In data provided by New Zealand Winegrowers for 2010, the Marlborough region accounted for some 69.3% of the total production for New Zealand with some 154,671 tonne of Sauvignon Blanc, 11,265 tonne of Pinot Noir, 7,545 tonne of Chardonnay, 4,809 tonne of Pinot Gris and 2,590 tonne of Riesling.

It was thought lower production for the 2010 vintage might help stabilise bulk wine prices however, recent excellent flowering and grape growing conditions through the summer of 2010/2011 indicates a potentially higher than ideal 2011 grape crop. This combined with reportedly lower contract grape supply prices by some wineries for the 2011 vintage is adding to continued viticulture uncertainty in the short to medium term, which will have a negative flow-on effect to grower returns for the coming season.

Adding to the uncertainty and lack of investor confidence in the industry is the recent placing of six Marlborough winery/vineyards into receivership. A number of these are large land holdings developed to viticulture on contoured or unproven viticulture land, making these blocks harder to sell in a climate of limited profitability. Improved profitability for growers in the viticulture industry would help underpin and stabilise the Marlborough viticulture property market.

Properties which have a unique factor about them should continue to hold underlying value better than properties which have limited scope, are poorly presented or are located in unproven viticulture areas.

There have been about six genuine market sales of vineyards since the beginning of 2009 all with grape supply contracts in place, but there are an increasing number of “pressured” sales predominately without grape supply contracts that have been heavily discounted as a result.

The Marlborough Sauvignon Blanc remains a strong brand with a positive reputation in the global market. Sales continue to build, however with the global economy still some way off a full recovery, marketing and selling of our product will be more critical than ever in the next two years.

In the early part of 2010 the residential property market in the Marlborough/Kaikoura region appeared to have stabilised, after declining steadily for the previous seventeen month period. However an analysis of the past year sales data from REINZ indicates the Marlborough/Kaikoura property market has declined again since this stablisation with the four month median rolling sale price to December 2010 at $286,750 down from $295,500 in May 2010.

December 2010 statistics from REINZ show 57% of the residential property sales were under $300,000 and of these sales around 60% were three bedroom dwellings.

Median sale price is the midpoint price of all of the sales which transact in any particular month. The median should not be confused with the average sale price. Variations in the median sale price can be significant from one month to the next. Factors such as the number of sales and the market segment from which those sales are derived determine the median sale price.

Time to sell well off the highs of 2010

Another market indicator is the time it takes to sell a property. The period to sell is up on last year with an average of 47 days to sell in December 2010 compared to 37 days in December 2009. This is still off the high of around 66 days in February and March 2010 and well off a two year peak of 77 days in January 2009. Traditionally we see the number of sales lift in early spring then drop away over January and February with a corresponding increase in days to sell. We would expect a similar pattern this year although discussions with local real estate agents suggest increased buyer viewings of properties, however getting a contract signed is still proving difficult.

Conditions contribute to a sluggish local economy

What happens this year is hard to assess, normally the property market would respond with increased sales if interest rates are below long term average rates, as they are now. However stalled net migration numbers into New Zealand, low building consents numbers and continued poor vineyard returns are all contributing to a sluggish Marlborough economy.

The Rugby World Cup, rebuilding in Christchurch after the September earthquake and improving commodity prices to farmers may have a flow on effect to help lift the Marlborough economy for the later part of 2011 and into 2012.

Overall, the residential market remains under pressure.