Saturday, March 2, 2024

Rural real estate pins hopes on autumn lift

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Current market slower than expected for time of year.
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Latest farm sale statistics continue to follow the 2023 trend with fewer sales across all industry sectors and the market slower than expected.

The decrease in the volume of sales may be offset by a late spring with many properties coming to the market later than usual due to the wet winter or set to come to the market into the new year.

Some vendors have been waiting in the wings to see where a new government might head.

So it’s not all doom and gloom in the rural property market, PGG Wrightson general manager real estate Peter Newbold said.

“There are a lot of listings out there and lot of quality listings in most sectors across sheep and beef, dairy and arable.

“Horticulture has been the quieter given the timing of peak production.”

Newbold said the majority of farm sales have been for “normal reasons” such as retirement or succession.

“Sales are slower than I expected for the time of year, even the market is slower than we expected.”

Newbold attributed this to the challenges in some sectors, particularly sheep and beef. 

Lamb prices have slumped, costs of running farms are up, there is pressure on interest rates and there has been a change of government – “a lot to work through”.

“It all adds up, the challenges, and change takes time. Stacking up viability with the banks is more relevant now than it was two or even five years ago.”

Dairy is showing more positivity.

“There’s more activity in the dairy space, more than I would have thought, being mindful there are less buyers out there.”

Newbold predicts a much stronger autumn for farm sales.

“There are contracts in play now, listings coming to market in the new year and we expect to see some stability once we see where the government is heading.

“Long term looks positive; we just have to get through the current hump.”

Real Estate Institute of New Zealand rural spokesperson Shane O’Brien said there is no shortage of listings across NZ, giving buyers a healthy selection.

But many buyers are being cautious around environmental compliance and future land use, he said.

“Product price uncertainty particularly in the pastoral farming and dairy sectors is weighing heavy on buyers’ decisions.  

“Market vendors do need to be mindful that with an abundance of listings and a cautious pool of buyers, any offers when presented may need to be carefully considered as buyers take into account the changing dynamics of the market including farm product prices, interest rates and confidence in the economy as a whole,” O’Brien said. 

In October 2023, finishing farms accounted for a 39% share of all sales. Grazing farms accounted for 22% of all sales, dairy farms 10% and horticulture 9%. 

These four property types accounted for 80% of all sales during the three months ended October 2023.

The median price per hectare for dairy farms decreased 31.3% over the past 12 months from $47,565 down to $32,690.

The median price per hectare for horticulture farms has decreased 39.5% over the past 12 months.

For the three months ended October 2023, the median sales price per hectare for horticulture farms was $233,330 (14 properties), compared to $324,210 (16 properties) for the three months ended September 2023 and $385,520 (20 properties) for the three months ended October 2022. 

The median horticulture farm size for the three months ended October 2023 was 9 hectares.

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