Rural property prices are still accelerating, despite the downturn facing the agricultural sector.
Figures issued yesterday by Quotable Value New Zealand show the rural price index rose 4.7 per cent in the six months to the end of June, compared with just 2.8 per cent in the sameperiod last year, and 4 per cent for the six months to December 2002.
The market is strong because of a shortage of good properties and the growing image of rural land as a good financial investment, says Quotable Value principal consultant Ian Bunt.
Although there had been a lot of emphasis on the increase in overseas buyers, he said, there was still plenty of local buyers coming from the farming sector and from the local corporate investment market.
In many cases foreign buyers were looking for properties with an "X factor" such as rivers, mountains or coastline, Bunt said.
Despite a 32 per cent drop in payout to dairy farmers this year, there has been no dropoff in dairy farm prices.
While the volume of sales was down 16 per cent, prices rose from $14,884 a hectare to $15,877.
Overall, farm sales were down 29 per cent by volume and the average sale price rose 9 per cent.
Bunt said that unlike previous rural downturns, where falling sales volumes were followed by falling prices, the shortage of properties looked set to hold prices up for some time yet.
Anecdotal evidence suggested that all around the country real estate agents were crying out for good farms. Sales of lifestyle blocks appeared to be growing on the back of the urban property boom.
In the six months to June there were 4046 provisional sales in the category totalling $1.11 billion, against 4093 sales totalling $1.06 billion in the corresponding period a year ago.
Bunt said that with plenty of residential properties well on the way to matching rural prices, city dwellers were increasingly able to invest in a country home.
