Cautious Aapproach To Slower Rural Market

FOR IMMEDIATE RELEASE

News Release 16 January 2009

Cautious Approach To Slower Rural Market

While December figures just released by the Real Estate Institute of New Zealand (REINZ) reveal one of the lowest turnover rates in the rural sector in recent years, properties are still holding their value reasonably well in a difficult market.

The newly available figures reflect a realistic caution in the sector says REINZ National Councillor and rural spokesperson Peter McDonald.

“Not surprisingly, there is a notable degree of uncertainty in the market as buyers and sellers both wait to see adjustments in pricing in line with Fonterra payouts,” Mr McDonald says. “We’re seeing a reluctance in buyers to step up until they have a clearer picture of the future.”

An acute lack of available finance from the major lenders is also having an effect on turnover in rural real estate, he says, but despite the big drop off in sales volume, dairy farm prices are still showing an average of $52 per kilogram of milk solids.

The median price for all farms in the three months to December 2008 was $1,525,000, only slightly down on the three months to November 2008 at $1,542,750 which also compares favourably with the corresponding period in 2007 of $1,650,000.

Median prices are stable across the whole rural sector and very much on a par with the same period in 2007. They are considerably stronger in Waikato with a median price of $3,150,000 in the three months to December 2008 compared with $2,365,000 in 2007 and in Taranaki $2,175,000 compared with $1,500,000 and in Canterbury, $2,800,000 compared with $1,925,000.

Lifestyle properties in terms of value remain consistent. The national median sale price for the three months to December 2008 was $450,000 compared with $455,000 in the same period last year. However, the number of sales has dropped to 959 in the three months to December 2008 from 1793 in the corresponding period in 2007.

“The slow down in the number of sales is of course of some concern, but the fact prices still hold firm is reason for optimism. Once some of the uncertainties impacting on people’s decision-making, such as the adjustment to the Fonterra payout, interest rates settling and funds become more freely available, I expect to see some confidence return to the rural real estate sector,” Mr McDonald says.

ENDS

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