Connecting the next generation to the land must be a priority in the next few years, according to Property Brokers general manager rural Conrad Wilkshire.
The 2023 rural property market is tracking 50% back on the same time last year with the jury now in as to why.
“We have got to get real around connecting the next generation to the land,” Wilkshire said.
“We have a 10-year window to get people who have built up equity to get on the rural property ladder otherwise they will lose interest and they will have the means to move to other business.
“There is urgency to connect to the next-generation buyers today to have people on the land in the future.”
In the past there have been some great opportunities and people have been open to considering a district, even regional, shift.
“The market has always been bigger than buying the neighbour. Yes, it represents value and opportunity but somewhere we have lost sight of people getting onto the land property ladder and into farming.
“There is a really strong push from us to reconnect the next farmers with landowners.”
It’s got to be more than equity partnerships, Wilkshire said.
“It’s the owner operator that has the best option and opportunities to adapt and go the extra mile needed to make change.
“There is real opportunity to trade land-only entities and stock-only entities to get the next lot of farmers on the land, but there is limited time to do it.”
Looking across the recent sales pattern, Wilkshire noted a clear distinction in what is selling.
“Prime location, prime soils, call it tier one, the demand for them is very obvious particularly for finishing livestock and dairy.”
In the middle tier two it is a bit more hit and miss.
“Properties over $5 million, the market is thinner; over $10m thinner again with the keener interest in adjoining property.
“Tier three, well you are dealing with the not-so-strong interest in location with influences of remoteness, proximity to a town and ability to attract staff.
“In all, tiers one and three represent the value and opportunity for the next generation on the land.”
The latest rural property review specifically focuses on pastoral sectors of 200ha plus, and dairy.
This market segment, as a proxy for the larger sheep and beef sales, finishing and grazing, at 46 sales continues to track at 50% of April 2022 sales at 71.
But Wilkshire said this is a market segment where it does not pay to generalise about softening demand.
“There is no question that in some districts farmers are stepping up where forestry left off, particularly in the central North Island, with notable recent sales of larger properties driven off local farmer interest.
On the east coast it’s a different story.
From north of Gisborne down to Wairarapa the market has seen a significant downward shift in market sentiment compared to unprecedented carbon-fuelled land appreciation run-up over the past five years.
“There is now a general expectation of a market reset given current uncertainty with alternative land-use options, the challenge to forestry’s licence to operate and the obvious on-farm financial impact of absorbing the recent cyclone event.
“Most farmers are flat-out doing their level best to keep their current farming systems intact and are unlikely to be too preoccupied with the ebbs and flows of the rural property market.”
The South Island market is different again with not only the carbon market uncertainty limiting alternative land-use options.
“You also have the likes of Environment Canterbury changing the way its interpreting the suitability of new forestry planting and its potential adverse effects in flow-sensitive catchments.
“A quick look at a few maps suggests these capture most of the hill country in the central Canterbury region, but this time because of a lack of water.”
When it comes to production forestry, the debate on what is the national best interest continues.
Wilkshire said the answer has always been an integrated policy solution.
“Production forestry has underwritten rural land values for the past 40 years.
“The current pace of afforestation change without appropriate local government land-use regulation has tipped the scales well past what has historically been in the national best interest.
“We need pastoral and forestry sectors to thrive, supported by much-improved policy and regulation tied to actual land-based production systems and supporting sequestration, not unrelated third parties trading off the back of NZ’s most significant primary sector exporters claiming to be on the journey to Net Zero through the ETS.”