In the final episode of Land and Lifestyle Property Market Insights, Jess Davidson discusses with Property Brokers Rural General Manager Conrad Wilkshire, some of the current trends, sector insights, and the future long-term outlook for the Rural Property Market.
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Speaker 1 (00:01):
Land and lifestyle market insights on the country with Property Brokers.
Speaker 2 (00:10):
Welcome to Land and Lifestyle Market Insights on the Country,
brought to you by Property Brokers. I'm Jess Davidson and
today again we catch up with Conrad Wilshire, general manager
of Rural at Property Brokers.
Speaker 3 (00:20):
Hey, Conrad, I guess good to be back on the
show again.
Speaker 2 (00:24):
So into twenty twenty six. So let's reflect firstly on
last year and that last quarter. How did things go
in the market there?
Speaker 3 (00:33):
Look, it was a standout spring and that run up
to Christmas for the ninety days it was the strongest
royal property result in five years, with one point seven
billion in farm sales and just over ninety days. So
definitely wasn't a flash and spike. It was definitely you know,
reflected genuine gets and by demand and it's compounding quarter
on quarter. We wanted to requorder just to see how
(00:55):
it compares at the same time last year and the
year before. Wow.
Speaker 2 (00:59):
And so will you kind of expecting that, Conrad, given
how things were going or was that news to you?
Speaker 3 (01:04):
You know, we were expecting that there was. We'd seen
really strong interests from July. In fact, look at their
own business. We've had month on month record sales values
come forward, so no question, you know we you know,
we've definitely seen that trend continue.
Speaker 2 (01:22):
So with that confidence and buyers getting involved, what's driving that.
Speaker 3 (01:27):
I think a last year we saw you know, strong
pastoral farmers protecularly should be farmers, significant commodity gains and schedules,
the signing of the much stronger payout earlier in the season,
the lowering of interest rates probably the most favorable exchange
rate in sixteen years on the on the Kiwi cross
(01:48):
to the US, and all those sort of things had
definitely factored into it. And I think also a much
more environmental approach in the collaboration with the farming sector.
I think it's on a much firmer putting that has
been for a long time time with signals and changes
and regulation and the like. And I suppose existing property
rights at least, you know, having been factored into decision
(02:08):
making and the biggest change in the RMA since nineteen
ninety one on the slate for this year. But there
are big factors that sort of tell our farmers that
Wellington's not looking to be so hands on on the
day to day elements of farming, but make sure the
important retary frameworks are in place and people can make
sense of them. Yeah.
Speaker 2 (02:28):
Yeah, well that farmers do get plenty of good news
last year, as you mentioned, Conrad. So do you maybe
think that's why that late push came late last year?
People were finally seeing the proof and the pudding and
have the confidence, you know, just sitting back and waiting
to see what happens with that.
Speaker 3 (02:42):
I don't think you could attribute to any one factor.
Sure that is in combination. I think it's a general
lift in the farm gate returns definitely fuels confidence, but
it's also significant, you know, the OCRs half that it
was at the same time last year, So you know,
it's so that at two point twenty five percent, you're
(03:04):
seeing a lot of larger commercial interests, you know, getting
back to interest rates and real value terms of under
five percent. Well that's you know, that's for many farming businesses.
That's a massive shift on the same time last year.
Speaker 2 (03:17):
Yeah, and what about twenty twenty six, How are things
panning out and what's confidence like around this year?
Speaker 3 (03:25):
I think our view is that a lot of that
confidence is still very much in play, heading in through
the summer in autumn, but looking into the next season
and the second half of this year, there's just a
little bit of uncertainty. I mean, you've got an election year,
that's maybe part of it, but also a lot of
these regretary reforms haven't really had the opportunity to cut
through yet some of the change is significant. You've also
(03:48):
got interestrates are still a very affordable and relative terms,
but there's still uncentius to just how much reltary tightening
of interest rates is going to be. So there's just
a few things in the Lso you've got falmgate returns
and some softening. The payout is that global supply and
balance sort of plays out, So you know, look, commidence
is the funny thing. It's very hard to put you
(04:10):
attributed to. But what I do know is that in
the absence of that, people just are reluctant to Vendors
are reluctant to sell because they think the times will
be better, and purchases are unwilling to take on a
new venture. And there's the confidence that can pay. And
so I think all those things are there, and I
think it's very much in play for the autumn, and
(04:32):
I still think, you know, farming is still going to
continue and be in good heart in the second half
of this year, but whether people are prepared to expand
and have a crack at things in the way they've
been lately, I think there's a few question marks about
that until there's a bit more certainty in the market.
Speaker 2 (04:46):
Yeah, and just honing in on one of those aspects
Conrad export performance and the outlook for dairy. How much
is that playing into things.
Speaker 3 (04:54):
Yeah, definitely farmgate returns part of it, but they are
definitely they're a big driver of confidence, and there was
a lot of confidence tracking to ten to eleven dollars
payout and now that's the midpoint around about nine dollars,
and so that starts to, you know, effect operational gains
being made year the year terms of the profit and loss.
(05:16):
So people will just be a bit more measured. I
think this part of the word is and I think
with the other things recognized is that people are often
quoting the blue chip locations and Midcancer is featured a
lot in the spring terms of some of the sale prices,
but the great majority of New Zealand is operating on
not any forward view of where the property prices are
(05:38):
going to go. It's very much based on a few
of the underlying return in fact, and the great majority
of transactions, people are just focused on what the probably
is going to return relative to its existing operations, and
there's very little forward pricing going of future property revaluations.
It's based on the fundamental So I think that's where
it's sitting. Mostly. Is these more extensive, bigger properties, and
(06:02):
I think for dairy for a moment, it's they're once there,
bigger in scale, You're going to see a lot more
you know, rule having run over it and does it
pay its way? And is it based on the current return,
it's not speculation of future returns.
Speaker 2 (06:17):
And also that the regulation resets another thing we've touched on.
But why is this going to be a slow burn
for the market?
Speaker 3 (06:24):
The change is big. I mean, as I mentioned previously,
you've got to go back to ninety ninety one and
the introduction of the RMA and the reforms been proposed
are a complete rewrite and so it's going to take
time for that to bed in. And then there's a
whole bunch of change forecast at local and regional government levels.
And again you know that's going to take at least
two years to work through, so I think people will
(06:48):
want to see the election result and see things continue
on the current path. Certainly there's the current consensus be
taking forth another two years. That's a very strong message,
but we've still got to pass the new legislation and
we're still going to see a change in government and
see that continue, I think before the market really responds
(07:08):
strongly to that signal.
Speaker 2 (07:09):
Yeah, but what are you hearing overalls? What's the vibe
about it at the stage of things, Conrad, I.
Speaker 3 (07:15):
Think it's very I think it's very good. And the
reason I say that a food production and the environment
have sort of been put against each other for a
very long time, and that's not just a new general thing,
it's so global thing. And I think there's a much
stronger consensus now on the need for food production, the
value of it, and how it has to be compatible
with the environmental settings. But there was really I think
(07:36):
it's on an equal footing, whereas I think, you know,
the farming practices or farming has almost been subordinated, and
I think what we've realized is that you know, we
are an important global producer of food in actually how
we get the settings right just needs to be worked
through on a more equable basis. So I think that's
what the driver is, is that from confidently farmers again,
(07:59):
which is I think.
Speaker 2 (08:00):
Yeah, absolutely. And let's talk about forestry and how that's
impacting land use in the likes of sheep and beef farming.
Speaker 3 (08:08):
Well, it's interesting look at this quarter and just gone
and the sheep and beef farms in the sale of
partial farms five years ago was a huge driver of
the market at tents and the overall market that at
similar levels to what we did in this last spring
back in twenty one and so you had no c
(08:32):
a quarter of a percent at the time. So you know,
it's a massively different outcome to how it is today.
If we have a look at forestry and the impact
it had on the New Zealand market five years ago
and you compare it to today, it's massively different. Back
in twenty one, we had the billion tree program in
(08:53):
full swing permanent forestry and full swing cabin market on
the app and it was driving said it almost golden
ticket outcomes for extensive hell country and that was a huge,
huge drive in the market. While there's some of that
in the last year's results very little, that is in
the spring quarter of one point seven billion results to
(09:16):
Christmas this year. In fact, dairy by paring away, it's
a much stronger driver. Which airy was still very present
in the market five years ago, but Sydney's significantly more
now and that influence, that alternate land use influence in
the market today is on a very very different footing
because again regal settings have changed. In this case. Rather
than if you like freeing up the regulation, I think
(09:38):
there's a much greater level of oversight than the rectory
framework in which the forestry operates, which were spoken before
and jes.
Speaker 2 (09:44):
Before we wrap things up Conrad. So to dairy resilience,
it's always a strong factor in this market, yes it is.
Speaker 3 (09:50):
It's we see dairy as a strong buy and nothing
about that view has changed. In fact, actually the fundamental
museum and dairy just continue to get better. There's going
to be a significant capital injection into farmers balance sheets
through the cavalry structure with Fronterra for a lot of farmers,
(10:10):
a lot of dairy farmers, so no absolutely and farm operations.
There's the ability to get labor some of those constraints
and the easing the interest rates. You know, all those
things really help well manageddairy businesses grow and go for it.
So you know, I think we wouldn't. We're unequivable with
the fact that we actually see that strong underpending dairy
(10:33):
market and you know that the price points for dairy
today and what we might be factory in five years
from now, there's every reason it seems there will be
at least in line with inflation, if not ahead of it.
With what's in front of us.
Speaker 2 (10:44):
I'm talking about buying behavior. You were saying earlier people
are looking more locally focused.
Speaker 3 (10:48):
Is that right? Yeah, yeah, definitely. There's probably two main markets.
There's a national market with the larger scale operators breaking
across both islands, and then you've got your regional market,
which you like the local buars are operating in their
local market. And obviously, but there are two very strong influences.
And are we certainly not ruling out overseas interests as well.
(11:10):
There's a lot going on the background there.
Speaker 2 (11:12):
What's your message at the stage of twenty twenty six, Conrad,
Why should people act now.
Speaker 3 (11:17):
Times are good? And I think that's and then when
times are good. Sometimes we can get into this complacency
of thinking that things will just carry on the settings
we're enjoying at the moment. The returns at the farm
gate are as good as we've seen them and so know,
all we'd say is in farming, you know, nothing is
always something around the bend. And our view is actually,
(11:40):
if you're thinking about timing and sale, thinking well to
be this autumn of the spring, we'd strongly encourage people
to put the best foot forward to the autumn. And
there still is the option for the spring, so it
gives them a dollar each way. But our view is
that we'll see a very strong autumn selling market and
either way that sets things up. But just the further
(12:01):
you go out into this county, there's just a few
more centages around and where's the market we still see
is strong now and you know, a bird in the
hand now better than guessing.
Speaker 2 (12:12):
Thanks so much again for your time, Conrad. That's Conrad Wiltshire,
General mentor Rural for Property Brokers. For more information, visit
property Brokers dot Co dot nz, Forward slash Land and
Lifestyle
Speaker 1 (12:24):
Land and lifestyle market insights on the country with Property
Brokers
Land and lifestyle market insights on the country with Property Brokers.
Speaker 2 (00:10):
Welcome to Land and Lifestyle Market Insights on the Country,
brought to you by Property Brokers. I'm Jess Davidson and
today again we catch up with Conrad Wilshire, general manager
of Rural at Property Brokers.
Speaker 3 (00:20):
Hey, Conrad, I guess good to be back on the
show again.
Speaker 2 (00:24):
So into twenty twenty six. So let's reflect firstly on
last year and that last quarter. How did things go
in the market there?
Speaker 3 (00:33):
Look, it was a standout spring and that run up
to Christmas for the ninety days it was the strongest
royal property result in five years, with one point seven
billion in farm sales and just over ninety days. So
definitely wasn't a flash and spike. It was definitely you know,
reflected genuine gets and by demand and it's compounding quarter
on quarter. We wanted to requorder just to see how
(00:55):
it compares at the same time last year and the
year before. Wow.
Speaker 2 (00:59):
And so will you kind of expecting that, Conrad, given
how things were going or was that news to you?
Speaker 3 (01:04):
You know, we were expecting that there was. We'd seen
really strong interests from July. In fact, look at their
own business. We've had month on month record sales values
come forward, so no question, you know we you know,
we've definitely seen that trend continue.
Speaker 2 (01:22):
So with that confidence and buyers getting involved, what's driving that.
Speaker 3 (01:27):
I think a last year we saw you know, strong
pastoral farmers protecularly should be farmers, significant commodity gains and schedules,
the signing of the much stronger payout earlier in the season,
the lowering of interest rates probably the most favorable exchange
rate in sixteen years on the on the Kiwi cross
(01:48):
to the US, and all those sort of things had
definitely factored into it. And I think also a much
more environmental approach in the collaboration with the farming sector.
I think it's on a much firmer putting that has
been for a long time time with signals and changes
and regulation and the like. And I suppose existing property
rights at least, you know, having been factored into decision
(02:08):
making and the biggest change in the RMA since nineteen
ninety one on the slate for this year. But there
are big factors that sort of tell our farmers that
Wellington's not looking to be so hands on on the
day to day elements of farming, but make sure the
important retary frameworks are in place and people can make
sense of them. Yeah.
Speaker 2 (02:28):
Yeah, well that farmers do get plenty of good news
last year, as you mentioned, Conrad. So do you maybe
think that's why that late push came late last year?
People were finally seeing the proof and the pudding and
have the confidence, you know, just sitting back and waiting
to see what happens with that.
Speaker 3 (02:42):
I don't think you could attribute to any one factor.
Sure that is in combination. I think it's a general
lift in the farm gate returns definitely fuels confidence, but
it's also significant, you know, the OCRs half that it
was at the same time last year, So you know,
it's so that at two point twenty five percent, you're
(03:04):
seeing a lot of larger commercial interests, you know, getting
back to interest rates and real value terms of under
five percent. Well that's you know, that's for many farming businesses.
That's a massive shift on the same time last year.
Speaker 2 (03:17):
Yeah, and what about twenty twenty six, How are things
panning out and what's confidence like around this year?
Speaker 3 (03:25):
I think our view is that a lot of that
confidence is still very much in play, heading in through
the summer in autumn, but looking into the next season
and the second half of this year, there's just a
little bit of uncertainty. I mean, you've got an election year,
that's maybe part of it, but also a lot of
these regretary reforms haven't really had the opportunity to cut
through yet some of the change is significant. You've also
(03:48):
got interestrates are still a very affordable and relative terms,
but there's still uncentius to just how much reltary tightening
of interest rates is going to be. So there's just
a few things in the Lso you've got falmgate returns
and some softening. The payout is that global supply and
balance sort of plays out, So you know, look, commidence
is the funny thing. It's very hard to put you
(04:10):
attributed to. But what I do know is that in
the absence of that, people just are reluctant to Vendors
are reluctant to sell because they think the times will
be better, and purchases are unwilling to take on a
new venture. And there's the confidence that can pay. And
so I think all those things are there, and I
think it's very much in play for the autumn, and
(04:32):
I still think, you know, farming is still going to
continue and be in good heart in the second half
of this year, but whether people are prepared to expand
and have a crack at things in the way they've
been lately, I think there's a few question marks about
that until there's a bit more certainty in the market.
Speaker 2 (04:46):
Yeah, and just honing in on one of those aspects
Conrad export performance and the outlook for dairy. How much
is that playing into things.
Speaker 3 (04:54):
Yeah, definitely farmgate returns part of it, but they are
definitely they're a big driver of confidence, and there was
a lot of confidence tracking to ten to eleven dollars
payout and now that's the midpoint around about nine dollars,
and so that starts to, you know, effect operational gains
being made year the year terms of the profit and loss.
(05:16):
So people will just be a bit more measured. I
think this part of the word is and I think
with the other things recognized is that people are often
quoting the blue chip locations and Midcancer is featured a
lot in the spring terms of some of the sale prices,
but the great majority of New Zealand is operating on
not any forward view of where the property prices are
(05:38):
going to go. It's very much based on a few
of the underlying return in fact, and the great majority
of transactions, people are just focused on what the probably
is going to return relative to its existing operations, and
there's very little forward pricing going of future property revaluations.
It's based on the fundamental So I think that's where
it's sitting. Mostly. Is these more extensive, bigger properties, and
(06:02):
I think for dairy for a moment, it's they're once there,
bigger in scale, You're going to see a lot more
you know, rule having run over it and does it
pay its way? And is it based on the current return,
it's not speculation of future returns.
Speaker 2 (06:17):
And also that the regulation resets another thing we've touched on.
But why is this going to be a slow burn
for the market?
Speaker 3 (06:24):
The change is big. I mean, as I mentioned previously,
you've got to go back to ninety ninety one and
the introduction of the RMA and the reforms been proposed
are a complete rewrite and so it's going to take
time for that to bed in. And then there's a
whole bunch of change forecast at local and regional government levels.
And again you know that's going to take at least
two years to work through, so I think people will
(06:48):
want to see the election result and see things continue
on the current path. Certainly there's the current consensus be
taking forth another two years. That's a very strong message,
but we've still got to pass the new legislation and
we're still going to see a change in government and
see that continue, I think before the market really responds
(07:08):
strongly to that signal.
Speaker 2 (07:09):
Yeah, but what are you hearing overalls? What's the vibe
about it at the stage of things, Conrad, I.
Speaker 3 (07:15):
Think it's very I think it's very good. And the
reason I say that a food production and the environment
have sort of been put against each other for a
very long time, and that's not just a new general thing,
it's so global thing. And I think there's a much
stronger consensus now on the need for food production, the
value of it, and how it has to be compatible
with the environmental settings. But there was really I think
(07:36):
it's on an equal footing, whereas I think, you know,
the farming practices or farming has almost been subordinated, and
I think what we've realized is that you know, we
are an important global producer of food in actually how
we get the settings right just needs to be worked
through on a more equable basis. So I think that's
what the driver is, is that from confidently farmers again,
(07:59):
which is I think.
Speaker 2 (08:00):
Yeah, absolutely. And let's talk about forestry and how that's
impacting land use in the likes of sheep and beef farming.
Speaker 3 (08:08):
Well, it's interesting look at this quarter and just gone
and the sheep and beef farms in the sale of
partial farms five years ago was a huge driver of
the market at tents and the overall market that at
similar levels to what we did in this last spring
back in twenty one and so you had no c
(08:32):
a quarter of a percent at the time. So you know,
it's a massively different outcome to how it is today.
If we have a look at forestry and the impact
it had on the New Zealand market five years ago
and you compare it to today, it's massively different. Back
in twenty one, we had the billion tree program in
(08:53):
full swing permanent forestry and full swing cabin market on
the app and it was driving said it almost golden
ticket outcomes for extensive hell country and that was a huge,
huge drive in the market. While there's some of that
in the last year's results very little, that is in
the spring quarter of one point seven billion results to
(09:16):
Christmas this year. In fact, dairy by paring away, it's
a much stronger driver. Which airy was still very present
in the market five years ago, but Sydney's significantly more
now and that influence, that alternate land use influence in
the market today is on a very very different footing
because again regal settings have changed. In this case. Rather
than if you like freeing up the regulation, I think
(09:38):
there's a much greater level of oversight than the rectory
framework in which the forestry operates, which were spoken before
and jes.
Speaker 2 (09:44):
Before we wrap things up Conrad. So to dairy resilience,
it's always a strong factor in this market, yes it is.
Speaker 3 (09:50):
It's we see dairy as a strong buy and nothing
about that view has changed. In fact, actually the fundamental
museum and dairy just continue to get better. There's going
to be a significant capital injection into farmers balance sheets
through the cavalry structure with Fronterra for a lot of farmers,
(10:10):
a lot of dairy farmers, so no absolutely and farm operations.
There's the ability to get labor some of those constraints
and the easing the interest rates. You know, all those
things really help well manageddairy businesses grow and go for it.
So you know, I think we wouldn't. We're unequivable with
the fact that we actually see that strong underpending dairy
(10:33):
market and you know that the price points for dairy
today and what we might be factory in five years
from now, there's every reason it seems there will be
at least in line with inflation, if not ahead of it.
With what's in front of us.
Speaker 2 (10:44):
I'm talking about buying behavior. You were saying earlier people
are looking more locally focused.
Speaker 3 (10:48):
Is that right? Yeah, yeah, definitely. There's probably two main markets.
There's a national market with the larger scale operators breaking
across both islands, and then you've got your regional market,
which you like the local buars are operating in their
local market. And obviously, but there are two very strong influences.
And are we certainly not ruling out overseas interests as well.
(11:10):
There's a lot going on the background there.
Speaker 2 (11:12):
What's your message at the stage of twenty twenty six, Conrad,
Why should people act now.
Speaker 3 (11:17):
Times are good? And I think that's and then when
times are good. Sometimes we can get into this complacency
of thinking that things will just carry on the settings
we're enjoying at the moment. The returns at the farm
gate are as good as we've seen them and so know,
all we'd say is in farming, you know, nothing is
always something around the bend. And our view is actually,
(11:40):
if you're thinking about timing and sale, thinking well to
be this autumn of the spring, we'd strongly encourage people
to put the best foot forward to the autumn. And
there still is the option for the spring, so it
gives them a dollar each way. But our view is
that we'll see a very strong autumn selling market and
either way that sets things up. But just the further
(12:01):
you go out into this county, there's just a few
more centages around and where's the market we still see
is strong now and you know, a bird in the
hand now better than guessing.
Speaker 2 (12:12):
Thanks so much again for your time, Conrad. That's Conrad Wiltshire,
General mentor Rural for Property Brokers. For more information, visit
property Brokers dot Co dot nz, Forward slash Land and
Lifestyle
Speaker 1 (12:24):
Land and lifestyle market insights on the country with Property
Brokers
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