Market value of rural properties

It can be tricky to put a market value on rural properties because there are so many variables to consider. A search of recent sales (of comparable properties) in your area usually provides a ballpark figure.

We then look at a range of factors that may impact the price that can realistically be achieved.

Scale of operations

Larger acreage allows for more extensive agricultural activities (usually returning an income), thus enhancing the property’s value. In saying that, we have a very buoyant ‘lifestyle’ market in the Scenic Rim and often, smaller acreage properties (20 – 50 acres) will achieve sale prices that seem to defy all logic. Usually, these properties will have high quality structural improvements and capacity to accommodate horses or other livestock.

Land balance – cultivation, topography etc

The land types present on a property can influence what agricultural activities are possible. Irrigated land commands a higher per acre and cleared grazing country is valued more highly than timbered. Scenic Rim properties often have a combination of irrigated land and grazing. In this instance, we apportion a value to each land type present, on a per acre basis. Eg. Total land area may be 1000 acres. 200 acre of irrigated cultivation @ $20,000 per acre = $4,000,000. 800 acres of grazing country at $3,000 per acre + $2,400,000. Total value = $6,400,000. This is a simplified example, but you get the idea.

Water resources/availability

With the unpredictability of our seasons in recent years, water availability is one of the first things that buyers (and banks) look at. Water resources may be in the form of an allocation from a river or creek, bores, dams and rainwater storage. Having an entitlement to pump water from a river or creek (a water licence or allocation) for irrigation purposes is particularly valuable.

Location/proximity to services

Our proximity to both Brisbane and the Gold Coast gives the Scenic Rim a unique advantage over other regional areas and tends to push our land values upwards.
Being close to towns or service centres can significantly increase a property’s appeal. Properties that are more than half an hour from the nearest major town (eg. Boonah or Beaudesert) however, tend to have lower per acre land values.

Access

Ease of access may not necessarily add value to a property, however it does improve its saleability. Factors like rivers or mountains that limit access can negatively impact value.
Buyers are always looking for ways to reduce a property’s worth in order to have a lower offer accepted. Access is often one such reason stated for a buyer’s reluctance to offer the list price on a rural property.

Interest rates

In the Scenic Rim, property prices are not reflective of return on investment. Unless the holding is an agribusiness (eg. poultry farm, turf farm etc), it is unlikely that the percentage return from farming activities will be higher than the interest payable on the loan. Therefore, rising interest rates makes it increasingly difficult for buyers to secure a loan. This significantly impacts buyer demand, reduces competition in the marketplace and subsequently, land values plateau or fall.

Quality of improvements

The presence and condition of structural improvements significantly impact its value. This includes residential dwellings, sheds, cattle handling facilities, fencing (internal and boundary) and water infrastructure eg. irrigation mains. Well-maintained and modern structures add more value than outdated or dilapidated ones.

To provide an accurate idea of the market value of your property, it is best to seek the advice of an experienced, rural real estate agent with an understanding of the complexities of agricultural land. You are welcome to contact Danny on 0427 007 116 should you require an appraisal of your property.