Property report: OCR cut ‘massive’ for rural real estate industry

News that Reserve Bank Governor Adrian Orr had lowered New Zealand’s official cash rate (OCR) by 25 basis points on Wednesday has been met with relief by the wider primary sector.

For the rural real estate industry, the tangible promise of respite from high interest rates is “long overdue,” according to those at the heart of it.

Speaking to The Country’s Jamie Mackay, PGG Wrightson’s General Manager for Real Estate, Peter Newbold called the announcement “massive”.

In May, Newbold estimated the rural sales market was roughly 30% down year on year.

However, he felt the OCR drop would be enough to change sentiment within the sector.

“I think it’s a fantastic move - it will drive change and people will be a lot happier moving forward.”

Despite an impending upswing in the market, Newbold stressed the need for vendors to remain realistic.

He said his main message for those looking to put a rural property on the market was simple.

“Just because the rates have changed and there’s more positive sentiment out there, it doesn’t mean values are going to increase.

“What it means is there’s more opportunities to sell your property.”

Heading into the traditionally busy spring months, Newbold said inquiries from potential buyers about which properties would be coming to the market had already commenced.

“If I look at what we do have coming up…I think we’ll have a better spring,” Newbold said.

“I’m a lot more confident today than I was, say, two days ago…[and] if the rate changes [downwards] again, that will only improve things.”

In terms of activity in the dairy sector, Newbold said a number of dairy farmers recently had been in contact, to look at adding support blocks to their existing properties.

As a number of these properties had entered the market recently, Newbold expects to see quite a few transactions in the space.

For sheep and beef properties, Newbold said the key factor remained the potential value for prospective buyers.

“If the value proposition is fine, then you’ll transact.

“If it’s not, it won’t happen.”

Also in today’s interview: Newbold paid tribute to Mid Canterbury Stock Agent Victor Schikker who had worked for PGG Wrightson’s for 49 years and tragically passed away recently.