Foreign interest buoyed by lower Kiwi dollar

Interest in dairy properties is tepid in the wake of lower pay-outs, but dairy farms doing well remain attractive to buyers.

The rural property market remains surprisingly resilient in spite of the sharp fall in dairy commodity prices, and there is even early evidence of a spring bounce in farm sales.

Rural economists say spring listings have been reported as strong in many areas, which bodes well for prospective farm buyers.

The latest data released by the Real Estate Institute shows there were five more farm sales during the three months ending in September than the same period last year.

This was a 1.5 per cent increase in sales.

The median price per hectare for all farms sold in the three months to September was $26,000, compared with $22.851 recorded for the same three months a year earlier. This was a 13.8 per cent increase.

Five regions recorded increases in sales volume, with Northland recording the largest increase in sales (plus 22 sales), followed by Auckland (plus 12 sales).

The institute's rural spokesman, Brian Peacocke, said the rural real estate market was reasonably quiet in September, with sales volumes similar to the same month last year.

"However, comments from around the regions confirm strong buyer interest for good-quality, well-located properties, with indications of a reasonable supply of listings as spring advances.

"In contrast to the dairy sector, where the reduction in payout has dominated the news, the sheep and beef sector is experiencing increasing prices and an improving outlook for product returns."

September sales in the horticultural sector were better than for the same month in the previous two years.

He said early sales of dairy units in Waikato had achieved per hectare levels firm on last season, with quality dairy support units also having sold strongly.

Horticultural sales in the Bay of Plenty reflected improving conditions in the kiwifruit industry, with green and gold orchards in good locations being keenly sought after at good prices.

Mr Peacocke said sales of finishing and grazing properties remained steady across the country, and there had been "healthy" enquiry from the investment sector for quality rural properties.

ANZ Bank rural economists reported anecdotal evidence of strong listings of rural properties this spring.

"This bodes well for those with strong balance sheets and in a position to grow, but it remains to be seen what impact the lower pay-out will have on buyers' risk appetite," they said in their October Rural Focus publication.

The bank economists said foreign investors could also provide support on the buy side, with a lower New Zealand dollar and the resolution of the election risk.

"At this stage, it seems vendors will probably be unwilling to accept too much of a step down in price in 2014/15, but it could be a different story, if the lean patch for dairy incomes extends beyond a year."

The economists said lower prices seemed likely for dairy-aligned property, but the better outlook for farm-gate prices for the other sectors probably gave them more breathing room.