So what’s happening in the rural real estate market in Northland?

Obviously the dynamics of the market have changed substantially in the last 2 years. The days of easy credit have gone and supply is exceeding demand, adjusting prices from where they were 2-3 years ago.

Tony Alexander from the BNZ gave an interesting view on the national rural real estate market following the field days: “There is a recovery in farm real estate activity underway, which is not at all surprising given the improving dairy returns and the passage of time making more vendors realistic and interested in getting on with their lives. There is increasing interest being shown by buyers — this is unlikely to mean upward price movement in the immediate future, but it probably means that prices have stopped falling. On that basis one can say there is probably no longer any good reason for a potential buyer to hold off.”

Where are values sitting?

One of the challenges that we are facing is that there hasn’t been enough quantity of sales to really gauge where the new benchmark prices are. What we do know is that values have changed and ultimately the market will decide on the value of an asset. We are certainly seeing higher quality farms holding their value better, as you would expect, while less-prime land has been harder hit.

For those who have owned their farms for years and are now looking at their options, there is no other way to look at it — they have missed the peak of the market. But dairy farms are still worth a lot more now than they were 10 years ago and the returns most farmers have enjoyed on their money in that time is way in excess than the money would have made in the bank. The good news is that boats and baches haven’t been this cheap for years!

Beat the Rush

We are now getting a number of vendors approaching us with a view to selling their properties in Spring. One thing we are encouraging some of them to consider is to not wait for Spring when a flood of other listings will also come onto the market. If the farm isn’t too wet and is presenting well why not get ahead of the competition?