PHOTO: FILE
Despite facing significant challenges, provinces continue to show resilience, although the current economic climate is impacting farm sales, according to rural real estate companies.
Peter Newbold, General Manager of Real Estate at PGG Wrightson, described the market as “the most challenging it has been in 30-odd years.” He stated, “We are at the bottom of the trough. It is going to change for the better, but it is not going to boom.”
The latest data from the Real Estate Institute of New Zealand (REINZ) indicates a noticeable decline in farm sales nationwide.
Newbold mentioned that recent sentiment has focused on anticipated increased activity in 2025. However, he believes that, based on current messages from banks, politicians, and the general market condition, we might see more activity as early as this spring.
Sellers are becoming more realistic, and buyers are starting to explore properties, despite inflation and interest rates still influencing the market. “These are the two things that, as a nation, we should be focusing on,” Newbold said. “Once sentiment changes, the market will benefit from more confidence and create more opportunities.”
Newbold pointed to the Southland region as a historical indicator of market trends, noting strong activity heading into winter and more expected in spring. “If I look at historical patterns, it suggests things are on the move and that activity will spread up the country,” he said.
Conrad Wilkshire, General Manager of Rural at Property Brokers, echoed that the property market reflects the broader economic climate in New Zealand. He emphasized that understanding economic cycles and regulatory impacts has been more useful than traditional commodity price benchmarks and farmer confidence.
“The rural real estate market is entering a new era this spring as interest rates and land use options continue to evolve. Historically, we’ve used 10-year benchmarks and annual sale performance, but this season we’re focusing on quarterly market information aligned with the seasons for more accurate comparisons.”
Wilkshire noted that interest rates and access to capital have significantly impacted real estate markets over the past three years. As interest rates have risen, demand for rural property has dropped dramatically. Despite this, the median price per hectare remained stable at $31,900/ha in spring 2023 but dropped to $25,000/ha in winter 2024 due to the ongoing reality of higher interest rates and the current commodity cycle moderating vendor expectations.
A highlight this season has been the success in marketing dairy properties, with sales surpassing the previous year. However, commodity prices and cost challenges have significantly impacted growth aspirations for sheep and beef producers, moderating demand.
Wilkshire also highlighted the success of marketing rural properties under 100 hectares, making them more accessible to many buyers. “We are proud to help the next generation get on the rural property ladder. These sales bring much-needed liquidity to the rural property market, instilling a sense of encouragement and hope.”
As we approach spring, Wilkshire acknowledged the absence of “silver bullets” but noted that the recent challenging economic period, tougher than the Global Financial Crisis, is behind us, and a rebound is inevitable.
The REINZ report shows a decrease of 25 farm sales (-9.3%) in the three months ending May 2024 compared to the same period in 2023. The total number of farm sales for this period was 243, down from 268 the previous year, representing a 2.8% decline from the 250 farm sales recorded in the three months ending April 2024. Over the year to May 2024, 951 farms were sold, which is 232 fewer than the previous year.
The decline was seen across various farm types: dairy farms (down 26.3%), dairy support farms (down 24.2%), grazing farms (down 33.7%), and finishing farms (down 17.2%). Conversely, arable farms experienced a 14.3% increase in sales.
SOURCE: FARMERS WEEKLY