Prop­erty mar­ket re­mains steady


Some observers seem sur­prised that, with pro­jected dairy re­turns drop­ping, en­thu­si­asm to in­vest in agri­cul­ture re­mains buoy­ant.

How­ever, if the South Waikato ru­ral prop­erty mar­ket is an ac­cu­rate gauge, many in­volved in dairy­ing are in a pos­i­tive frame of mind: Farms are still chang­ing hands at, or just be­low, record prices.

At present, both lo­cally and in much of the rest of the coun­try, two fac­tors are hold­ing the ru­ral prop­erty mar­ket steady, en­abling it to with­stand re­duced dairy pay­out pro­jec­tions: First, con­fi­dence in the long-term health of New Zealand agri­cul­ture re­mains strong; and sec­ond, prospec­tive buy­ers of farms out­num­ber sellers.

Au­tumn farm sales in South Waikato were con­sis­tent with pre­vi­ous years. Prices for dairy land re­main firm in the face of the un­cer­tain out­look. On the Cen­tral Plateau, dairy land trans­ac­tions reached an all­time high point of $57,000 per hectare, with other sales at lesser prices in a broad range up from $29,000 per hectare. Dairy sup­port farms also sold well be­tween $ 13,000 and $22,000 per hectare.

While re­duced ac­tiv­ity more re­cently could in­di­cate wan­ing con­fi­dence, the mar­ket gen­er­ally slows through win­ter any­way so that con­clu­sion does not nec­es­sar­ily stack up.

That is the ‘‘glass half full’’ ver­sion. Oth­ers will see it dif­fer­ently. Time will tell who is right. That said, if global dairy auc­tion prices have bot­tomed out and are set to climb again, any de­te­ri­o­ra­tion in ru­ral prop­erty val­ues is un­likely.

Of course, the out­look for dairy has cre­ated some anx­i­ety, which could re­sult in lo­cal prop­er­ties of­fered for auc­tion be­fore calv­ing. How­ever, any sug­ges­tion that banks will ap­ply pres­sure to force mort­gagee sales runs against the facts: Banks are more in­ter­ested in pro­tect­ing their own po­si­tions by sup­port­ing clients through these chal­lenges. They will work hard to en­sure ev­ery ef­fort is made to keep peo­ple on farms and able to meet their in­ter­est pay­ments.

We see no sign of farm­ers putting prop­erty on the mar­ket un­der pres­sure from the strain of the re­duced pay­outs. Any bar­gain hun­ters wait­ing for a ‘‘fire sale’’ will wait in vain.

De­mand re­mains strong, there­fore, and will likely con­tinue at a high level through to spring, par­tic­u­larly for well- de­vel­oped, favourably lo­cated dairy prop­er­ties with mod­ern farm in­fra­struc­ture, but also for well-bal­anced sheep and beef prop­er­ties ca­pa­ble of run­ning 5000 stock units or more. Any­one with a farm to sell over the next few months will soon find a will­ing buyer.

Paul O’Sul­li­van is Bay of Plenty and Cen­tral Plateau Real Es­tate Man­ager for PGG Wright­son Real Es­tate.

Paul O’Sul­li­van

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