As an industry it has been a demanding season for us all, with on farm costs, interest rates, an uncertain political landscape and fluctuating milk price ensuring a challenging environment. Despite this we have continued to see on-going interest in property across the region and despite a reduction in overall transactions we still see long term interest in Taranaki property remaining strong.
Latest REINZ Farm Sales Statistics
Recently released national statistics have confirmed the trends we are seeing across the Taranaki region with significant reduction in property transactions across the country. According to data released at the end of February 2024 by the Real Estate Institute of New Zealand (REINZ), there were 142 less national farm sales (-38.4%) for the three months ended January 2024 than the same period in January 2023.
Further to this, in the year to January 2024, 919 farms were sold. This was 475 less than in the year to January 2023, with 43.7% fewer Dairy farms, 7.1% fewer Dairy Support, 37.8% fewer Grazing farms, 35.3% fewer Finishing farms and 26.1% fewer Arable farms sold during the same period.
Looking at regional trends, Manawatu-Wanganui ( -25 sales) and Taranaki ( -20 sales) recorded the largest decreases in sales across the country.
The median price per hectare for all farms sold in the three months to January 2024 was $30,940, down from $32,895 recorded for the three months ended January 2023 (-5.9%). The median price per hectare fell 8.9% from December 2023.
These trends have ultimately pointed to what many of our agents across the region have noted, with interest in properties across the region still at strong levels however economic factors preventing many sales being completed.
This sentiment was shared by Shane O’Brien, Rural Spokesman, at REINZ who stated in his latest report, “The market has continued its downward trend as volumes of sales recorded dips again during the first month of 2024.The reduced dairy payout plus rising farm costs and the higher interest rates are causing dairy farm buyers to take a cautious approach with many farmers focused on farm operating costs at this time. Although many farmers are buoyed by the recently announced lift in dairy payout for this season by Fonterra and encouraging results in the recent Global Dairy Trade auctions, this is yet to transpire in an increase in sales activity so far this year.”
Looking Ahead to Next Season
Having a clear strategy
This season more than ever, it has becoming abundantly clear that when looking to sell your property you need to enter the market with a clear strategy and have prepared well in advance to execute this plan. With current interest rates many buyers are now acting with high levels of caution with borrowing ability for those looking to purchase, especially if this is a first farm, being significantly reduced. Farm financial performance, condition of key infrastructure and environmental compliance have become key drivers for purchasers and their supporting rural professionals therefore it’s important as a vendor you are working with your salesperson well in advance of entering the market to ensure you put yourself in the best possible position to sell. There are plenty of farms on the market across the region each season with limited buyers, therefore great presentation and a clear strategy are key to success.
Being flexible
Different sale options are also important for vendors to consider prior to going to the market with a number of purchasers currently not in the position to purchase an entire farm in a single transaction. Alternative options need to be considered prior to marketing. This may mean the lease of a title or a vendor finance option which in many cases can now be a key factor in whether farms are sold or remain on the market for a further season.
Prepare a strong team
As much as it’s important for vendors to have an exit strategy it’s also important for aspiring purchasers to also be working closely with their key rural professionals to get a strong understanding of their purchasing abilities prior to entering the market. There are a number of exceptional rural professionals across the region who want to work with farmers to prepare them for any potential purchase so it’s essential this is utilised, and strategies are developed. You never know when the perfect property will enter the market and you want to be ready to move when this opportunity arises.
Final Thoughts
To those moving onto a new venture or exiting the industry, we wish you all the very best. The team at McDonald Real Estate would like to thank all the farmers we have worked with across the 2023-24 season. We look forward to the coming season and the new challenges and successes this will bring and are confident that looking to buy or sell, our rural team will have the energy and experience to get results.
To all our farmers across the region, know that you farm in the greatest region in the country, take a moment to be proud and take great satisfaction in what you have achieved and what lies ahead, just like us.
Cheers, Dan Butler.
