WITHIN the stale odour of stagnation, the rural property market may just be getting a sniff of sweet optimism.
Rural property analysts predict a brighter 2010 for agriculture, with forecasts that the rural real estate market will be swept along with it.
A glimmer of hope within a bogged market was the overall tone from the February Month in Review, put out by property valuation firm, Herron Todd White (HTW) recently.
Contributors to the review spoke of the market being near the bottom of the cycle and renewed hope in various commodities was enough to prompt movement within the rural market. The Southern Queensland report spoke of an "air of expectation" that 2010 would be a better year.
With February and March the traditional time for a flurry of properties to hit the market, industry onlookers will be watching to see if the number of property pages does actually grow.
Exactly how calm the 2009 market became was exhibited in HTW's Far North Queensland report, which looked at sales figures for the Cassowary Coast region between Innisfail and Cardwell.
It reported less than 30 sales were recorded in 2009, in comparison with nearly 40 in 2008 and nearly 100 in 2007 - the highest recorded number of sales in a single year on record, largely due to managed investment schemes (MIS) buying up property.
"The forestry MIS sector in Far North Queensland is now totally absent from the market due to a lack of investors, schemes failing and legal challenges from local authorities as to the legitimacy of plantation forestry as an 'as of right' rural land use," it said.
The Northern Queensland report told of a concern that property values could experience a downward adjustment during 2010 as more properties are tested on the open market. The time it takes to sell a property could be a surprise for vendors, the report said.
"Sale periods are expected to be extended in 2010 and it may take a full 12 months or longer to dispose of a property," it said.
"At present it would appear that sellers are not prepared to suffer any major reduction in established grazing values and are prepared to take a longer time period to dispose of a property than take a reduced selling price."
Meanwhile the Real Estate Institute of Queensland (REIQ) gave a nod of approval to the Reserve Bank's decision to leave the cash rate unchanged at 3.75 per cent, stating it was "a sign the Reserve has adopted a cautious approach to the burgeoning economic outlook".
REIQ managing director Dan Molloy said as the economic recovery was still in its infancy it was prudent that the Reserve did not tighten monetary policy too much, too soon.
"After three rate increases in a row, this pause by the Reserve gives existing homeowners some welcome breathing space," Mr Molloy said.
"As the central bank has also been very clear that rates will rise as the economy improves, first-time buyers must factor in higher interest rates when budgeting for their first home."
Many of the reports within the HTW Review stated the level of confidence within the agriculture sector, and therefore the real estate market, was heavily dependent on factors such as continued good rain throughout the State, the Australian dollar's effect on the beef industry, and how long the world sugar price remained high.
According to the Rabobank Australian Agriculture in Focus report, 2010 was shaping up as a positive year for Aussie agriculture with increasing global demand for agricultural commodities such as dairy and sheepmeat, while the supply of many of these commodities was limited.
At the same time, global food commodity prices were returning to their pre-financial crisis trend and beginning to climb again, the Rabobank report said.
Rabobank's food and agribusiness research and advisory manager, Justin Sherrard, said after going into "freefall" more than 12 months ago during the global financial crisis, world food commodity prices were once again on the rise, driven by the same fundamental factors which had seen prices surge before the financial crisis.
"To benefit from higher commodity prices, farmers and agribusinesses need to manage any related increases in production and processing costs, and see higher prices passed down to consumers," he said.
But in 2007, higher food commodity prices did not necessarily translate to better returns as production and processing costs also increased.
"Dairy, sheepmeat, sugar and fibres are the sectors that appear best placed to capitalise on the positive outlook,'' he said. For dairy, sheepmeat and sugar, this was largely a result of restricted supply. For fibres it was more complex - supply was restricted and demand was also recovering after bearing the brunt of the financial crisis as consumers cut down on discretionary spending.
However, the report said, the outlook for the beef, grains and wine sectors was not yet as positive.
"There is some potential for beef and grains to have a brighter second half of 2010," Mr Sherrard said.
"Beef is being held back by subdued demand, in particular in Japan, and the high value of the Australian dollar. While global stocks of most grains are high, as a result of the back-to-back bumper harvests, and this has been limiting price moves."
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