Market Update – Spring 2020 / Summer 2021
We’re almost there – just a few more weeks and this crazy year is over. I know I’m really looking forward to some Christmas festivities.
This spring, especially November, has been an active one. An auction campaign for three properties netted $36.4 million under the hammer, and out of Matamata we concluded $30 million worth of transactions in four or five sales. And we’re expecting another $300 million worth of campaigns to be completed by the end of December!
So I’d say the market has found its level, depending on what’s presented to the buyer. If the property is sound in terms of contours, soil quality and environmental compliance, with a willing seller and a willing buyer the sale will happen.
Going into summer things look in reasonable shape for the farms, with solid dairy payouts. Grass growth over spring was phenomenal with plenty of supplement made, though because of the weird weather the grass quality wasn’t great for production.
So a number of farmers are trailing last year’s production, but we’ve had nice amounts of rain and growth is still strong, so we may avoid some of the problems of previous seasons.
You’ll have seen all the news recently about the booming residential property market. At present there’s no connection between rural and residential market prices. Banks’ lending appetite for dairy deals is subdued to say the least, so any transactions have to be bullet-proof.
By that I mean that vendors have to be able to show business profitability and make sure that every single compliance box is checked. It’s the only way a deal can be done.
The buyers in the market are serious ones. They’re mostly farmers growing their businesses, or giving their families a leg up. Going forward, a lot of capital is being raised for dairy investment.
City investors are expressing interest, but most want to make sure they can have the property managed at a reasonable cost, because of course they want a decent return. In the Waikato we’re also starting to see some land use change opportunities – for instance, several kiwifruit operators have been investigating the area.
I’m expecting a crazy run up till about 20 December, then a rest until mid-January when it’ll all start again. We’ve got some good product to launch early in the new year.
One change I’ve noticed is that auctions are back. There are fewer buyers in the market, but they’re all serious and they want to make a decision and purchase quickly. The efficient and transparent auction process suits this climate, as opposed to a drawn-out negotiation process.
I also wanted to say that if you are looking to sell bookings are now open for the Autumn edition of the OUTLOOK Magazine click here to view our spring edition which is distributed to 75000 Lifestyle and Rural box holders throughout the country, and closes on 24 February. Ads are $1000 for a full page and $600 for a half-page, we were oversubscribed for spring advertising, so you don’t want to miss out this time.
As always, I’m just a phone call away for a chat about buying and selling rural properties.
And I want to wish you a happy, safe and relaxing holiday season, because you most definitely deserve it after this year.