Farms already on the market, especially good farms, should sell well because there’s not a lot of competition for them from other properties.
He expected market momentum to build through next year.
“We hope there’s enough buying power then to keep the market solid and indications are that there will be.”
Confidence was returning to the rural property market after two subdued years and would be further improved by the latest gains in the Global Dairy Trade auction.
Though spring listings were light, especially with the wet, cooler conditions in Waikato and Manawatu, the Property Brokers managing director said group businesses had been selling farms through the year with good buyer interest being shown.
That included two good dairy farms in Waikato, sold at $54,000/ha and $50,000/ha.
The group expected to get a good guide on the Waikato market on December 8, when a high-tech 72ha farm near Hamilton was auctioned.
The property had robotic milking machines and a self-feeding barn for cows.
Though it was close to Hamilton and had subdivision potential, being on 16 separate titles, Mordaunt expected it to sell as a dairy farm.
“We have interest in it,” he said.
One trend in the market was a closer focus on farming fundamentals, especially with buyers wanting to make a working return on their investment.
The days of just farming for a capital gain from the property were long gone, Mordaunt said.
“A few people have been burnt by that approach.”
That meant farmers were prepared to invest in areas “that were not the sexiest in the past” but had good production and land could be bought more cheaply.
Areas such as West Coast and Tararua were becoming more attractive and a Manawatu dairy farm could be bought at $10,000/ha cheaper than one in Waikato.
“I think buyers are making business decisions. They’re being pragmatic on price and looking for returns, rather than looking for a flash house and a lot of infrastructure on the farm.
Potential vendors were still keen to see sales from which they could get a guide on the value of their own farms.
Estate planning and succession were a huge challenge for farmers and an exit strategy was always better to plan when there was a buoyant market.
There were farmers who were dusting off plans shelved a year or two ago to scale back or exit their farming operations.
Both buyers and sellers had to pay closer attention to the impact of environmental regulation around irrigation, freshwater and nutrient management. Rural property prices would respond to both productivity and environmental gains.
On a regional basis, Waikato prices were poised to recover but buyers were still looking to buy at last year’s prices or lower and vendors might have to moderate their price optimism.
In Canterbury there was good demand for well-located farms with secure irrigation. Buyers were very selective but quick to move on the best properties.
