COVID drives up regional property prices: Eases rate burden on farmers

The rush to escape the city and buy a country home has lifted councils’ residential rate revenue, easing the burden on farmers.

The surge in new town residents “takes a bit of the (rates) burden off us” says farmer and brewer Sandy Joyce, with husband Dave. Picture: Andy Rogers

A COVID-driven rush to the regions has driven up residential property values, easing the rates burden on farmers across many shires within Melbourne’s tree-change zone.

The surge in demand for a regional escape means that for the first time many regional councils are planning to markedly lift their residential rate revenue in their draft 2021-22 budgets, which are out for public comment.

The total value of residential properties on the Bass Coast has risen 11.2 per cent, to reach $14.8 billion, while the pool of farmland values has jumped 7 per cent to $1.35 billion.

That growth gap has meant Bass Coast Council’s draft 2021-22 budget proposes lifting residential rates by 2.5 per cent, while keeping the farm rate rise at 0.7 per cent.

It’s a similar story in Greater Bendigo where the council plans to cut its farm rate revenue by 13.37 per cent on 1162 farm assessments.

Strathbogie Shire also plans to cut farm rate revenue by 0.1 per cent, while in South Gippsland the proposed rural rate rise is just 0.08 per cent and 1.4 per cent in Wellington Shire.

Strathbogie small farm owner and brewer Sandy Joyce said she was glad to see “small towns grow, which takes a bit of the burden off us”, given the shire had no large towns.

“There’s been subdivisions at Avenel, Nagambie and Euroa,” Ms Joyce said. “Over time they will fill and give us a bigger rate base.”

Even the Golden Plains Shire, west of Geelong, is looking to cut its poultry (intensive) farmers’ rates by 0.9 per cent, while an extra 0.9 per cent will be collected from broadacre businesses.

North East real estate consultant Mark Dillow said buyer inquiries were flowing in from all over the nation, from as far as Alice Springs to many from Melbourne looking for an escape.

“People say they’ve had enough of the big city and want to get out,” Mr Dillow said. “But it’s not going to last forever.”

Regional councils’ 2021-22 draft budgets — valuation versus rates. Click here for a PDF version.

Analysts CoreLogic’s latest property report shows growth in regional residential property values have outstripped those in state capitals over the 12 months to April 30 in Victoria, South Australia, Tasmania and Queensland.

But demand for a sea-change or tree-change home has not helped all farmers.

Growth in farm property values still outstripped town values in other shires, with Baw Baw planning a 6.59 per cent rate hike, Colac-Otway 5.1 per cent, Shepparton 8.56 per cent and Wangaratta 6.2 per cent.

The only outlier in this group is Mansfield Shire, which last month announced it would not increase its overall rate take in 2021-22, to provide what Mayor Mark Holcombe said was “some economic relief” to all ratepayers after a difficult 2020.

The move came despite the total value of rural properties in Mansfield rising by a staggering 24.5 per cent, from $890 million to $1.1 billion in 2020.

Yet Mansfield council has kept the farm rate rise to just 0.3 per cent, residential to 1 per cent and cut the businesses rate revenue by 0.5 per cent.

But beyond the sea and tree-change zones farmers are still taking on an even greater share of the rates burden.

In the Glenelg Shire farm values surged by 15.47 per cent last year, leading council to propose farmers contribute a third of the rate revenue in 2021-22 on the back of a 4.51 per cent rate rise.

Meanwhile the 10,022 residential ratepayers in Portland and surrounding towns are being offered a 0.91 per cent cut in their rates.

The situation in Horsham is even worse, with farmers facing a 10.65 per cent hike in their rate contributions on the back of a 27.42 surge in rural property values.

Greenwald farmer Georgina Gubbins, who pays about $20,000 in rates to Glenelg Council, said it was difficult for shires where there was no population growth.

“If anything there’s population retraction,” Ms Gubbins said.

But that does not mean she supports amalgamation of councils to boost the ratepayer base.

The Victorian Farmers Federation wants the government’s fair go rate cap to be applied to each rating category, not the overall average.

As it stands councils are able to crank up farm rates beyond the cap, while keeping the overall “average” increase for all ratepayers at or below the 1.5 per cent cap.