A solid summer of plentiful rainfall resulting in a surplus of grass, combined with record commodity prices, has also lifted the confidence of those looking to invest in the rural property market, says Pete Stratton, director of Bayleys.
“The lift in farmer confidence is slowly but surely resulting in a firming of farmland values,” he says. “The lift in activity has, as predicted, soaked up a lot of unsold property that was choking the market. Cash buyers are now struggling to dig out suitable property, which inevitably is resulting in pressure on values.”
Stratton says that 18 months ago stressed sales made up to over forty percent of farm sales by value in the Manawatu and Wanganui region but this has now dropped significantly to around 20 percent. This drop has also been helped by a big lift in unconditional farm sales with around $50 million worth of farmland changing hands in the Wanganui Region since the beginning of June.
Pete says Bayleys has been involved in over half of these sales selling 60% of the farmland sold in that period. Two Dairy farms have been sold in this time with Bayleys selling a large conversion at Marton for $5m and a 116 hectare Dairy in Taumarunui making $2.5 million.
At the smaller end of the market, one of the most pleasing features of a burst of recent activity has been the purchase of two hill country properties by farmers and their sons. One was an entry level 330ha farm near Taihape which sold for $1.3 million to a local family and the other $1.68 million sale involved 466 hectares south of Mangaweka going to a Waverley Family.
Also a 270 hectare farm on Stewarts Loop Road at Taihape just sold to a local couple with a long term farm management record.
“This sort of succession planning has been absent from the market for the past few years and it’s great to see it back again. When farmers are making investments for their family it’s a pretty good signal that confidence is returning to the market.
“For all that, farmers are continuing to tread fairly cautiously and there remains a big focus on reducing hard core debt and catching up on deferred maintenance. A significant number of farmers are still struggling to raise serious capital and until they have their debts at comfortable levels, they won’t have the confidence or the capital to expand.”