TelferYoung (Northland) Limited

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Northland Newsletter - December 2009

16 December 2009

Welcome to our 2nd newsletter for 2009. In this issue we comment on the drivers of Northland's farm values plus an article on whether your building requires a Warrant of Fitness.

Also, we have reviewed some of the large construction projects that have been completed within the Whangarei district over the past year.    

Rural Happenings

It is widely known that agriculture is the backbone of New Zealand's economy. Northland is no exception, as many people are employed either directly or indirectly within this industry. The following is a brief overview of the recent happenings in regards to Northland's farm values.

There have been very few bona fide dairy farm sales within Northland over the last 6 months.  Values for these types of farms escalated rapidly through early 2008 due to the price spike in the Fonterra payout and optimistic future payout predictions.  However from mid-late 2008 and more particularly through the earlier part of this year, the payout steadily declined until recent announcements of an increase for the 2009/10 season.  Values for dairy farms and also dairy support units tend to be closely related to the payout and accordingly values for this type of property have declined.  We have yet to see an increase since the latest announcement and anticipate there will be only a slight increase (if any) short term.

The values for sheep and beef units (not suitable for dairy support) remained relativity static from mid 2006 to mid 2008. Since then there has been a slight easing in values mainly due to increased costs and reduced income.

Farm buyers are becoming more selective and closely scrutinising factors such as the farm's fertilizer history, the condition of its infrastructure and any potential to add value, before proceeding further.

Farms on fertile soils, in a good locality or with above average infrastructure are still and always will sell strongly providing they are priced competitively.

But, don't be expecting farmers to open their wallets just yet. Most are concentrating on reducing debt and improving cashflows. Banks are still very prudent with their lending and are scrutinizing cashflows and securities before they become involved in any new venture. 

As an aside, the following table may be of some interest. It shows the farm gate prices for a dairy farmer/sheep farmer over the last eight years. As can be seen the Fonterra forecast payment for this season is the second highest over the timeframe shown. With increasing costs it will be tough times for sheep farming unless we see better returns.

* For a 15.3kg YM grade lamb

Source: Otago Daily Times, Fonterra dairy payout up almost 20% to $6.05, 10/11/09

Will we ever see values for farms align themselves with what the owner can return from the property? Who knows, all we can say for certain is that you can't create more land.  If we see farm owners demanding a better personal income and putting less emphasis on capital gain we may see values stabilise. 

Does Your Building Need A Warrant Of Fitness?

Whether you own an existing property, are intending to purchase a building or are simply completing or allowing tenants to complete alterations to an existing building, an area often overlooked is Building Warrant of Fitness Compliance.  The following table may help demystify this area. 

Further reference/assistance can be obtained at

1. Local Council (http://www.wdc.govt.nz/)
2. Department of Building & Housing (www.dbh.govt.nz)

Positives in Northland

There have been a number of projects completed during 2009 in and around Whangarei including:

• The finishing of the extensions of the Courthouse.
• Progression of the Stadium which is understood to be on track.
• Completion of the Police Station.
• Finishing of the Kamo Community Link Building
• Construction of the ACC Building.
• The progression of the Jane Mander Rest Home in Kamo.

Looking forward, one of the major projects is Stage II of the Kamo Bypass which is pencilled to start during February/March 2010. The Spedding Road link will be incorporated with that project.

The Western Hills four laning project is due to start as soon as property purchases are completed and it is anticipated that it will be split into various stages i.e. Western Hills/ Selwyn Ave intersection; Western Hills/ Central Ave intersection etc. This project runs from Selwyn Ave right through to the Tarewa Road intersection. It is also proposed to undertake a major upgrade of SH1/14 intersection at Maunu Road and this will also be undertaken as soon as property related matters are taken care of.

Hot off the Press

New Rating Valuations for the Whangarei district are now out. These are mass appraised values that may not capture particular features or flaws of a property that may be considered in a Market Valuation. Some recent examples of the differences between the Market Value and Capital Value are as follows:

Conclusion

The team at Telfer Young (Northland) Ltd wish you all a very Merry Christmas, stay safe and most of all have fun with friends and family. We look forward to working with you over 2010. 

Back issues of the newsletter can be obtained from TelferYoung (Northland) Ltd
17 Hatea Drive,
PO Box 1093,
Whangarei,
New Zealand.
Telephone : 09 438 9599,
Facsimile : 09 438 6662
www.telferyoung.com
email: telferyoung@northland.telferyoung.com

+ Alistair Nicholls + Steve Baker + Mike Nyssen + Grant Algie + Julian Rattray + Nigel Kenny + Mark Aslin + Craig Russell + John Hudson + Aaron Hunt + Martyn Cottle