are inspecting properties, the dams are dry so they're wanting to know if the property has got bores and if it has the capacity, depths and how long they've been in use.

"When the dams are full, people do not really pay too much attention to the bores," he said.

Mr McCulloch said one upside to buying in a drought was purchasers can see farmland at its absolute worst. But there were also downsides.

"A general term we use is that you are seeing it nude, which is quite true because you are seeing every rock, every bone, every fence that's bad," he said.

"The disadvantage is that you can't compare how good or bad it is to another place, when it is bare like it is now, you can't pick out the good from the bad."



In the north-west of the state, agents describe the market as "look but don't touch just yet".

While transactions were down by about 20 per cent, Narrabri-based agent Michael Guest said inquiries were still strong.

"Values are holding to slightly dearer, but it all hinges on rain," he said.

"There's inquiries for all types of property but people are waiting for a break in the season and people need an income to borrow money."


Hesitant to sell during drought

Drought, fires and major water issues had failed to dampen buyers' enthusiasm for agricultural land across the Hunter region.

Enquiries had been steadily rolling in to property agents despite the raft of drought-related issues.

Interest ranged from farmers wanting to expand, corporate investors and others keen for a lifestyle block — including those looking for hunting blocks.



Scone agent Gavin Beard said most of these had been for small holdings, and said the region was not having the larger holdings that would suit the corporate world.

"Of the larger holdings sold off over the past few years, the Chinese have been a major player, buying mostly cattle properties in the upper Hunter," he said.

"Buyers that are showing an interest are more concerning wanting information on how much water is available and what the flow rate is for any bores on the properties."

Agent David Carter noticed farmers had adopted a conservative approach and were waiting for the drought to end and for a recovery period before considering their options to sell or to expand.

"That is unless they are forced out of agriculture through economic pressures rather than leaving at a more favourable time of their own choosing," Mr Carter said.

"This forms the basis of the ongoing realignment process underway in Australian agriculture with the necessary and continuing process of assimilating smaller farms into increasingly larger, more supposedly productive and more efficient businesses.

"There's also agriculture-finance experts suggesting today's funding discussions are very different to what they were six to 12 months ago, for two key reasons: banks' exposure to drought-impacted borrowers; and post the banking sector royal commission."

Farmers looking south of the border



Frustrated and depleted from the foot and mouth disease outbreak and aftermath in the United Kingdom, Kevin and Gina Feakins uprooted their wool and horse breeding enterprise half way across the world to the NSW northern tablelands.

Months of planning and due diligence, scouting locations right up the eastern seaboard, led them to Glen Innes, ironically because it never seemed to be affected by drought.

"We made several survey trips and every time we would come through there it always looked extremely well," Kevin Feakins said.

"The area around Glen Innes was considered one of the safest in NSW, as far as rainfall and grass growth was concerned, and it is stressful to see the way it's going. It's all on fire."

At its peak, the Feakins' Glen Innes property was running more than 2,000 sheep, as well as a few hundred cows and horses.

But after 11 years, and staring down the barrel of one of the worst droughts in the state's history, they decided to pack up and move again.

"By Christmas last year, we'd had to kill a lot of our animals off because we didn't have the feed," Mr Feakins said.

"The stress and the hardship of facing that drought, that really came home to us."

Down to their beloved horses, 800 sheep and a few cows, the Feakins began again, 1,400km south in Warrnambool, Victoria.

"We don't have roots in Australia — for us, it's easy to just pick up and go," Ms Feakins said.

"If we'd stayed in Glen Innes, we'd have no animals. We moved for the right reasons and we think at the right time."

Their neighbours back in Glen Innes thought the decision was too hasty, that the drought was temporary, and before long everything would come right again.

But, 12 months on, the couple watched in horror as flames engulfed much of the northern tablelands.

"We just feel extremely sorry for the farmers back in Glen Innes, they're going through something they've never been through before and it's extremely distressing to see them struggling to survive," Mr Feakins said.

"And while we are on a lot less acreage, it is is much more productive because you're getting the rain and you're growing the grass and the feed all the time."



Coastal rain no longer a guarantee

On the NSW mid north coast, dry conditions are often referred to as a "green drought".

Despite low rainfall, to the uninitiated, travelling through there is usually a green belying the lack of water.

This time, in many areas the terrain is stark and brown because of little or no rain, which has primary producers reeling like their counterparts across the state.

The region traditionally has been the destination for farmers from other parts of the state looking to buy property as a safeguard for their primary properties over the range.

Many of the farms in recent times have been bought by couples soon to retire, financing them by selling their larger holdings elsewhere in the state and moving to a more reliable agriculture region.

Port Macquarie Hastings Rural Sales principal Peter Richards has been handling property sales across the region for 22 years.

"There is a heap of big money coming through. It is cash. They didn't need the banks," he said.

"It is largely people who managed to sell their holdings from out west.

"I've never known so many people wanting land for agistment.

"They are desperate both locally and from elsewhere because they need feed, predominantly for beef."

Farmers want in on Riverina's reliable rainfall

A blueberry farm, an island property on the Murray River, landmark homesteads, dairy farms, traditional grazing and broadacre enterprises are among the properties on the market in the New South Wales Riverina at the moment.

CBRE agribusiness director Tim Corcoran, based at Wagga Wagga in southern NSW, said high rainfall was currently driving property sales, with farmers from western and northern NSW keen to secure mixed farming land in the south-east of the state.

"In the last couple of years, we are seeing a shift to more people seeking out water security — whether that be high-security water, ground water or higher rainfall — just to get through these tougher times with less heartache," Mr Corcoran said.

"Ideally, the best scenario is for them to keep both properties and not sell their western or northern country."

Mr Corcoran said it was not surprising farmland values were hitting record highs in the Riverina during this dry period as high commodity prices were helping hold the market up.

"A big motivation for vendors — particularly for those who are retiring or succession planning — is to sell, as it is unknown how long this market spike is going to last," he said.

Mr Corcoran said mixed-farming properties were most in demand in the Riverina because they enabled farmers to diversify their operation and split the risk.

He said top dollar was being for farmland around Wagga Wagga that was close to services including schools.

He said south of Wagga Wagga, land around Holbrook was in demand for its higher average annual rainfall — 600 millimetres — and its location to major service centres Wagga Wagga and Albury.

Properties at Tumut and Tumbarumba were also being sought for their more reliable rainfall.

Mr Corcoran said most farmland in the Riverina was being bought by large local families that were expanding their enterprise to accommodate another generation.

He said prices per acre had lifted in the past 12 months, cropping country at Ardlethan — where annual rainfall was about 450 millimetres — were making up to $1,850/acre now, whereas last year, it was more around $1,550/acre.



He said tightly held mixed farming land at Junee was making $4,000/acre, and grazing country at Holbrook was making upwards of $4,500/acre.

"Vendors definitely aren't complaining about the money they get for their country at the moment and they are often achieving above expectation," Mr Corcoran said.

However, he expected property prices could plateau in the new year if the drought continued across the state.

"I expect there could be more farms hit the market and it will be a supply-and-demand situation for price," he said.

Lack of water forces dairy farms onto market

In the southern Riverina region, where the general security-water allocation for irrigation farmers was zero per cent, a number of dairy farms were sold this year.

Elders real estate manager for the Riverina Matt Horne, based in Deniliquin, said several dairy farms had been sold to mixed farmers and croppers for fodder and beef production.

However, he said there had been a change in recent weeks, with more inquiries for dairy farms to remain as dairy operations.

"We have just sold a dairy farm to farmers from Warrnambool in Victoria, who are moving north to the Riverina to milk a Jersey herd," Mr Horne said.

"If we can get back to reasonable seasons, there will be some more dairy-sale activity through the Riverina and northern Victoria."

Mr Horne said broadscale cropping, pastoral country and irrigation country supported by bore water were currently the most sought-after properties at the moment.

He said high prices being paid for wool, lambs and goats had brought a wave of buyers from Wilcannia and Broken Hill to invest in southern farmland around Bunnaloo, Wakool and Deniliquin.

"They are looking for properties to run younger stock on, which have bore-water irrigation," Mr Horne said.



Mr Horne said despite the dry conditions, property prices were holding up well, and this year was a better selling season than 2018.

"Over the last four or five years, it would it would be safe to say that land prices have doubled in some areas of the Riverina, with strong commodity prices and low interest rates having a big hand in that," he said.

He said irrigation country around Deniliquin and Finley was selling for about $2,000 an acre and pastoral country was selling for $300 an acre.

"Whether it is going to plateau off in time is anyone's guess, but while there is an appetite for aggregating land, I think that it will continue to trend upward," Mr Horne said.

"No matter what part of Australia you go into at the moment there are less listings on the market, but come autumn around sowing time, I think you will see quite a number of properties listed."

Buying farms with a different climate

Rather than buying the farm next door, more and more farmers are looking to spread their risk by looking further afield.

Farmers on the NSW south coast are buying properties in the Snowy Mountains with more reliable rainfall, to manage the ongoing drought.

Dairy farmer Greg Heffernan is based at Candelo in the Bega Valley, and he and his family recently bought a farm 250 kilometres away in Khancoban on the NSW and Victorian border.

He said farming in different climatic zones had given them more options to manage their livestock.

"You could buy the farm next door, but when you are in drought, next door is in drought," Mr Heffernan said.

"It's worth looking a little bit further outside the valley, I think it is a better risk — they could be having a good season while you're having a tough season.

"Khancoban is in a pretty good rainfall area, a lot of the paddocks are dam fed and the troughs are gravity fed from the dams, so we don't have to worry about things breaking while we aren't there."



Toad Heffernan works in partnership with Greg and he said after leasing the property in Khancoban for eight years, buying the farm was an easy decision.

"Right now, there's not a blade of grass on our dairy farm, we're trucking in every ounce of feed," Toad Heffernan said.

"Whereas, over at Khancoban you're guaranteed a winter, it gives us the opportunity to lock feed away and relieve pressure on this farm.

"We bought 400 acres with two houses on it for $750,000 and we also lease a 600-acre bush block next door, and I reckon it is the best decision we have made in a long time."

#alertme


- ABC

© ABC 2019

More breaking news

Sydney Morning Herald
ABC News
National Nine News
News Limited

Display Your Local Weather

Weather News

Flash flooding on Gold Coast and Brisbane sparks calls for help as storms sweep Queensland

15:46 EDT

Dangerous storms described as a one-in-100-year event have swept through South-East Queensland overnight and into the morning, dumping heavy rain and causing flash flooding in parts of Brisbane and the Gold Coast.

WA convoy carrying thousands of donated hay bales heads to NSW to help bushfire-affected farmers

14:40 EDT

A convoy of almost a dozen trucks stocked with more than 2,000 bales of donated hay and fodder and a raft of supplies like clothes, blankets and nappies is heading from south-west Western Australia to help farmers in fire-ravaged areas of New South Wales.

BOM says more rain on way for Sydney as country creek flows for first time in five years

07:37 EDT

Water has flowed through a creek in drought-ravaged northern New South Wales for the first time in five years with more heavy rain and thunderstorms expected to hit the state over the weekend.