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25 March 2024
Market Commentary

Property report: Tough times slowing the rural market

The rural property market is finally starting to see more activity following a difficult period for farm sales.

“To be brutally honest, it has been tough for some time,” General Manager of PGG Wrightson Real Estate, Peter Newbold, told The Country’s Jamie Mackay.

“But…in the last couple of weeks, we’ve just seen some more activity.

“It’s not booming but [there’s] definitely more activity.”

Newbold said the days of purchasing a property to make a capital gain were gone, with buyers very focused on the potential return.

He’d noticed a lot more due diligence was being carried out.

As a result, he said, vendors needed to be realistic about the current market, or their properties wouldn’t move.

Mackay put it to Newbold, that one of the challenges for sheep and beef farmers was the changing landscape of potential buyers.

He said farmers could have sold “to trees” a year or two ago, and, before that, dairy grazing.

“Those options are now off the table, so there is a limited market,” Mackay said.

Newbold agreed “100 per cent” and said the sheep and beef sector had some “real challenges” in the marketplace.

“It is a totally different market at the moment than it was one, two [or] three years ago.

“The trees that underpinned values for a number of years…have gone.”

However, Newbold didn’t expect the downturn to last.

“I honestly think the sheep and beef will come right,” he said.

“Some people might disagree with me, but over time when some of the values are reset, it’s a great industry to be in.

“It will take some time and we just need to support those farmers out there at the moment.”

The dairy sector was seeing “a little bit of momentum” at the moment, which was “a real positive,” according to Newbold.

“I think that will continue…[there are] good things [happening] in the dairy world.”

In terms of horticulture, Newbold said he was not seeing as many listings as he expected, given the favourable conditions in the sector.

“Viticulture has had low yields, but it’s going to be quality crops; kiwifruit is looking really strong.

“Within a couple of weeks, things can change pretty quickly, but those two areas are looking good.”

Newbold said factors such as high operating costs, low returns and climate conditions had proved challenging for farmers lately.

“It hasn’t been easy.”

He acknowledged any drop in the OCR would have a significant impact on the market and public sentiment.

“Sentiment drives everything I believe.

“So, let’s look forward and hope that things improve in that space - from an interest rate perspective, any drop is positive.”

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