Concerns around the cost of water could reduce buyer demand in Mildura: HTW rural

Concerns around the cost of water could reduce buyer demand in Mildura: HTW rural
Concerns around the cost of water could reduce buyer demand in Mildura: HTW rural

Concerns around the cost of water could reduce buyer demand for horticultural properties, however this will only become evident over the next six months or so, according to the latest Herron Todd White rural report.

The valuation firm noted that the ongoing dry conditions are creating challenges for a wide cross section of our rural community.

"This year is looking a lot like 1982, which is the last time grain growers in our regions faced the prospect of no harvest.

"With many farmers now running continuous cropping programs and with no livestock to fall back on, the next 12 months will prove a testing time."

"Many graziers in western New South Wales are fast running out of water as well as feed. Most have spent significant sums buying in hay, grain and pellets, but are now questioning whether to quit stock if they have sufficient condition to be saleable rather than keep buying in feed.

"Hay and grain are becoming very difficult to source and more expensive each month."

"While this is a pessimistic outlook, we note that farmers in this region are bred to be resilient and we expect the majority will have sufficient capital or equity to ride out at least the next 12 months.

"History also shows that few people list their properties for sale during drought conditions and so we expect the number of sales to dry up over the next six to 12 months," according to Shane Noonan and Graeme Whyte, local experts.

The cost of leasing annual allocation is now stuck above $300 per ML, which will impact on the return for particularly wine grapes but also higher value crops such as almonds, citrus and table grapes.

There has been development of these crops over the past four to five years, much of which is reliant on leased water.

"Any rationing of water will flow through to lower yields, further exacerbating the current shortage of some wine grape varieties," the Herron Todd White valuers noted adding that they "expect that concerns around the cost of water could reduce buyer demand for horticultural properties, however this will only become evident over the next six months or so. Returns remain good for most commodities which will justify the cost of leasing water, even though it will reduce profit."

"There have been good snow falls in the Murray catchment area and we note that there is still time for any substantial rainfall event in September to create good run off and increased allocations,." it added

A recent noteworthy sale is Cowra station (pictured above), a 4,300 hectare mixed farming operation located 25 kilometres west of Mildura and with extensive frontage to the Murray River.

The property has been primarily used for grazing and dryland cropping, however has some existing irrigation infrastructure and potential for expansion of this enterprise.

The property had been on the market for many years, waiting for a buyer intending to undertake some form of irrigation development.

Another recent sale at Mildura is a 3,823 hectare viticulture/vineyard property which was traded at $180,000 (pictured below).

The property at 792 Ontario Avenue features low level irrigation and included water right. 

It is within a short distance to major shopping centres.

Concerns around the cost of water could reduce buyer demand in Mildura: HTW rural

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Mildura Htw

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