Buyers still wary in ample market
Seller confidence has increased in the rural property market in the Waikato and nationally but buyers have yet to catch on to the more positive outlook, say real estate experts.
Real Estate Institute of New Zealand national rural spokesman Brian Peacocke said the number of rural properties on the market had increased this spring but not many had sold yet.
Last month nationwide, 50 grazing farms had sold but only four dairy farms.
‘‘There’s still a bit of caution there among buyers,’’ said Mr Peacocke, Pastoral Realty principal.
Spring and autumn were always the strongest selling times for rural properties but this spring had seen considerably more properties on the block than the previous two springs.
There were 50 to 70 rural properties for sale in the Waikato, more than double the number on the market at the same time last year, Mr Peacocke said.
Reasons for the increase included the higher dairy payout prices even accounting for the recent 45c/kg milksolids payout cut, favourable interest rates for borrowing and one of the best growing seasons in many years, Mr Peacocke said.
‘‘There are plenty of buyers around looking but they’re a bit slow to commit yet. Once you have a few more properties selling, people will see a few more options. You get a snowball effect, albeit a controlled snowball effect. I don’t think there will be a sudden surge in pricing.’’
Another trend was that banks were more optimistic than they had been and in some cases more optimistic about lending money to farmers than farmers were about borrowing.
‘‘That means the banks have got over their caution faster than farmers,’’ he said. ‘‘That’s in marked contrast to two years ago where there was a nosedive in confidence among the banks which in turn led to a nosedive in confidence among farmers.’’
Rural properties today still had to stack up from a cashflow and equity perspective to qualify for loans, Mr Peacocke said.
PGG Wrightson’s Hamilton rural sales manager John Sisley, said the company had more rural properties listed than it had seen for the last two years.
‘‘The higher payout has given vendors the confidence to put their farms on the market,’’ Mr Sisley said. ‘‘The 45c payout reduction was a bit of a flattener but it hasn’t stopped the activity. We’ve had an extremely good spring otherwise and people are very happy about that. We’re seeing quite a few buyers but they are, almost without exception, reasonably cautious.
‘‘There is some confidence in dairy and a bit more confidence back in sheep and beef.
‘‘But with all the constraints out there, I think it’s most unlikely we will see the levels of optimism we saw three years ago or 15 years ago,’’ he said.
Bayleys country sales manager Mark Dawe, said this was the best spring Bayleys had seen for the last four years in rural sales.
Most of the sales were in the dairy or dairy-related sector.
‘‘There’s some good property there for people to select and some very motivated vendors wishing to sell,’’ Mr Dawe said.
RURAL WINNER: Confidence has increased in the rural market.