As we head towards the end of the season and farmers around the region lock in their plans for the new season ahead, our rural team at McDonald Real Estate have reflected and prepared an overview on this season’s farm activity across the region.
In this article, our team provide insights on the activity we have seen this season as well as a look at what we expect in the coming season.
To provide you with the most up-to-date national and regional rural property statistics, we have utilised the most recent data released from the Real Estate Institute of New Zealand (REINZ) as well as commenting on some of the key factors influencing rural property sales across this season.
We also explore some of the key factors that have influenced rural property sales during this time. We will provide more in-depth knowledge of elements that may affect your selling or purchasing decisions going forward.
- National rural property data from the past season
- Taranaki rural property data from the past season
- Looking ahead to 2023 and beyond
- Upcoming events with industry leaders in Taranaki
National Farm Sales Statistics – REINZ (March 2023)
In March 2023, the Real Estate Institute of New Zealand (REINZ) published data on rural buyer behaviour. It showed that buyers continue to take a cautious approach when purchasing land due to higher interest rates, government uncertainty, and rising farm input costs.
Across New Zealand, 1,345 farms were sold in the year to February 2023, 457 less than were sold in the previous year.
Much of the lower sales volumes can be attributed to a lower number of listings of farms for sale during Summer and early Autumn. Buyers are also being very mindful of market conditions including interest rates and inflation affecting farm operating costs which are ultimately squeezing any profitability margins and debt servicing ability for farmers.
Buyers were still present across all rural markets, however, they have been more considered in their buying decisions, looking to target well-developed properties that represent good investment opportunities.
Total rural properties sold
| March 2021 – Feb 2022 | March 2022 – Feb 2023 | |
| Total properties sold | 1,802 | 1,345 |
Average sale price (per hectare)
| 3 months ending February 2022 | 3 months ending February 2023 | Percentage increase (%) | |
| Dairy farms | $40,450 | $44,050 | 8.9% |
| Finishing farms | $33,130 | $39,365 | 18.8% |
| Grazing farms | $12,070 | $12,900 | 6.9% |
Taranaki Farm Sales Statistics – REINZ (March 2023)
Rural Property statistics across the Taranaki region this season have been reflective of national trends with a total of 24 fewer properties sold at the end of February year-on-year. This has been a result of buyers being cautious with their spending given the significant increases in interest rates, government uncertainty, and the rising cost of farm inputs.
Despite these concerns, we saw a significant number of sales across the season and the team at McDonald Real Estate has been pleased to assist dozens of farmers with the sale of their rural property.
Buyers were certainly present in the market, with many still seeing a very good opportunity to focus on the future of dairy farming in the region. However, these buyers were more astute with their purchasing, choosing to look for properties that were well developed, had strong infrastructure, and had the necessary environmental consents such as a long-term effluent consent in place.
Looking Ahead
Prepare a long-term exit strategy
When considering when to list your property, it is essential for all potential vendors to create a long-term exit plan with clear timeframes. It is wise to work with an agent, looking at potential changes or developments that could be made prior to going to market.
This planning and the support of key rural professionals will ensure you have the best possible opportunity to successfully sell your property, no matter what the current market conditions. This has been evident across the current season as, despite challenging market conditions, great properties with a clear strategy remain desirable and purchasers have been willing to meet the market to acquire them.
Financing Rural Property
As the value of the property is increasingly out of reach for some buyers, financing solutions are increasingly common. Banks across the region have continued to be accommodating to potential purchasers and remain positive about the outlook for rural property across the region. However, we are beginning to see transactions with elements of either vendor finance or leasing a title from the property to provide an element of a structured payment over a period of time. If this is split over several transactions across a time period it often becomes achievable, and an agreement can be reached.
The initial payment represents a significant lump sum and then the remaining vendor finance or lease of outstanding title acts as a passive income at a strong return for the vendor. It’s important we get the right purchaser for these transactions but they can prove very successful to allow an exit from the property to occur with an ongoing income prior to a later lump sum payment for the remaining land or debt. An outcome that can prove very agreeable for all parties.
Contractual Trends
We also continue to see an increase in conditions being added to agreements. We often see a “due diligence” clause being inserted as purchasers begin to view farm property sales more as an assessment of a business’s profitability rather than a simple acquisition of land.
Vendors should not be concerned about this trend. It simply highlights the changing dynamic of land purchasing across the region and how investors are looking to assess the current performance of a business as well as any future environmental implications prior to making a final purchase decision. As a business, we will ensure we remain on top of this and continue to work towards any information we can provide purchasers during the sale process.
