Extreme weather, price pressure tested rural sector through 2023
Extreme weather put farmers on the back foot in the early stages of the year and the resilience of the rural sector has been thoroughly tested in 2023, according to Colliers experts.
Farmers have been hit with higher input costs and lower returns for meat, dairy, cereals and fruit. These, coupled with the weather, rising interest rates and an inflationary environment have had an impact on transaction numbers across the rural property market, they say.
In the year to October 2023, 1069 farms were sold, 476 less than in the year to October 2022, according to the Real Estate Institute ( REINZ).
While sales volumes were down, the median price per hectare for all farms sold in the three months to October 2023 was $ 30,250 compared to $ 27,100 recorded for the three months ended October 2022, 11.6 per cent up.
The median price per hectare increased 22.2 per cent compared to September 2023, according to data from the REINZ All Farm Price Index.
James Nilsson, Colliers’ national director of Rural and Agribusiness, says while transaction volumes were down in 2023, in many ways this was to be expected once the year began with such adverse weather.
“Those cyclones and heavy rain volumes put farmers under duress from the beginning of the year and then as buyers continued to adjust to rising interest rates, further challenges emerged,” Nilsson says.
“Uncertainty around the election also caused people to sit tight as they weighed their options. Following the emergence of a new Government a selection of properties came to market for spring, but they arrived later than in previous years.
“We are continuing to see an alignment of expectations among vendors and purchasers, which does bode well for the long term as people navigate this part of the property cycle.”
Buyers that have been active in the market included farmers purchasing either neighbouring properties or not far from their existing operations, allowing them to increase capacity.
Colliers rural sales advisers Doug Harvey and Hamish Goodwin recently brokered a deal on Blackburn Rd, Central Hawke’s Bay, working with the vendor and buyer to complete the sale of a neighbouring property to combine them into a highly productive 500ha block.
“Dairy farm values seemed to have held up relatively well with a positive outlook longer term in dairy payout prices increasing next year,” Nilsson says.
“Data from our Colliers rural valuation team suggests that it has become apparent that dairy farms entering the market with a well- defined and an assured approach to land use consents, winter grazing areas, compliant effluent systems, dependable irrigation water sources and a grasp of nutrient responsibilities are achieving higher sale prices.”
Looking at the lifestyle property market, Nilsson says prices have begun to level out following big gains during the pandemic where people explored the opportunity to work remotely and escape larger metropolitan areas.
“Prices still remain elevated compared to pre- pandemic levels, although transaction volumes are down on the previous year.”
Nilsson says many sectors of the rural community have been impacted by various roadblocks this year, which have ultimately led to challenges that filtered through to the property market. “Our communities are full of resilient types, and we are looking forward to turning the page on 2023 and starting next year in a positive way.”
Article supplied by Colliers