It’s a sham

18/12/2009

Our Riverton farm was on the market earlier this year.

At the time the grapevine was buzzing about a Maori bloke who was signing up farms without setting foot on them.

Shortly after ours was signed up by a man offering a 1% deposit after unspecified due dilligence.

The real estate agent told us he had absolutely no confidence in the offer and we didn’t accept it.

It sounds very like the offer came from the same outfit which the ODT reports has bought 28 farms in Southland.

A Maori trust, with financial backing believed to come from Dubai, has contracted to buy 28 farms in Southland, with plans to buy others throughout the country.

The cost of the farm purchases so far is estimated at more than $150 million.

Inquiries by the Otago Daily Times have revealed concerns in the rural industry about the group’s actions, from delays confirming the sales contracts to deposits not being paid as expected.

Two of Southland’s largest rural real estate companies, PGG Wrightson and Southern Wide, declined to deal with the trust, but the farms have been bought through other real estate agents.

That the two major firms won’t have anything to do with the trust is pertinent.

If it’s the same outfit which made the offer to us, it’s a sham.


Bollard says some farms must sell

12/11/2009

Real Estate agents’ phone have been busy since Fonterra announced an increase in its forecast milk payout.

Some calls have been from would-be buyers and a few have been from vendors wanting to take their farms off the market.

They’d been under pressure from banks but the increase in the payout has given them some respite.

The sharp drop in the payout last season provided a wake up call for farmers who had borrowed heavily and many will use the increased payout to reduce debt.

However, the increase might not be enough for everyone.  The Reserve Bank’s financial stability report says some farms are carrying too much debt and will be forced to sell some or all of their operations.

Very few farms have sold in the last few months because buyers have been holding back but that changed this week.

No-one rings a bell at the bottom of the market, but the number of calls real estate agents are fielding suggests dairy farms, and their prices, might be about to move again.


Increased payout will help farm sales – updated

09/11/2009

A rural real estate agent in South Canterbury said when Fonterra’s forecast payout went up 55 cents in September his phone started ringing.

People who had been holding back for the bottom of the market started showing an interest in buying.

Today’s announcement of a further 95 cent increase in the forecast payout will confirm the belief that the market has bottomed out and attract more buyers.

It may also result in more farms listed for sale as potential vendors who have been holding back see an opportunity for a better price.

Farm sales and conversions slowed markedly with last season’s lower payout. The latest increase will widen the gap between dairy returns and those for sheep, beef and cropping which might result in more farmers considering a change to dairying.

However, the sharp drop in last season’s payout and the volitility in the market have made farmers more cautious.

The big payout in the 07/08 season encouraged a lot of spending. This included more intensive systems to boost production which were found to be unsustainable when the milk price dropped.

The most efficient way to convert grass and water to milk is to let cows graze pastures. Our climate and soils allow us to do that very well and relatively inexpensively in terms of both money and the impact on the environment compared with other countries where the feed is taken to the cows.

The decrease in payout gave a reality check and reminded us that our natural advantage is pasture based production.

The increased payout will boost farm sales and it may boost conversions. But those who’ve learned from the volatility of the last couple of season won’t be rushing to boost production with expensive inputs.

UPDATE:

Adolf at No Minister puts some figures on the impact the increase will have on the wider economy.

BK Drinkwater does a payout for dummies translation of the figures.


Sales and prices down

25/09/2008

A real estate agent tells me that property sales in Wanaka are down around 65%.

The average sales were about 30 properties a month but they haven’t got to double figures for months.

Prices have fallen about 15%.

Another agent tells me Wanaka real estate is booming and opportunities abound.

I think the pessimist is more likely to be right.


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