Pastoral property sales bounce

Pastoral property sales bounce back

Colin Williscroft colin.williscroft@globalhq.co.nz

RURAL real estate continues to perform strongly, with a swing in the total sales value of more than $1 billion for pastoral properties of more than 20ha in the rolling 12 months to April 2021.

Property Brokers general manager for rural Conrad Wilkshire says his research into sales of properties of that type shows it’s an even stronger performance than those figures suggest, with the rural market back more than $630 million in the 12 months to last May compared to the same period a year earlier.

He says during the turnaround over the 12 months to April there were 1326 pastoral farm sales, with a total sales value of just over $3b, compared to 921 sales for the year prior, at a total value of about $2b.

The figures to April this year include 232 dairy farm sales.

Wilkshire attributes the rebound to a number of factors.

He says despite a lower number of sales between 2016 to 2020, the Waikato and Southland markets continued to operate at levels only slightly lower than usual.

However, other parts of the country have picked up.

“The lower North Island has seen beef producers paying dairy prices for dairy farms, including those on the best soils, and the Canterbury market has reignited again as the obvious value and strong profitability helps offset some of the uncertainty with environmental production constraints,” Wilkshire said.

He says covid has helped to reset the pastoral sector’s worth in the public psyche, while there has also been a softening in banks’ risk appetite, particularly in favour of dairy farms.

Wilkshire says there is still a lot to be done to meet environmental challenges facing the sector, but the market is now seeing those in a different light.

Real Estate Institute of New Zealand (REINZ) data released this week shows there were 220 more sales of properties of all sizes and farm type for the three months ended April 2021 than for the three months ended April 2020, an increase of almost 90%.

REINZ rural spokesperson Brian Peacocke says sales figures for the three-month period ending April reflect the strength and resilience of the rural economy, with the majority of categories registering significant increases in volumes for the 12-month period just ended compared to the preceding 12-month period.

“Improving product prices, particularly for the dairy and horticulture sectors, are part of the story, but of equal significance is the fact that after several years of boardroom-induced restrictions, most banks have for the past six months been coming back to the rural market,” Peacocke said.

“This mix of support, backed up by a low interest rate regime, has assisted in a positive way, purchasing decisions for those farmers with the necessary performance and equity credentials to expand their operations, and where the opportunity has become available, to acquire additional land.

“Equally, such increased activity, which has applied to the pastoral, horticultural and forestry sectors, has allowed a number of older landowners to either bring equity partners into their operations, or in many cases, to exit their respective sectors altogether,” he said.

Peacocke says covid-19 continues to affect some parts of the supply chain, particularly at the point of cargo discharge, but a mix of careful planning and innovation has allowed most sectors to deal with those issues reasonably successfully.

However, some eastern parts of the country have been affected by drought conditions and while many other regions have enjoyed good spring and autumn growing conditions, an overall shortage of rain across the country has resulted in diminishing supplies of surface water, as well as that in underground aquifers.

“Labour and compliance issues aside, water in all its components, quality and quantity, is one of the major issues facing the rural sector and for that matter, most of the urban centres throughout the country.”

BOOM: The total sales value of pastoral properties bigger than 20 hectares has jumped $1 billion in the year to April, Property Brokers general manager for rural Conrad Wilkshire says.

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