Farm sales stay in the doldrums

Just 267 rural properties were sold in the three months to the end of April. Photo / Wairarapa Times Age

The rural property market remains subdued with one third of the number of farms being sold during the first three months to April, than in the same period two years ago.

Real Estate Institute of New Zealand (REINZ) president Peter McDonald said the market had been "held up" by a lack of finance.

"The market should be humming but it's not. The outlook looks good. The dollar dropped again today but there are just no sales happening. It's very frustrating," he said.

REINZ figures show just 267 properties were sold in the three months to April, compared with 786 during the same period two years ago.

The national median farm sale price rose to $1,000,000 for the three months to April 2010, fractionally up on the median of $970,000 for the three months to March 2010, but still well down on the $1,810,000 recorded two years ago.

McDonald said there was a lot of interest in the dairy sector in particular, with Fonterra increasing its forecast milk price payout by 40 cents, to $6.10 per kilogram of milksolids last month, but lenders remained cautious.

"They are saying they are lending but I have not seen any evidence of it," he said.

Two years ago banks required a 30 per cent deposit, now some were asking as much as 70 per cent, while banks were requiring mortgages to be taken out over 20 years, as opposed to 30 years previously.

Banks had also added a global liquidity cost of 1.5 per cent to most rural mortgages, McDonald said.

ANZ and the National Bank told nzherald.co.nz last month their policy around rural lending had not changed pre or post recession, with a 45 per cent deposit of the value of land, stock, plant and dairy company shares required by the bank.

However there could be quite a variation depending on the farms productivity, forecast returns and the economic environment, a spokesperson for the bank said.

Regionally the largest number of farms sales during the three months to April was 38 in the Waikato, followed by 30 in Manawatu/Wanganui.

There were increased sales of grazing properties with 123 sold in the three month period and a rise in the median price to $900,000 from $850,000 at the end of March. There was also an increase in the median price for finishing farms from $953,100 at the end of March to $1,225,000 in the three month period ending in April.