A strong start to the year for agricultural sales in the central South Island shows no signs of slowing down.
Rural real estate agents are talking about the first quarter of the year as the busiest in several years after January’s best sales in a decade.
PGG Wrightson Rural Real Estate managing director Peter Newbold said February was traditionally a “building” month after a slow January, but sales, values and units were well up for both months .
“If we look at February compared to a normal February, then it’s very strong. You could say it’s continuing. The numbers look very strong for February and up from previous Februarys.”
He said the traditional autumn rosters might have come up due to the green countryside and high prices for dairy, mutton and beef.
Mr Newbold said some of the interest in sheep and beef properties had been driven by forestry, but there was another demand.
Sheep and cattle farmers were looking to upgrade from a 3,000 unit property to a 6,000 unit farm or build on their property base and dairy farmers were looking for more pasture in the traditional “heartland” area like some parts from Canterbury, Otago, Southland and Waikato. Urban groups new to agriculture also wanted to invest.
“I think sheep and beef will stay strong. The challenge will be listing availability. Yes, we do sell dairy, but there’s not the same excitement as sheep and beef. I’m not negative , but there’s probably more energy.”
He said there was an argument that a good time to sell a dairy farm was during a high payout, but many reasonably sized farms were worth between $10 million and $15 million.
Perhaps there was a confrontation between buyers and sellers with price expectations. Question marks over compliance and the environment were also having an impact, he said.
“Once again, we sold a good number of [dairy farms]but it’s not as smooth as other sectors.”
The company recorded strong sales in Otago, Southland and North Canterbury as well as Mid Canterbury for dairy, sheep and beef properties.
The outlook was bright with potential risks including fallout from the Ukraine crisis and, in the short term, meat processors becoming understaffed as teams fall ill with Covid-19.
Mr Newbold said sales of kiwifruit were on the rise, with listings appearing because growers were dealing with family succession and retirement or wanted to sell in order to develop another bloc.
The Bay of Plenty orchards were selling for $2 million per hectare of canopy, with PGGW selling one block for almost $38 million and another for $37 million.
Nationally, Colliers had more listings, greater demand and higher prices across the country, with the traditional slow start to the year almost non-existent.
The company says the rise in dairy farm values is being boosted by Fonterra which raised its milk payment forecast to a new record high in late January.
Christchurch rural manager Richard O’Sullivan said more than $300 million in dairy farm assets, or around 30 farms, are expected to be sold in Canterbury this season.
That was up from 18 dairy farms sold in the 2020-21 season and eight in 2019-20, he said.
Mr O’Sullivan said the certainty of a milk price of over $9 for next season was attracting new entrants with the backing of equity from established operators or family farm businesses.
So far this year he had sold a 226ha property in Geraldine to a first-time farm buyer, a 250ha dairy farm in Oxford for $11.85million and another Waitaki Valley farm for sale before the deadline will close in early March.
Southland and Otago sales volumes and prices are also on the rise.
The Real Estate Institute of New Zealand recorded $242 million in dairy farm sales in the region last year, up from just $85 million in 2020. Farms were also changing hands at higher prices, the price average increasing by more than $1 million last year.
Colliers says horticultural land leads the pack in terms of land value, particularly kiwifruit and avocado orchards in the Bay of Plenty.
A new high of $2.1 million per hectare is being set for golden kiwifruit.