Farm sales tipped to rise

Optimistic outlook: Alan Steenholdt and Andrew Newton of Alex Scott and Staff, Leongatha, are anticipating more rural sales.

FARM sales are gaining pace despite low commodity prices and the high Australian dollar casting an air of caution over buyers.

Real estate agents reported some sales in recent months but predominantly little enquiry from buyers.

Vendors have reduced prices compared to 18 months ago just to secure sales.

Elders is expecting to sell three 100 acre lots at Kilcunda, despite an unsuccessful auction recently.

Don Olden of Elders Korumburra remained optimistic that farmers wanting to sell would do so, particularly as the warmer months inspire buying activity.

“There is renewed interest in dairy farms and we’re starting to get enquiries into grazing properties,” he said.

“We have a few things lined up and properties coming onto the market that I believe we will be able to sell.”

Vendors just had to ensure their asking prices were realistic, Mr Olden believed.

“From where prices were 18 months ago, they (vendors) have had to drop prices by 10 per cent to effect a sale,” he said.

Alex Scott and Staff Leongatha has sold two dairy farms in the past eight weeks: a 380 acre dairy property at Mardan and a 320 acre dairy farm at Welshpool. Both were bought by locals.

Other properties sold by Alex Scott in recent months include: a 71 acre beef farm at Mirboo North, 150 acre beef property at Berrys Creek and a 50 acre beef farm at Foster.

The agency’s Andrew Newton said while there was not significant demand for farms, enquiry was stronger than the first half of the year.

“Rural sales are certainly not back to the level of two years ago, however the market is starting to gain confidence and momentum,” he said.

Low milk prices have been a factor in less interest earlier in 2012.

“I don’t think it (milk price) has improved as much as it needs to,” Mr Newton said.

He said asking prices were a little higher compared to eventual selling prices that were “reasonable” and at “market value”.

“I think it’s better than in some other areas because we’re a foodbowl and have the highest rainfall in Victoria, along with the Western District,” Mr Newton said.

“But the rural job across the country is in the same state. When the rural job picks up, it picks up first in places like South Gippsland.”

Barry Redmond of SEJ Real Estate said the market was generally slack.

“The market is pretty tough. It’s been pretty tough throughout the winter. The rural job’s been quiet in general,” he said.

Mr Redmond attributed the quieter sales to a combination of wet weather and the high Australian dollar lowering commodity returns.

“The rural job would like to see the dollar come back to around 80 cents because that is affecting the export market,” he said.

“We are just hoping that coming into summer, we will see a change to the market.”

The last major rural property SEJ sold was Scadden’s Run at Meeniyan.

“We have plenty of properties for sale but no one is buying,” Mr Redmond said.

“The interest has not been there like it has been.”

Mr Olden also believed a wet winter contributed to less interest from buyers, particularly compared to previous winters.

Vendors are predominantly Baby Boomers looking to leave farming and young farmers seeking to upgrade, while buyers are a mix of locals and newcomers.

“We had three reasonably sized beef farms sell and two of them sold to non-locals,” Mr Newton said.

“They’re usually from south eastern Melbourne and looking at buying and then building.”

Few young farmers are among the buyers given the major financial barriers they face when starting out.

“The costs they have to get in are enormous. There is not a lot of movement among the share farmers. Most of them are staying where they are,” Mr Newton said.

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Posted by Simone Short on Nov 27 2012. Filed under Rural News. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry