Property report: How world events and forestry affect the market
Jamie Mackay from The Country had his monthly catch-up with Peter Newbold, General Manager for PGG Wrightson Real Estate, to have a look at the state of the rural real estate market.
The big question is how the current state of the world affects the rural market. Newbold reckoned the effects were negligible. He said that with a lot of pre-sales coming into autumn, things were looking positive and that both long and short term returns and outlooks were good.
Mackay raised the issue of pastoral land going into forestry. Newbold said the situation was "interesting" and gave an example from Northland where four of the last six sheep and beef properties sold had gone into forestry. Many former dairy farms in the North were being converted to forestry or horticulture, such as avocados. Newbold said huge change was happening and, in his opinion, it had gone past the point.
However, it was great for those selling of course, as they get good value for their land.
Big money is also being made from the sale of kiwi fruit orchards in the Bay of Plenty. Demand was huge and the returns were positive – especially for those retiring and looking at succession plans, Newbold said.
Sheep and beef farms are still going well even though returns are lower than dairy.
Sales have been solid and there has been a lot of interest, with properties being listed earlier in the year than normal.
Newbold said this could be because there had been a lot of rainfall and farms were looking good because of it.
There is also demand from young farmers coming down from the North Island and looking to get more farm for their money further South.
Mackay asked why there had been a reluctance to buy dairy properties in spite of there being good returns.
Newbold thought that may be due to the sentiment out there around environmental and compliance challenges in the industry. It could also be due to the high cost of these farms, he said.
As for rural lifestyle properties, the demand was still there but there was a shortage of listings, Newbold said.
Click the play button for the full interview.