Spring farm sales sluggish
Atough spring has put a dampener so far on the rural real estate market despite a surge in dairy farm listings in Waikato.
Industry experts blamed the cold and wet spring for a delayed start to the spring selling season when market activity usually lifted.
Sales had been slow and nationally listings were down, PGG Wrightson Real Estate general manager Peter Newbold said.
A quiet winter selling period, tighter lending criteria from banks, a new government that had signalled changes to the Overseas Investment Act and terrible weather in the North Island which made showcasing any farms on the market extremely challenging.
They had all put uncertainty in the market, despite how well the primary sector was performing.
There was also a level of adjustment occurring between buyers and vendors over where values sat in the dairy sector, he said.
‘‘The challenge will be when they come to market is where people see the value.
‘‘The one thing that is still clear is that quality properties always sell.’’
Listings for the rest of the country were at normal levels or below, he said.
The exception was Waikato. Among reasons why vendors chose to sell, retirement was a common theme.
‘‘They have put off putting the succession process into play and they have to get on with their lives [and sell].
‘‘This was always going to happen because a lot of rural New Zealand is an older demographic.’’
He said there were signs that the market was slowly beginning to pick up. Good farms were still selling strongly and the sale of Olrig Station in Hawke’s Bay, which was sold at auction for $10.170 million, had generated interest.
The latest farm sale statistics from the Real Estate Institute of New Zealand are expected to be released in the next few days and Newbold predicted they would confirm the slow start to spring.
Earlier this month, REINZ rural spokesman Brian Peacocke said there was a more optimistic outlook for the dairy payout after two tough seasons and that made selling a more attractive prospect.
‘‘Succession planning, age and the wettest season we’ve had on record which has created a lot of problems and a lot of frustration, in turn, the ongoing impact of labour, which has been exacerbated by the climatic conditions.’’
Peacocke said there was a big increase in the amount of dairy farms offered for sale in Waikato compared with previous years.
While it had been a slow spring so far, listings were up for Waikato, Northland and Southland dairy farms, Bayleys National Country manager Duncan Ross said.
‘‘There were genuine reasons for people putting thier properties on the market - it’s not a bank driven thing - the payout is pretty good and people are thinking about where they want to be in five years’ time.’’
If vendors missed this high payout cycle, there may not be another for a few years and further tough times when milk prices fell, he said.
While he did not think the change of government had much influence in selling decisions, the time and costs of compliance was an added frustration to many aging farmers.
Although good ‘‘tier one’’ farms still sold well, the next few months would be telling as it would show the number of transactions taking place and where the market was.
A tighter lending criteria from banks was also a big factor and it was probably going to be the availability of funding that would either drive the market or hold it steady, he said.