Strong demand lifts farm sales across NZ

ROB TIPA
Last updated 11:25 09/04/2014

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Increasing confidence in agriculture in the past year has fuelled strong demand and a recovery in prices for good quality farm land throughout the country, according to the Real Estate Institute.

Farm sale volumes had increased about 20 per cent in the last 12 months, institute spokesman Brian Peacocke said.

"There's strong demand across all of New Zealand for quality property that is sensibly priced," Peacocke said. "The supply is not there to meet the demand.

"I talk to a network of real estate people throughout New Zealand every month and what stands out consistently is the strength, not only of the dairy market, but the sheep and beef and dairy support markets," he said.

"We've had very strong activity in farm sales in most regions around the country. In the South Island, Canterbury, Otago and Southland are areas that stand out quite strongly."

Farm price indexes for both dairy farms and other types of farmland hover between unchanged and gains of between 5 and 9 per cent in the last 12 months, indicating a cautious recovery of confidence in agriculture.

"It hasn't hit the peaks of 2007/2008 but there are isolated sales where prices are getting close to that period," Peacocke said.

Continuing demand for dairy farms had flowed out into the rest of the agricultural sector, creating strong inquiry for dairy support properties that were good enough to run replacement stock or grow feed crops for the dairy sector.

"What we're seeing across the countryside is that, as the dairying expansion has gone on, it has put more and more pressure on good sheep and beef country.

"There is still strong demand for quality sheep and beef properties, but the supply has diminished to the point that in many areas properties are just not available."

With increasing compliance costs, not just for dairying, Peacocke said buyers were putting a lot more effort into making sure all consents were in place for a property's water supply and effluent management.

Rural real estate agents had observed a marked trend in recent years of more dairy farms that supplied Fonterra now being sold without their Fonterra shareholding included in the sale.

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- Straight Furrow

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