Rural

Question 1

What are the main factors to consider when conducting rural valuations?

Answer 1

Location, topography, climate, soil type (nd productivity of it), water supply/irrigation, drainage, size

Question 2

What is the Dry Sheep Equivalent (DSE)?

Answer 2

Basic measure of carrying capacity. It is the area of land required to feed one medium framed Merino wether (non-milk producing) weighing 45kg, for one year

Question 3

What are the important things to check when on inspection of a rural valuation?

Answer 3

Boundaries, services available, distance to towns, carrying capacity, types of stock, fencing quality, watering facilities, soil types and areas, fertilizer history, topography, unproductive areas

Question 4

How do you perform sales analysis for rural valuations?

Answer 4

Need to convert back to a cleared hectare value for the land

Question 5

What is the cleared hectare rate?

Answer 5

= Gross sale price LESS plant & equipment, stock and feed
= Net sale price LESS improvements (house, fences, irrigation etc)

Question 6

For sales analysis of rural valuations what do we convert back to?

Answer 6

Cleared hectare value of land

Question 7

What is arable land? Why is it important to know how much arable land a property has?

Answer 7

Arable land is land that can be used to grow crops. its important because two properties the same size could have different amounts of arable land which is more valuable.

Question 8

What is broad acre farming?

Answer 8

Grazing (cows, sheep) or cropping property

Question 9

What is commercial rural property?

Answer 9

Wineries or Broiler Farms (chicken)

Question 10

What are examples of intensive farming?

Answer 10

Market gardening (water rights), dairy farms

Question 11

What is a brief overview of rural market?

Answer 11

Since 2018 has been very strong in rural areas. Dairy relatively strong, beef prices have come back, land prices have come back and grain prices holding firm.
Many properties have been increasing 15% per year, but the economic pressures of 2023-24 have pulled that growth back

Question 12

What are the major factors that affect the rural market?

Answer 12

Rainfall,
Feed (grass on ground, otherwise have to buy more),
Interest rates,
Commodity prices (the market price of outputs - milk, grain)
Input costs

Question 13

Why are location and soil types important in rural property?

Answer 13

They determine what you can and cant grow
Rainfall, soil types, pastures that can or cant be fertilised and reused

Question 14

What are some considerations to think of regarding rural properties improvements?

Answer 14

What is or isnt included in a sale (plant and equipment can be worth a lot)
Houses on larger rural properties dont add as much value as those on hobby farms
Changing the use of the site can mean some improvements wont add as much value
Use direct comparison or summation to find value where you can, or use depreciated replacement cost to start and analyse sales to see what they add

Question 15

What are some common zonings for rural properties?

Answer 15

Farming zone
Rural conservation zone
Rural living
Low Residential (closer to towns)
Green Wedge
Rural Activity Zone

Question 16

What legal attributes are relevant for rural properties?

Answer 16

Titles (can be crown allotments),
Zoning and planning
Licenses/Leases - waterways, use of roads, occupying grazing and farming areas

Question 17

What are some considerations for sales analysis of a sale of 100 hectares?

Answer 17

Who bought it? Was it a neighbour
Were non real estate assets included (plant and equipment)
Summate the building from sales evidence
Use aerial imagery to estimate how much land is arable and split rates between uses (arable vs non arable)

Question 18

What methodology would you use for broiler farm?

Answer 18

Rate per bird, sqm basis of shedding
Have to make sure the are set to same standards as each other

Question 19

What methodology would you use for rural lifestyle properties?

Answer 19

Summation - they can be so difference that direct comparison can be hard (dependent on sales), need to break down different elements and work it out that way.
Look at it on a sum of money basis and if things dont add up, adjust
Can use rate per hectare

Question 20

What is a water right and how would you treat it?

Answer 20

A license to use water? - can be connected to rivers etc
Rate per megalitre
This is extremely important as it can grow more grass, help to do things year round, and especially important in drier areas or for crops that require a lot of water

Question 21

1000 hectares of land, zoned farm zone. How do you value this?

Answer 21

Firstly, wouldnt go about this alone, dont have experince.
Next thing is to always establish what the highest and best use is.
Can this be a development site or are people paying for these lots expecting the urban boundary to grow. If it can be developed have to look into costs for permits, lot yield, expected overally realisation etc. Can then potentially use turner approach. If enough sales in area or recently, could also use direct comparison, likely on a per hectare rate. if it is purely farming zone, as said, would also be looking at the amount of arable land there is, overally topography etc and comparing on a like-with-like basis.