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Bayleys Research


FIRST HALF RURAL 2007

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Farm Prices Hold Ground

Farm property prices have held firm over the past year despite continued pressure on the rural export market as a result of the high NZ dollar which continues to hold at around 70c US. The same is true for the horticultural and forestry property markets. Despite the trying conditions and present unfavourable domestic economic climate for the rural sector, rural land prices appear to be holding up. Farm values in the December 2006 quarter have bounced back from a particularly low September quarter, with the average sale price of $1,634,707, only slightly less than record levels achieved in the June 2006 quarter and the December 2005 quarter figure of $1,650,264.

Sales volumes of 620 in the December 2006 quarter are also slightly back on the 642 recorded in the December 2005 quarter. This is also behind the average volume of sales, 672, for the December quarter over the last 6 years.

The slow down in value and volume growth can largely be attributed to the current high value of the NZ dollar, a consequence of the relatively high domestic interest rate environment encouraging strong international investment in the NZ dollar. This situation is seeing farmers struggling to make headway in their respective export markets which may be causing some apprehension among purchasers. The positive aspect is that the high dollar is being offset by the high global commodity prices and then, if those hold until the dollar eventually devalues, exporters will be set to hit the ground running.

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