Rural market positive but recovery still slow
Demand for rural properties is steadily increasing, with the market reaching its most positive level in four years, according to PGG Wrightson.
The agency’s general manager, Stuart Cooper, said the latest figures reflected the most positive market change in four years.
However, he emphasised the market had come off a ‘‘fairly deep’’ level and was still only about 60 to 70 per cent of a ‘‘normal’’ market.
‘‘We would say it’s more of a steady recovery than a boom. It’s a recovery that is more disciplined. We don’t have silly things happening that happened in 2008, where people were borrowing nearly 100 per cent money.’’
Current demand was strongly focused on dairy farms throughout the whole country, Mr Cooper said.
‘‘Looking at our business, every area of New Zealand is up substantially over last year. The fundamentals of dairying look very good.’’ Most interest was in the large-scale dairying heartland areas of Waikato, Canterbury and Southland.
Taranaki was also doing well but did not generally have much large-scale farming, Mr Cooper said. ‘‘People looking to invest in farms, including corporates, farmer groups and farmer consortiums, want scale.’’
The increasing trend of corporate involvement in farming had brought greater discipline to farm purchases, Mr Cooper said.
Most people buying farms now had a strong business focus and were spending longer on due diligence. The time period from a property going on the market to purchase had doubled from about 90 days to about 180 days.
‘‘While a farm can look good, people are now looking below the grass and behind the scenes to make sure the farm is a good business proposition.
‘‘When people come to look at farms these days, they are bringing accountants, lawyers and consultants, too, to ensure they know clearly what they are getting. That’s good for everybody.’’
Real Estate Institute rural market spokesman Brian Peacocke said while demand for farms was increasing, there was not necessarily an upward trend in pricing apart from where there was a shortage of very good properties.
DEMAND INCREASES: Rural properties are a sought-after commodity.