Dairy farm sales revive rural market
A rush of dairy property transactions in December helped lift the median farm sale price but local agents said farm values were still sitting around 2005 levels. Real Estate Institute of New Zealand rural market statistics revealed 30 farms were sold nationwide in December, bringing a huge boost for the rural sector but most in the industry believed between 20 to 30 per cent has been wiped off farm values in the past two years.
PGG Wrightsons real estate manager Stuart Cooper said buyers and sellers were still trying to work out where values sat. He believed prices had come back to 2005 levels but he said there was not a lot on the market for buyers to choose from.
While big parcels like the Crafar farms and the 29 Carter Holt Harvey farms around Tokoroa were still up for grabs, they were well out of reach of most buyers and with lending right down the only activity was with equity buyers.
‘‘ Those equity-based buyers tend to take a lot longer to make a decision. They do thorough due diligence. These guys have been through the crash and managed to retain their funds because they’re prudent.’’ He believed the average time to sell a farm used to sit at between 80 and 90 days but it had doubled.
Institute figures showed the median farm price in the Waikato had dropped from $1,550,000 to $1,500,000, in the three months to December.
Auckland, the Bay of Plenty, Hawke’s Bay and Gisborne also experienced reductions.
Southland and Taranaki saw the largest increases, median prices in Southland went from $ 916,594 to $ 3,422,125 and in Taranaki from $ 2,125,000 to $2,664,438 but these figures were most likely affected by higher sales volumes.
Bayleys Waikato Country Sales team manager Mark Dawe said farm prices had come back by 20 to 30 per cent over the past two years but low sales volumes had meant both buyers and sellers were unsure where their properties were placed in the market. The recent flurry of activity before Christmas had helped solidify the situation, he said.
‘‘I think soon you’ll start to see a lot more farms being advertised, there’s not a huge amount of activity at this stage.’’
The figures showed median farm sales prices were up 15 per cent from $968,500 at the end of November 2010, to $1,150,000 in December.
Real Estate Institute of New Zealand rural market spokesman Peter McDonald said there was still a huge variance in the price per hectare being paid for farms, however.
The highest price paid was $18.2 million and the average size of the dairy farms sold in December was 146ha, with an average milksolid production of 982kg per hectare.
In the last three months of 2010 there were 213 farm sales, an increase on the 170 sold in the three months to the end of November.