Rural property sales expected to find another gear in the run up to Christmas
Monday, 4 November 2024
Those waiting for the market to bottom out may have missed their chance.
Interest rates significantly influence the rural property market. As rural fixed-term loans decrease from over 8% to rates starting with six, buyer interest growing. The easing of the Official Cash Rate (now at 4.75%) is expected to further boost confidence as we head into the New Year.
This season brings many positive expectations, in stark contrast to last year. Dairy farming is definitely back in play, thanks to current and future payout forecasts. Sheep and beef returns still having a way to go, but Hill Country buyer demand remains, although the previously inflated forestry premiums are now more aligned with “farmer to farmer” levels, especially on the East Coast of the North Island.
Significant land-use changes are also shaping the market. Solar energy is emerging as a key influence, with ten solar farms scheduled under the government’s fast-track legislation, bringing billions in foreign investment - notably Canterbury’s green energy project.
These developments have substantial implications, nationally, for both the landscape and the economy.
Foreign investment policies are under review, which could impact the rural property market. Federated Farmers have welcomed the government’s intended review of Overseas Investment Policy settings.
The absence of foreign investment capital in the large-scale dairy sector has been a concern, especially when horticulture and forestry can access such funds. Dairy export receipts exceed $25 billion - dwarfing both forestry and horticulture combined - yet dairy farm capital values have been held back due to a lack of market equity-led investment.
Direct foreign investment has kept dairy processing viable on the West Coast in recent years. China’s Bright Dairy’s recent commitment to Synlait has provided a crucial lifeline for that business’s future. With appropriate controls, foreign investment could stimulate significant market activity, including increased farm-to-farm sales. However, it’s currently challenging for foreign investors to even emigrate, buy a farm, and operate it as a family business due to investor visa restrictions.
An increase in dairy listings this season - over 220 active listings nationally - is expected to lead to a stronger real estate market performance compared to last year. While regional median price expectations may not shift significantly, the number of dairy farms sold is likely to rise.
Supply and demand economics will drive future land price expectations. With the ongoing reduction in land available for primary production, those investing in the primary sector for the long term stand to benefit.
The recent growth in solar energy projects, combined with production forestry, and dairy deconversions of past seasons, continues to decrease the supply of pastoral land available for sheep, beef and dairy production. This is in direct opposition to the underlying strength in the export receipts from these industries, year on year. Land has always been an excellent long-term investment, and that’s certainly no less true today.
Whether you’re looking to buy or sell your farm or lifestyle property, our True Team is here to exceed your expectations. With a perfect blend of energy and experience on your side, you can’t go wrong with Property Brokers.
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