$8.35m sale a positive sign

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Rural property sales could be about to turn upwards after a lull.

Industry personnel hope the sale of a Hilderthorpe dairy farm late last month for $8.35 million is a sign of things to come.

PGG Wrightson Real Estate Oamaru agent Dave Heffernan marketed the 178ha spray-irrigated property, which produced 250,000kg of milksolids from 580 cows in the 2019-20 season.

He said few dairy farms had sold in the past few months.

“Although recent transactions have been rare, the sale value of around $47,000 per hectare is close to what this farm would have made two years ago,” Mr Heffernan said.

“Listed for sale in January, the property sold to a locally based purchaser.

“We also received interest from several other parties, indicating that farms with low-cost reliable water, good soils and proven production should achieve values that satisfy realistic vendors.”

PGG Wrightson Real Estate North Otago branch manager John Sinnamon said the Hilderthorpe result was a positive signal to a market previously in hiatus.

“Several factors, including Mycoplasma bovis and banks adhering to tighter lending criteria, have increased recent levels of buyer caution.

“However, this sale shows they are becoming more attuned to current market expectations, while vendors are willing to take innovative steps to achieve the best outcome.

“In the current market you have to be more innovative to achieve a sale,” Mr Sinnamon said.

“For example, vendors might opt to retain a proportion of equity in a farm for a limited term.

“This sale proves that realistic vendors can reach agreement with motivated purchasers, which is necessary for the rural property market to remain active. It also shows purchasers remain interested.

“Current indications suggest that the spring market for listings is shaping up to be very busy with a range of local sheep and beef, arable and dairy farmers readying their properties to offer to the market.”