Information being received by the Real Estate Institute is that overseas buyers are becoming frustrated by the delays and resulting expense in the Overseas Investment Office (OIO) consent process, the institute’s rural spokesman Brian Peacocke said.
“The OIO appears to be looking for reasons to say no to an application rather than reasons to say yes,” he said.
Peacocke’s business, Pastoral Realty group, has been involved in one of the applications, where the investor withdrew.
“They pulled the pin. It was just too hard.”
Overseas buyers were never a large part of the New Zealand rural real estate sector but were significant in buying bigger blocks.
“Our experience in the South Island is that they are prepared to pay more and there may be some frustration among vendors not able to get those prices.”
The M bovis virus is also affecting farm sales, with the latest institute report mentioning it as an issue being watched closely in Northland, Waikato, Hawke’s Bay, Taranaki, Wairarapa/Wellington, Otago and Southland.
In the important Waikato dairying region, Peacocke, who is based there, expects increased listings in the spring but said there will be much discussion on biosecurity measures to cope with the risk of the virus.
The Ministry for Primary Industries is bulk-testing milk supply in a process that might take the next three or four months to complete through to conclusive results.
If an increase in the rate is confirmed that will slow down the rate of sales and the doubt and speculation is already resulting in a lot of work for the legal profession in forming clauses in the documentation to protect both buyers and sellers.
Peacocke was speaking after publication of the institute’s commentary for June, which showed a fourth successive year of quieter activity in the three-month period covered.
The 2015 numbers were 479, then 472 in 2016, 459, last year, and a drop to 427 in the latest three-month period.
Dairy farm sales have eased back a shade over that time and there has been a big drop in grazing property sales.
“Dairy farmers have dropped out of the dairy-support market in that time but we think that might pick up again now.”
This is a result of the M bovis situation, with reports from agencies in Taranaki, Wairarapa/Wellington, Otago and Southland recording renewed interest as farmers seek to be self-contained in their off-season grazing management.
The report also shows a 17% drop in overall farm sales in the year to June, to 1480, compared to the previous year.
The biggest falls in sales were in the arable sector, down 25%, and grazing farms, down 28%.
Some of the fall came down to availability of properties, Peacocke said.
Nearly all product groups are achieving good prices with wool being about the only exception but being more than offset by high lamb and mutton returns.
“Farmers enjoying the good incomes might see that as a good reason to hold on and as we get into spring some might also be asking if that might be a good time to sell.”
In Waikato the poor late winter-spring period last year wasn’t an easy time to sell farms and the improved conditions coupled with some difficulties getting good staff in some areas might make the decision easier this year.
“Signals we’re seeing suggest there will be some moves made after calving is finished, though we did have similar signals last year.”
Nationally, there is very good demand for sheep and beef properties and that is evident in the good prices achieved in Otago and also Canterbury, where there are very few properties available.
Demand is also strong on the east coast of the North Island though pricing is not as strong there.
Good finishing land is scarce to buy because of the large dairy take-up in previous years.
“We had thought that some of the second and third tier dairying land might come back to dairy support or running heifers or for finishing but we’re not seeing that yet.”
One move being noticed is forestry interests active buying into sheep and beef country in Wairarapa and Hawke’s Bay.
Peacocke said the horticulture market continues to amaze, driven by the demand for kiwifruit orchards, especially those with the Gold variety.
Activity slowed over winter while vines were being pruned and tied down but demand is expected to resume unabated in the spring.
The increase in Gold orchard values is also dragging up green fruit orchard values.
Demand for horticulture land is also strong in Northland for kiwifruit with new Gold licences issued and avocado development.
There are restricted areas of quality finishing or dairy land available for kiwifruit.
