Sunday, December 3, 2023

Market uncertainty cools farm sales

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Sales in the three months to August were down 21% compared to the same period last year.
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Farm sales have taken a slide and while activity is expected to increase through spring there are still several factors causing uncertainty in the market. 

Real Estate Institute of New Zealand (REINZ) data shows there were 175 farm sales in the three months to August 2023, down 21% compared to the same period last year. 

For the full year, total farm sales, at 1085, are down 31% with 494 fewer sales than in the year to August 2022. 

Sales of dairy farms were down 34%, dairy support down 7.9%, grazing farms down 21%, finishing farms down 39%, and arable farms down 16%.

The median price per hectare at $24,920 for all farms sold in the three months to August was down 8.3% compared to the same period last year, and down 15% compared to the three months ended July 2023.

REINZ said the results were expected, continuing a trend that has been prevalent through most of 2023.

It noted that activity might now be increasing into spring but there are still plenty of factors causing delay and uncertainty, such as wetter-than-usual weather in many areas, the general election, reduced dairy payout forecasts, and recent overseas investment decisions as they affect forestry conversions.

General manager rural for property brokers Conrad Wilkshire said while spring normally brings with it a “spring in the rural market”, there are still a number of factors affecting the market.

“It’s fair to say that the rural real estate market has been challenging as the impacts of higher interest rates and ongoing regulation are absorbed.

“But there is a realisation now this is the new normal and the market is poised for a reset again.

“The market in recent months has definitely shown a positive response to interest rates levelling off, as sales confirm.”

Wilkshire said the Waikato market is as good a case study as anywhere. It is currently highlighting a comeback with strong buyer inquiry and a good line-up of listings to match that.

“We have had some good early results this past month with both dairy and drystock properties. 

“Open farm attendance is way ahead of the same time last year, and with a surprising number of cashed-up buyers in the market.  

“With the primary sector still forecast to deliver 80% of NZ’s export receipts, we need to look at all options, at times being more creative to get deals together to help vendors and purchasers achieve their long-term goals.” 

REINZ rural spokesperson Shane O’Brien said the lower sales volume is expected during the winter months but it is encouraging to note that despite a lower number of sales than previous years, median sale prices are holding across most sectors. 
“The wetter-than-usual winter across many regions has seen a delay in releasing some properties to the market and some vendors are choosing to hold off, awaiting the outcome of the general election to give more certainty around buying and selling decisions.
“Many of the rural sales teams are already noting an increase in activity as we hit spring with listings being readied for market.” 

O’Brien said there is no doubt the recent drop in the dairy payout has impacted prospective buyers for dairy farms and dairy support land, but this is expected to be short term.
Interest continues in the carbon and forestry sector.

“But the market noted the recent decision by the Overseas Investment Office [OIO] to not approve two applications for land for forestry conversion will undoubtedly be a factor for some buyers to consider.

“REINZ was recently advised that there are 18 applications for rural land to be converted to forestry sitting before the OIO and ministers awaiting approval,” O’Brien said.  

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