City dwellers’ dreams to capture a slice of country life are being restricted by a shortage of listings despite excellent interest rates bolstering purchasers’ borrowing power, according to First National’s quarterly rural property survey.
First National Group Chairman Jill Quaid says, “Many people must have had a move to a lifestyle block high on their wish list for 2012 as there has been a notable increase in enquiry from interested buyers since the beginning of the year.
“The difficulty is there is a shortage of places for these keen buyers to consider, even though interest rates remain at record lows and banks are providing a supportive lending environment.”
Overall listings for rural properties across the First National network are down 14% from the previous survey in September.
Listings in the lifestyle sector fell 16% in that time.
The popular lifestyle areas of Rotorua and Cambridge are bucking this trend, showing an increase in the number of listings.
Horticultural and grazing land were the only rural categories to report an increase in listings in the summer compared with September, rising 81% and 12% respectively.
Categories where listings fell alongside the drop in lifestyle properties for sale were dairy, arable land, finishing land and bare land.
Regions where buyer enquiry has risen this summer include Southland, the central North Island, and the Bay of Plenty.
Demand has also increased in Canterbury, but purchasers’ nerves are still evident amidst the continual shakes being experienced around Christchurch as people search for new living options when their post-quake home situations are finalised.
The survey, which measures listing levels, sales, market trends and overall activity across First National’s nationwide network of rural realtors, shows sales in the last three months are markedly lower in the lifestyle sector compared with the previous quarter.
“Vendors are still tending towards being overly optimistic with their price expectations,” Rotorua rural sales specialist Chris Meban says.
“The uncertainty in the world economy is making buyers cautious and they are not extending themselves even though the banks are saying interest rates will remain low.
“People are not taking risks as they might have done in better times,” Meban says.
He notes there has been increased enquiry for bareland, especially for smaller sections a hectare or less, in the Rotorua region.
“In recent years some bare land listings would take three years to sell – it has been a tough sector. The fact that enquiry is up is a promising sign of a boost to the bare land market to come,” Meban says.
In the central North Island, he also notes there’s been an increase in the use of tenders as opposed to auctions because there are fewer cash buyers around and tenders allow conditional offers.
Nationally dairy listings fell 43% from September.
In the Taranaki region there’s a shortage of dairy farm listings in the popular 60,000-100,000 kg of milk solids sized properties.
“The shortage of listings is most likely due to current good dairy payouts together with a good growth and production year. Owners are obviously holding on to their properties for a year or so while things are good,” Allied Farmers Stratford First National Principal Owen Mills says.
“At the same time there are more buyers emerging into the market looking to buy dairy land because of good returns, along with very favourable interest rates and a slowly returning confidence,” he says.
“Good quality, well located dairy land is selling well and I believe the gap between first quality and second quality farms is widening and this trend will probably continue,” Mills says.
“For example, top quality dairy land in Taranaki will sell for $50,000-$60,000 per hectare, while land that is not so well located or not so well contoured is selling more at $30,000 to $38,000 per hectare.
“Buyers are genuinely being more selective and favouring better quality land as management of hillier, contoured land is more challenging,“ he says.
In Marlborough, the low returns for grapes are influencing the market as buyers are reluctant to commit to a purchase when the prospects are grim.
In Te Puke PSA’s influence on the kiwifruit industry has been disastrous, but new rateable values for properties in the area are assisting with a correction to prices.
The outlook for lifestyle properties differs depending on the region.
There are good buying opportunities for those looking to move into the lifestyle sector in Southland.
First National’s Otaki office reports more people are buying bare land and building a home as existing, quality lifestyle properties are few and far between.
In Richmond and Blenheim sellers are advised to consider all offers and not to put their property on the market unless they are prepared to meet purchasers’ expectations.
NB: Invercargill is a new office for First National. It opened in January.February 17, 2012