It's good news for farmers with the start of 2022 tipped to be the busiest first quarter the rural property market has seen in several years.
The national Colliers Rural team is reporting more listings, greater demand, and higher prices being achieved across the country and in nearly all sectors, with the traditional 'slow start' to the year almost non-existent in 2022.
Dairy is the big winner with Fonterra lifting its forecast milk payment to a new record level at the end of January, spurring rising property values.
Richard O'Sullivan, Director of Rural at Colliers Christchurch, is expecting over $300 million in dairy farm assets to be sold in Canterbury this season.
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This equates to around 30 farms - a sharp increase from 18 that were sold in the 2020/2021 season, and just eight in 2019/2020.
O’Sullivan says the certainty of a $9-plus milk price for the next season is also enabling new entrants into the market with equity backing from established operators or family farming businesses.
So far this year O’Sullivan has sold a 226ha property in Geraldine to a first-farm buyer, a 250ha dairy farm in Oxford for $11.85 million and has another Waitaki Valley farm for sale by deadline closing in early March.
It's a similar story in Southland and Otago where both sales volumes and prices are trending upwards.
According to REINZ, $242 million in dairy farms were sold in the region in 2021, compared to just $85 million in 2020. While there was an increase in the number of sales, the farms were also changing hands at higher prices, with the average price increasing by over $1 million in the past year.
Ruth Hodges, Director of Rural at Colliers Queenstown, says although the buyer profile remains largely local farming entities, higher yields have brought renewed interest from corporate farming groups and equity partnerships.
“The lifestyle market is also experiencing a surge as Covid-19 causes people to re-evaluate their priorities,” Hodges says.
“Demand for lifestyle properties in Central Otago is now outstripping supply, especially for income-generating properties, which is causing property values to rise. REINZ data shows an increase in lifestyle property prices by 15 per cent in 2021 compared to 2020.
"Value-seekers are looking further afield than Wanaka and Queenstown, where prices continue to soar, and larger lifestyle properties that are handy to towns are particularly popular.”
So far this year, the Colliers Rural team has sold a home on 2ha of land just outside of St Bathans for over $1 million, and a small vineyard property for $2.5 million, while four other properties are under contract.
Colliers' viticulture experts are also busy with some $30 million worth of property currently under contract by Andy Poswillo in Marlborough, with $11 million in confirmed sales so far this year.
Poswillo says there are no shortage of buyers despite the pre-harvest season usually being a quieter time of year.
“In the Marlborough region we are experiencing significant demand for vineyards, particularly sauvignon blanc,” Poswillo says.
“The region still offers value, and the climate and lifestyle are appealing to a wide range of buyers from around New Zealand and New Zealanders based overseas.
“We have a number of listings coming to the market in the next few weeks, and post-harvest I’m expecting more opportunities, but with even higher interest based on current returns.”
In the North Island, Colliers' listings in Hawke's Bay and Wairarapa were up over 30 per cent year on year compared with 2021.
Hadley Brown, Director of Rural at Colliers Hawke’s Bay, says it’s shaping up to be the busiest first quarter yet for Colliers in those respective regions.
Horticulture land is leading the pack in property value with the Colliers team involved in several landmark sales in the previous quarter, including a recent, confidential sale that will set a record for the area.
Horticulture, particularly kiwifruit and avocado orchards, remain the stronghold in the Bay of Plenty.
Conrad Headland, Rural and Lifestyle Sales Specialist at Colliers Tauranga, says despite industry challenges, kiwifruit continues to increase in value.
“A number of challenges are at play, including tighter bank lending and labour sourcing issues, but vendor expectation remains high,” Headland says.
“We’re yet to see any easing in price sentiment, with a new high of $2.1 million per hectare being achieved for gold kiwifruit.”
On par with the southern regions, dairy farm prices in the Bay of Plenty are being driven up by high payouts and limited supply as farmers hold on to their assets for longer.
So far this year, Headland has transacted the sale of a 121ha dairy farm in West Huntly for a record price of $43,500 per hectare, and a 4.2ha development site in Te Puke for $1.2 million per hectare.
James Nilsson, National Director of Rural and Agribusiness at Colliers, says it’s great to see the industry reap the rewards of record commodity prices and property prices, but warns against complacency.
“The rural market is off to a flying start, but we need to be mindful of the impact that surging Covid-19 cases will have on resources and labour, which will likely affect the preparation of properties being brought to the market come late autumn and spring.”
- Article supplied by Colliers
