New Zealand rains dampen land sales, as well as milk output

17.11.2016

Wetness in New Zealand, besides denting milk production and washing out the first day of international cricket for the season, is putting the dampeners on the land market too, in delaying the spring marketing surge.

Farmland sale volumes over the winter months of August-to-October proved "reasonably consistent with the same period over the last two years", real estate institute Reinz – remaining flat at seasonally soft levels of a little over 350 for the period.

However, hopes among land agents of the spring bringing a fresh batch of properties to market have been undermined by the wet weather which, for instance, this week landed parts of North Island region with more rain in a day than typically received in a month.

Wainuiomata, in Wellington region, for instance, received 109.5mm of rain in 24 hours, according to MetService.

'Extremely wet, unpleasant conditions'

"Whilst a number of properties are programmed to come onto the market during the current spring, in some areas of the North Island in particular, extremely wet, unpleasant conditions have caused some vendors to delay their marketing programmes," said Brian Peacocke, the Reinz rural spokesman.

Vendors are waiting until their farms are "more presentable", he said.

"An urgent need for more sunshine in the dominant factor in many regions."

'Significant impact'

In terms of prices, values of farms sold last month were 5.9% higher than a year before, according to a Reinz index which adjusts deals for farm size, location and farming type.

The increase defied an 8.7% fall in dairy farm values, year on year, according to Reinz - which noted in northern areas of North Island "indications of land use change, with some marginal units changing to beef" in the face of milk prices only now emerging from a two-year slump.

The revival in world dairy prices - which are up 16.5% month on month at New Zealand-based GlobalDairyTrade auctions – is in fact being helped by the dent to the country's own output from the wet weather.

Dairy giant Fonterra two weeks ago, reporting a 2% drop in its New Zealand milk receipts for September, warned that "the challenging weather conditions of late will have a significant impact on the peak milk volumes, and future production for this season"

The group, which runs GlobalDairyTrade, has since August 1 cut by more than 55,000 tonnes the volume of dairy product it will sell at the auctions over the next 12 months.


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