Wealthy Waikato farmers stonewall 'foreign' ownership

Photo / Sarah Ivey

‘Out-of-town’ bidders struggle to compete financially with locals in the area’s busiest quarterly sales period since 2007

Waikato farmers are beating both foreign bidders and farmers from other regions to Waikato dairying and grazing blocks coming up for sale, according to the latest rural real estate sales data.

Bayleys has sold 11 of the 15 dairy and grazing farms in the Waikato to have gone under the auctioneer's hammer during the past two months, with locals outbidding buyers from Taranaki, Hawkes Bay, Northland, Southland and the Bay of Plenty on every occasion.

Bayleys Waikato country manager Mark Dawe said though "out-of-town" bidders were active on many of the Waikato farms going up for auction, they could not compete financially with local farmers.

Waikato has had the busiest quarterly sales period since 2007.

"The value being achieved for highly productive rural land in the Waikato is now far ahead of the rest of New Zealand," said Mr Dawe.

"It's like comparing the Auckland residential property market to the rest of the country -- there's us, then there's the rest ... with a big gap in between."

The per-hectare sales value for the Waikato farms which had gone under the hammer over the past two months varied, but location was probably the biggest determination, with access to water being an important part of that.

"Our data shows most of the successful buyers already owned farms in the Waikato, with half of the grazing blocks purchased by farmers who had sold up their bigger dairying operations but who wanted to remain both in the province and in the dairy support sector," he said.

"Among those who bought the dairying units, 90 per cent have leveraged their way into the market by borrowing, albeit at relatively low debt-to-equity ratios."

Mr Dawe said the sales data reflected particularly strong buyer demand for dairying units in the $3 million to $6 million bracket, with support blocks well supported in the $1 million to $1.7 million range.

He said though farm values were fairly static compared to the same period last year, the number of farms being sold was up 30 per cent, while the average numbers of bidders was up from 3.7 to 4.2.

"That shows that there is still strong support for dairying and dairy support property although it looks like any inflationary additions in the valuation process have been nullified by a reduction in forecast revenues from dropping milk solid pay-outs."

Meanwhile the rural property market remains surprisingly resilient nationally, in spite of the sharp fall in dairy commodity prices, and there is early evidence of a spring bounce in farm sales.

Rural economists say spring listings have been reported as strong in many areas, which bodes well for prospective farm buyers.

The latest data released by the Real Estate Institute shows there were five more farm sales nationally during the three months ending in September than the same period last year. This was a 1.5 per cent increase in farm sales.

The median price per hectare for all farms sold in the three months to September was $26,000, compared with $22.851 recorded for the same three months a year earlier. This was a 13.8 per cent increase.

Five regions recorded increases in sales volume, with Northland recording the largest increase in sales (plus 22 sales), followed by Auckland (plus 12 sales).