Rural property values subdued in 2011

THE Valuer General has just released the Property Market Movement report ahead of the release of the new 2011 annual statutory land valuations later this month.
These new valuations will take effect on June 30 and will be used to calculate local government rates, State land tax and State land rentals.
This report would indicate that there will not be any sizeable jump in rural land values this year.
As the Valuer General noted, the monsoonal weather over the summer stalled the market for the short term, and the market has been quieter since its peaks in 2007.
Longer term, it is unlikely the floods and cyclones will have long-lasting impacts, and the fundamentals for agriculture in terms of seasonal outlook and commodity prices appear very strong. Therefore the longer-term outlook for rural property is much more positive.
In the immediate term, when the valuations are released, it will be important for farmers to note the difference between how values are calculated for rural land and for non-rural land.
Non-rural land will be valued with site value methodology, which will bring Queensland into line with valuation practice in other States.
Site valuation for non-rural land takes into account improvements made to land such as earthworks such as leveling, filling or drainage works but does not include improvements on the land such as houses and buildings. Also, excavations on a site for buildings is not included in site valuation.
For farmers, all rural land continues to be valued on unimproved value.
This is because ‘there are little or no site improvements made to rural land’ as noted in the Foreword to the report by the Valuer General.
It is also important to note that from now on, all rateable local government areas are to be valued annually unless there has been little market movement or there are exceptional circumstances.
The report provides a summary of value changes for residential, rural residential, multi-unit, commercial, industrial, and rural land, since each the local government areas was last valued.
A total of 58 local government areas were revalued. These valuations varied across the State with both sizeable increases and decreases, reflecting the recent softening of the market and the various time periods that have elapsed since the last valuation.
The report highlights the following changes in rural areas:
• There are a small number of local government areas that have not been revalued for five years and accordingly record large increases overall in values, such as Burdekin (77pc), Cloncurry (49pc), Hinchinbrook (90pc) and Mount Isa (155pc).
• Local governments that have the largest decreases such as Balonne (-16 per cent) and Croydon (-22 per cent) were last revalued in 2010 and reflect the downturn in the market of the past 12 months.
• Some small western towns record large increases in residential land value because they have not only not been valued for five years but also come off a low valuation base. These towns include Winton (208pc), Windorah (400pc), and Blackall (750pc).
For agriculture, the report made the following key points:
• The horticultural and small crop industries in the Burnett region continue to strengthen.
• Dry land agriculture in Central Queensland remains strong. These local government areas were last valued in 2008 and as a result will have increases in the agricultural component of their properties.
• Irrigation land values in Central Queensland are generally unchanged despite recent wet years and crop losses from flooding.
• Sugarcane and small crops valuations in Whitsunday and Mackay regional council areas have remained unaltered. Cane farming in most coastal areas has been limited by excess rainfall. It could take up to 12 months for sugar and fruit farms to recover from the impacts of the cyclones.
• Gas exploration in the Surat Basin and mining developments in Bowen, Galilee and Surat Basins have continued to increase land values in these regions and particularly residential values. Valuations of rural properties in these areas are based on normal rural transactions and do not take into account purchases involving premiums paid by mining companies.
• The market value of some grazing properties has fallen 20–30pc since the height of the boom in 2007–08.
While the Valuer General’s report indicates a reasonably smooth transition to the introduction of valuation reforms under the new Land Valuations Act, the next five years of annual valuations will provide a better indication of the impact of the changes.
Landowners should bear in mind that the forthcoming valuations are not rates valuations. I also urge anyone who disagrees with their valuation to lodge an objection with DERM by contacting the local office or calling 1300 664 217 by the deadline of July 4.