Welcome end in sight for forced farm sales

Welcome end in sight for forced farm sales

Is this just real estate spin or is rural real estate on the move again and can we expect modest price rises based on stronger product prices and profits?

As reported earlier from the June real estate figures, more farms are being sold than last year, but at values last seen in 2004. The banks have signaled their intention to lend more on profits and less on land value, so if product prices continue, we can expect more sales.

The challenge for the livestock industry  is improving average on farm performance closer to the level of the top 20%, which will help achieve satisfactory profit goals, and allow farm expansion options to be explored.

Forced farm sales have almost dried up, says one of Bayley's leading farm sales managers reports The Manawatu Standard. Pete Stratton said there had been high-profile sales such as Ken Thurston's Tawera Farms, which were in receivership, and two cattle farms in northern Manawatu which were owned by the Capehorn and Nitschke Trust.

In some cases, people had bought land at the price highs of 2004 to 2006, and were caught out by several years of low product prices and little or no capital gain, he said. "Steep hill country is still selling, but it is harder work with fewer tenders than the good land, which is always in demand," Mr Stratton said. In the past 12 months, forced sales made up one-third of the $120 million of farmland sold in the region. That compared with only 20 per cent in the previous 12 months.

"Although Whanganui-Manawatu is one of the biggest region's for sheep and beef, there have been few dairy farm sales." But there had been interest in sheep and beef finishing properties.Most of the "stressed farm sales" were over, with only a few more still to come."But we're seeing a confidence with high product prices we have not seen before," he said. "Many of the banks are taking a wait-and-see approach."

He said historically banks were more relaxed with their lending, relying on capital gain, but now cash flow was king, and if the figures did not stack up, banks were reluctant to fund land-buying.Mr Stratton said the Rugby World Cup and the huge lift in farm returns would generate renewed interest in farmland from expatriates coming home or visiting New Zealand. He believed the bottom of the price cycle for farms was last year, and a large pool of unsatisfied buyers were still keen to enter the market.

We welcome your help to improve our coverage of this issue. Any examples or experiences to relate? Any links to other news, data or research to shed more light on this? Any insight or views on what might happen next or what should happen next? Any errors to correct?

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Reale estate spin. Does Pete Stratton know what banks strategies are? Bankers saying lamb prices next season $95. Banks have mortgages due to rolll over Nov this year and farmers received letters stating mortgages won't be renewed sell up or try and refinance.

Amazing what the World Cup is going to do for Farm sales, the great panacea.

Banks still have reserve bank regs to accommodate so lending policies not going to change anytime soon.Many of the forced farm sales happening quietly.

Talked to a rural bank manager couple of days ago.He said that they have put together quite a few proposals recently(obvoiusly for some of their "better positioned" clients) for farm purchases/expansions but in the end the clients "walked away"....i.e they got cold feet and were testing the water and then thought better of it..

I guess these "clients" dont see any major farm price increases on the horizon any time soon...

But won't peak oil will take the shine off commodity exports - more expensive to get products to the port and from the port?  Plus, heaven forbid, it looks like we are in for one shiner of a Global Depression!  The award-winning documentary 'Inside Job' - claims it will make the 30's Depression look like a walk in the park.

Not just exports, everything we do is oil based, down to the food we eat.....

30's Depression ~ The Long Depression in the 1870s was apparantly worse, it was the GD that hit the US very badly....seems its credit driven....and what debt there is to drive it....way worse than the 30s....In both cases we came out because raw materials were cheap and plentiful, cant say the same this time, so how do we get out?

regards