24 Feb 2010

Tough bank lending policies hit rural property deals - survey

8:17 am on 24 February 2010

A nationwide real estate survey has found a number of rural property deals are collapsing because of the lack of bank financing and the requirement for a high level of equity.

The First National Group's quarterly survey, carried out last week, has confirmed the fall-off in rural properties sales and prices, at a time of year when they should be peaking.

More than a third of the group's rural sales offices reported deals in their region falling over because they couldn't get the funding.

General manager, John Stewart, says banks are "very, very cagey" about who they will lend to, and in some cases have been demanding well over 50% equity from potential buyers.

Equity of more than 60% was required in two or three attempted purchases of dairy farms in Taranaki, which then fell through, he said.

In Marlborough asking prices for the large number of vineyards on the market have dropped by up to 40%, reflecting the global glut in wine supply and falling returns.