In summary, supply is high, with a number of properties available over all areas and price brackets. To date there have been a lower number of transactions occur vs historic precedence. Capital availability is high, however significantly higher interest rates, labour shortages, and rising on farm costs are reducing confidence. Regulatory pressures remain.
This season has started off slower than historic data indicates. While its early days, the number of farms having transacted up to 1 January is down approximately 25% vs historic averages. Looking forward, despite the large volume of properties for sale, we expect the volume of transactions to be back on last season. To date, sale prices remain buoyant, with Total Sale Prices back approximately 3.2% on last Season.
The pastoral market has been particularly buoyant over the past two seasons. This has resulted primarily from the substantial increase in the value of carbon (NZU’s). Above average product prices has also led to value increases for finishing land. Product prices are currently under pressure which may reduce confidence in the sector.
Purchasers of farms for conversion to forestry are varied, from private individuals, to corporate and overseas investors. Within the Waikato, approximately 45% of pastoral farm sales over 200ha will be planted in forestry. This equates to approximately 7,500 hectares of land. While we note not all of this land can be planted, with areas of natives included, it provides guidance on the scale of change we are and will experience. Without regulatory intervention, we expect this trend to continue.
On a regulatory front, during September the government released the National Policy Statement for Highly Productive Land (NPS HPL). It came into effect on the 17th of October. In summary, the policy statement has the intention of giving Councils more direction on how to map and zone highly productive land, and manage the subdivision, use, and development of this land.
Land which is classified as class 1 – 3 is deemed “Highly Productive Land”. Within the Waikato, approximately 24.4% of all land is classes 1-3 with this area totaling approximately 580,000 ha. The location of this land is left in green.
If the land hasn’t been already earmarked within planning documents for urban development, it is subject to the policy statement. For development to occur Councils would need to determine that other suitable land is not available, if intensification (including that enabled by the new Medium Density Residential Standards) is not viable or appropriate in other areas.
“At this stage, Surveyors’ and Councils’ are still coming to terms with the implications of the Policy Statement. ”
Subdivision of highly productive land, or a rezone for an urban development or rural lifestyle use, will require a resource consent or a plan change to be undertaken. In the case of subdivision, a person subdividing land will need to demonstrate that the productive capacity of the land will be retained, or that permanent or long-term restrictions on the land mean it is no longer viable for land-based primary production. This will be a challenging task. While initially many people envisaged the policy statement was likely to relate to medium to large scale subdivisions, the policy statement will apply to any subdivision on highly productive soils. The likelihood is that rules regarding the subdivision
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