Newspaper Article 1994 – Orchard values down

Orchard values down

By Geoff Mercer
Staff reporter, Hastings

Orchard real estate values have dropped slightly since the March 2 hailstorm but real estate agents said the full effects would be felt after the picking season.

If a rash of forced sales were to occur, prices said to be about 5 per cent to 10 per cent below government valuations could deteriorate further.

Hawke’s Bay Realties principal Kevin Rose said there had been downward pressure on orchard prices, but “no way have prices fallen through the floor”.

There was still a shortage of properties on the market. Buyers looking for orchards tended to be buying to strict criteria. They wanted producing orchards rather than those being developed or redeveloped.

“There is still good inquiry from cities like Auckland and Wellington, not at last year’s level, but they are still coming through.”

The market started to soften in January and February and the hail had given the trend an “extra shove”, Mr Rose said.

Prices had dropped 10 per cent since the beginning of they year, but would probably remain where they were for the winter unless there was an influx of properties on to the market after picking.

However, if pipfruit export prices improved this year orchard prices would follow suit. “You only need two drops of confidence and they’ll be away again,” said Mr Rose, who is also an orchardist.

Simpkins’ rural salesman Peter Dick said a reasonably strong inquiry base was evident, but buyers were playing a “waiting game”.

The hailstorm had not influenced their thinking but they still asked whether properties were “in the hail belt”.

He had several small Meeanee and Bay View orchards listed, but it was hard to get people interested in them.

The “lifestyle” market was strong. Orchards close to Taradale and Napier with older, uneconomic trees could be sold for conversion to pony grazing and tennis courts.

Harvey, Fulton and Long rural salesman James Ellingham said buyers were unsure what orchards were going to sell for but they expected some cheap ones might be available at the end of the picking season. “They are just not in the market at the moment… they are waiting to see what will happen.”

An eight-hectare Poukawa orchard auctioned last Friday by Harvey, Fulton and Long failed to reach the reserve price. Bidding stopped at $350,000. Last year the property was on the market at more than $400,000, Mr Ellingham said.

Harcourts’ rural salesman Tony Bailey said the hailstorm had not affected buyers’ interest, they were just naturally being cautious.

“Genuine buyers are still looking for good orchards.” He said he would be surprised if banks reacted to increased indebtedness after the hail by forcing orchard sales.

Two had been listed since the hail, but they probably would have come on to the market anyway.

Prices were gradually coming down as land values lined up with last year’s diminished pipfruit export returns. Growers last year received on average $7.17 net a carton; in 1992 a carton fetched $12.60.

Orchards appeared to be selling about 5 per cent to 10 per cent below government valuation, Mr Bailey said.