Confidence in the Canterbury rural property market is high, driven by dairying.
Peter Barnett, rural property manager for Property Brokers, outlined the good news at a briefing in Ashburton. Mr Barnett said there were five positives: Cashflows were improving with the product price outlook and low interest rates.
Farmer confidence was up, with 50%+ expecting improvement. There was solid inquiry for farms. Few farms were on the market, meaning less competition. Sales activity was up, with a four-year upward trend.
Mr Barnett said the market in Mid Canterbury had ''boxed on'' through fears about the effect the proposed land and water regional plan could have on land use.
Mr Barnett presented analysis from the past 13 years. The data excluded lifestyle properties. In the 1990s, North Island farmers looked south for opportunities, and many of those on the move were make-it-happen people, he said.
Conversely, from 2008, as dairying built up in the South Island, many traditional sheep and beef farmers began to look north for opportunities, most settling in the lower North Island. In the past two years, about half of the Wairarapa hill country had been bought by South Island farmers.
There was also an argument that the high productive base of South Island dairy farms was driving values in both islands, Mr Barnett said.
Over the same period, the average dairy farm had grown in size by 50%. With bigger farms and fewer farm owners, there had been a knock-on effect in the rural service sector, with lawyers and accountants commenting that they had fewer clients with higher worth.
In Canterbury this year, there had been more than 150 farm sales topping $600 million. In 2012, there were fewer than 150 sales. The market peaked in 2008 with just over 350 sales.
Farmer confidence was up and could go higher, and over the past year more farms were sold than were listed.
Many properties which had been on the market with little inquiry were now moving, with confidence up and the prospect of higher cash flows.
The percentage of farmers who expected the rural economy to improve over the next 12 months was climbing, reaching just over 50% in June this year, up from 25% in March this year and just under 20% last December.
- by John Keast