Finance blockage for farm sales

Finance blockage for farm sales

EMBARGOED to 6am Tuesday 25 August, 2009

Banks might be relaxing criteria for residential property but are still tight toward farm lending, according to First National's quarterly rural survey.

First National's rural real estate agents surveyed last week showed farm sales volumes for three months to mid August on average were less than half those of a year ago.

Access to finance was reported by 40% as a blockage in the domestic farm sales market, despite some bargain buys on the market.

Taranaki had the strongest market with 15 farm sales, on par with the same period last year, with agents reporting demand and supply for dairy beginning to strengthen after a particularly quiet first quarter.

The record priced dairy farm that First National sold in 2007 in Taranaki for over $13million recently resold for half the price.

Mid Canterbury and Waikato reported very low farm sale volume, shortages of listings and low farmer confidence.

Many agents reported deals dependent on finance falling over due to banks' tight lending criteria.

First National General Manager John Stewart said tight lending criteria was not always justified.

"It is understandable with dairy and the low payout, but the high dollar means lamb and beef returns are very good this year. That would make these types of farms very profitable but despite that, buyers are showing little interest.

"An example to hand is a great farm in the central North Island worth over $4m that is being marketed by its owner for $2.6million but still can't attract a buyer.

"Over the past year farmers have taken a hammering on all sides and possibly don't have the heart themselves right now, as well as the banks.

"Of real concern in Marlborough and the Hawkes Bay/East Coast area, is the decline in international demand for the likes of chardonnay wine, resulting in major winemakers cancelling grape purchase contracts fo 2009 and 2010, decimating regional incomes."

On the bright side, lifestyle property sales were busy over most of the country, with 79% of the network's rural offices reporting steady or increased demand for lifestyle properties. Listings for lifestyle properties were up in most areas.

On the international buying front, agents in Central Otago reported the high dollar was discouraging investment in rural properties traditionally attractive to overseas buyers.

Stewart commented that notwithstanding the above, there were growing indications of a lift across most rural sectors with many prospective purchasers planning to take advantage of lifting farm returns in 2010.

ENDS

About First National Real Estate
With over 450 offices throughout Australia and New Zealand, First National Group offers the most progressive real estate services available. The network's membership sells, leases and manages property with the promise of putting consumer interests first - at all times. First National has the industry's leading technologies and is the only network to offer an ISO Best Practice Quality Assurance accreditation system to its operators. Agencies belonging to the network are selected based on their consistently ethical conduct, commitment to excellence, and superior local knowledge. First National Real Estate members are backed by the resources, systems and standards that only a large network can provide.

© Scoop Media