Market Update Autumn 2021
Autumn’s a great time of year, isn’t it? It’s nice to be heading out and about in rural New Zealand on those pleasant sunny days.
We start the year in a pretty positive frame of mind. The rural real estate market has been buoyant, and it really looks like we’re shaking off some of those issues we’ve had in the last few seasons. If you remember, the banks started transitioning their lending requirements from interest-only to interest and principle, and extra-dry weather had a big impact.
This year, though, the dairy farm market looks like it’s tracking to be up about 50 percent on the same time last year, and things are looking good there. Most of them have been busy working on shoring up their balance sheets, which puts their properties in a great position. They’re probably going to get their second-highest milk payout this year, which could even carry through till next year. I say that with the caveat that previously we’ve had huge milk prices, but then went into a low cycle. It’s hard to predict if that will happen this time, however.
The sheep and cattle market returns have dropped off a bit. That could just be seasonal, because generally it’s pretty active and the balance sheets have been strong. There’s been a lot of movement from drystock farmers, who’ve been purchasing and decommissioning dairy farms for fattening units.
The horticulture market is still strong, too. It’s particularly good for kiwifruit, with a number of players raising a lot of capital to invest into it, and the cash is definitely out there.
The Lifestyle market driven mainly on the back of a red-hot Residential market is proving very popular with most properties being sold under multi offer situations.
Most farms are really well set up for winter. We had a great spring, so lots of surplus grass was made into supplementary feed. Parts of the Waikato and Northland were more affected by the hot dry summer, but generally farms should happily get through till next spring.
From an investment point of view, dairy assets are still more valuable when they carry non-farming equity. If we’re facing low term deposit rates, the farm has to produce a good return to be a robust proposition.
That said, if there are any headwinds in front of us, it’s not a lack of capital, it’s unknowns like the Government’s freshwater policy. The farming sector still wants a better understanding of those issues, so they can be factored in. Once that’s cleared up, I expect to see an upward swing of money going into Agriculture assets.
There seems to be a general shortage of properties in all farming sectors, particularly kiwifruit which is putting upwards pressure on values. That’s good news if you’ve got a property you’re thinking of selling, because there’s certainly no shortage of buyers.
Now’s a good time to start those conversations and start preparing for presenting to the market.
If there are technical things to be resolved, Farmlands our strategic partner has a team of Technical Field Officers who can provide advice and support on resolving any issues.
As far as selling methods go, we’ve had very good results from the auction process, as well as the tender process. With compelling marketing and a finite end date, buyers are more likely to get interested and move quickly.
If you’re ready to start talking about how to find the best buyer for your property, give any of the Property Brokers Team a call today and let’s get your property in tip-top shape for that sale.
Till next time
Ian Morgan AREINZ
M – 0274925878