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Three farm sales a day failed to settle last week because of the global credit crunch, with some buyers forced to walk away from deposits worth hundreds of thousands of dollars.
One real estate company said the sale of 15 farms throughout New Zealand fell over last week because funding that had previously been arranged could not be secured on time.
Some of those contracts were unconditional when funding became unavailable, forcing the buyers to walk away from deposits worth several hundred thousand dollars or pay penalty interest, said a rural real estate agent, who asked not to be named.
For each sale that failed to settle, up to four other land and property deals were affected. "You have to be in a really strong position to settle a rural real estate deal at the moment."
He said the uncertainty had placed many farmers under enormous stress and strain.
The director of rural investment company MyFarm, Andrew Watters, said banks were tightening their lending criteria, and he had noted several were not as active in rural lending as they were a few weeks ago.
"We've had a number of traditional banking partners, but some are now sitting on their hands a bit."
Uncertainty due to the credit crunch had forced him to cancel a $30 million syndicated purchase of four Canterbury dairy farms.
He said he might still buy one of those farms, and he was continuing with the purchase of a King Country farm for dairy support.
"It means we will do a few smaller specialist projects. The outlook is still good but not as good as it was."
ASB rural banking manager Craig McBeth said his bank's funding criteria had not changed and the bank remained confident in the future of agriculture, but every deal was assessed case by case: "If the cash flow is not there we are less inclined to look at them now than we would have six months ago because of the level of uncertainty out there."
Where the ASB had committed to funding a transaction, Mr McBeth said it would not withdraw.
ANZ-National Bank rural banking managing director Charlie Graham said he was aware some farm sales had fallen over, and funding and liquidity had tightened, but the bank had not changed its rural sector credit policies or lending criteria "in any shape or form".
"We continue to meet all the commitments and obligations that we have in place with our clients," he said.
Specialist rural lender Rabobank has also said it was "business as usual."
The bank's New Zealand rural manager Ben Russell said it would continue with the same approach to assessing loans it has previously used.
Westpac's agribusiness area manager for Otago and Southland, Peter Moynihan, said the bank has not changed lending criteria for farm purchases and did not envisage doing so.
Directors of a large Canterbury farm, Canterbury Grasslands, were reconsidering a decision to sell the 2700ha business, which consists of six dairy and dairy support farms, north of the Rakaia River.
Chairwoman Sharon Rayne said it was to have been sold privately and the proceeds invested in the company's United States business, but the international financial meltdown had prompted them to reassess their decision.
Southern Wide Real Estate director Dallas Lucas said he had noted some indecision in the market in recent weeks due to the credit crunch. "People are more cautious selling and buying, especially buying."
Interest in buying sheep and beef farms to convert to dairying had declined, but Mr Lucas said that was due more to spiralling conversion costs and the greater availability of existing dairy farms on the market than the credit crunch.
- OTAGO DAILY TIMES
