Tony Verdon: Farm prices remain firm

It may sound odd at first, but farmers, rural economists and valuers are welcoming an easing of dairy farm price increases across much of the country.
They say a continuation of the soaring international milk prices could have ultimately led to over-investment in rural property and farm prices inevitably reaching unsustainable levels.
Most rural land prices remain firm, and with the local and international economy continuing to grow, prospects look encouraging.
ANZ rural economists say from a long term perspective a fall in milk prices is likely to be a good thing.
Back-to-back record high pay-outs could have fostered over-investment, unsustainable land prices, and too large a supply of milk around the globe. This would ultimately have led to prices undershooting a season or so down the track, causing unnecessary investment volatility.
So the easing of milk prices from historically high levels has been accepted with few complaints.
Quotable Value's registered valuers point to Northland as an example of a much improved rural property market.
QV's Rural Value head valuer, David Paterson, says following several years of difficult rural property market conditions, Northland was experiencing a moderate increase in prospective purchasers, which in turn was lifting sales volume.
"With parties competing for properties, this has brought an increase in values for the first time since 2008," he says.
Mr Paterson says real estate agents in Northland were having difficulty finding enough farms to sell to willing buyers.
Some well-located areas had seen increases of more than 10 per cent for smaller farms that attracted a larger pool of prospective purchasers.
Values for dry stock pastoral farms in Northland were typically between $500 and $850 per stock unit.
Mr Paterson said the dairy market in the Waikato and Bay of Plenty Regions was positive and showing signs of a good recovery in value levels in some areas. There has been a slight increase in values generally.
"Those areas that saw large declines post 2008 and have struggled since with high numbers of mortgagee or forced sales are now also experiencing good interest in properties on the market, and a corresponding increase in sales volume and values," he says.
There had been a strong recovery in values in the Bay of Plenty and the Hauraki District in particular.
The market for sheep and beef properties around Rotorua was limited because most farms in the region had already been converted to dairying. Mr Paterson said many of the smaller properties were being bought as dairy support.
The largest breeding sheep and beef farm sold over the past 12 months in the Central North Island was Mangaohane Station, near Taihape, which sold at $553 per stock unit for 4840ha.
The property also included an area of commercial forest.
Other smaller properties in the Rotorua area were selling for between $625 and $1001 per stock unit with the higher value being influenced by dairy farm or dairy support potential.
The Hawke's Bay-Gisborne region had been recovering relatively well following drought conditions.
After a relatively subdued few years, current sale levels were generally strong and showing a slight increase on recent years.
"There have been 22 confirmed sales of properties over 300ha in size since June 2013, plus a number of others which are yet to settle. Value levels are generally in the $500 to $800 per stock unit range, with good levels of interest shown in most properties," he says.
Values probably remained slightly behind those seen during the 2007-08 period.
The Manawatu/Wairarapa region had seen renewed interest in dry stock pastoral properties on the market. "There have been slight value increases for this region of between 2 to 4 per cent which reflected the more positive sentiment in the rural economy and property market."
Mr Paterson says smaller blocks oftenhave good interest from neighbouring owners prepared to pay good money for land adjoining their own farms.