Property report: Dairy farm prices ‘defying gravity’

Peter Newbold, general manager PGG Wrightson Real Estate. Photo / Supplied.

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The rural property market is a scene of mixed fortunes at the moment, according to PGG Wrightson’s General Manager for Real Estate, Peter Newbold.

With the Overseas Investment Office having declined several applications for forestry conversions, combined with sustained downward movement in the carbon market, the pool of buyers looking to purchase sheep and beef properties had “shrunk considerably,” Newbold told The Country’s Jamie Mackay.

“If you look at the buyer pool, they’re a lot more discerning - they’re taking a lot more time to work through things, doing their [due diligence],” he said.

Therefore, Newbold believed it was important for vendors to carefully consider the value their properties presented to potential buyers.

“They’re looking at the size of the properties, where they’re located...[and how] the whole financial [package] stacks up.”

While banks were still open to lending, Newbold said they were “looking at things far more financially - what the returns are and what the profit is on that property”.

A lot of recent activity centred around farmers purchasing either neighbouring properties or those not far from their existing operations, to increase their operations’ capacity.

And while sheep and beef properties were proving hard to move, Newbold said dairy farm values seemed to be holding up relatively well.

“I think people are seeing the theory, ‘Long term is good.’

“Sure, we’ve had a hiccup recently, but there’s a lot more interest in [dairy], which has taken us by surprise.”

With dairy properties still coming to the market, Newbold said purchasing interest centred around three groups in particular - investors, those in partnerships, and neighbours.

“It’s a really nice space to be in and there’s some momentum there.”

As for horticulture, potential purchasers were wary following the climate challenges of the past 12 months.

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Newbold said he didn’t expect to see a lot of movement in the horticulture space prior to Christmas, but once bigger properties reached the market in the new year, they would provide an indication of value levels.

“Once we get a take on where those values [are], I think we’ll see some momentum there again moving forward.”