Canterbury

Rural Market Update

The Canterbury rural market is not immune to the rise in interest rates and on-farm inflation, which is putting the squeeze on returns for farmers and growers in the current season. The impact has been a reducing buyer pool for properties offered to market, with one or two genuine buyers operating at tender or auction as the new normal.

Buying interest has ranged from well-established local operators to renewed interest from out-of-town buyers. PB has completed several transactions this season where the buyers have originated from the North Island.

As always, quality rural properties sell well, no matter the market forces at play, and this has been clearly evident over both spring and summer with Canterbury rural real estate. Well-located dairy and dairy support properties with irrigation, land-use consent and quality infrastructure have been met by strong market demand.

Season to date has seen 11 dairy sales for $106m, back a third on last year, but the median price per hectare is still holding at $49,000/ha both this season and last.

All Canterbury rural sales (20ha+) season to date are back a third at 75 sales, season to date on last year (109). However, the median price has strengthened at $39,000/ ha, reinforcing that quality properties sell at full value in the Canterbury market.

The market is discounting farms with uncertain consents or poor compliance records, and farms in second-tier locations are proving harder to move at last year’s prices, given the squeeze on operating margins.

The arable sector has experienced a much-improved harvest, helping confidence. Arable land values are still typically below what is being paid for dairy support. This reflects land use compliance constraints rather than any lack of demand for quality arable land.

Enquiry for sheep and beef properties continues to be strong across the region. Weakening schedules, a softening commodity outlook, and higher interest rates will likely weigh on this market over the second half of this year.

Looking ahead, it is hard to envisage the current pressures on the rural land market changing in a hurry, and we probably should consider this the “New Normal” for buyers. So as buyers seek to gain a competitive advantage over the rest of the market, we should anticipate the due diligence and extended timelines to conclude contracts with vendors.

If you’re considering selling this coming Autumn or Spring, having the right team on your side will be vital.

The reach of our team across rural New Zealand is second to none, supported by experienced local agents with a proven track record of securing the best terms no matter the market conditions.

It gives me great pleasure to introduce you to our South Canterbury rural team that will leave you in no doubt you have chosen the best to represent you, whatever your real estate needs.

Gareth Cox, Canterbury Rural Manager gareth@pb.co.nz