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Spring rural market showing strength - REINZ

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Fuseworks Media
Fuseworks Media

Data released today by the Real Estate Institute of NZ ("REINZ") shows there were 42 more farm sales (+11.2%) for the three months ended November 2015 than for the three months ended November 2014. Overall, there were 416 farm sales in the three months ended November 2015, compared to 358 farm sales for the three months ended October 2015 (+16.5%), and 374 farm sales for the three months ended November 2014. 1,769 farms were sold in the year to November 2015, 5.9% fewer than were sold in the year to November 2014.

The median price per hectare for all farms sold in the three months to November 2015 was $28,761 compared to $29,834 recorded for three months ended November 2014 (-3.9%). The median price per hectare rose 4.0% compared to October.

The REINZ All Farm Price Index rose 4.9% in the three months to November compared to the three months to October. Compared to November 2014 the REINZ All Farm Price Index fell by 5.9%. The REINZ All Farm Price Index adjusts for differences in farm size, location and farming type, unlike the median price per hectare, which does not adjust for these factors.

Eight regions recorded increases in sales volume for the three months ended November 2015 compared to the three months ended November 2014. Otago recorded the largest increase in sales (+20 sales), followed by Hawkes Bay (+16 sales) and Auckland (+12 sales). Compared to the three months ended October 2015, eleven regions recorded an increase in sales.

"Variability in weather conditions around the country has been a feature this spring, with many areas experiencing more wind and cooler conditions than normal, yet other regions such as the mid to northern areas of the South Island being impacted by continuing dry conditions and it would seem, the early onset of El Nino," says REINZ Rural Spokesman Brian Peacocke. "The dairy sector reflects such variability with considerably fewer farms sold in November 2015 than in the same period of 2014 and 2013."

Highlights include:

- Fickle conditions in Northland with stronger activity on grazing blocks, yet first farm enquiry limited by a shortage of dairy farms; evidence of purchasers pulling back on prices;

- Strong marketing activity in the Waikato, particularly in the eastern areas, yet fewer sales than in previous years; good results being achieved for realistic vendors as buyers have clearly set a limit on price;

- Continuing strong horticultural activity in Bay of Plenty, very few orchards available, good sales specific to prime areas only. Zespri very positive on future prospects with increasing emphasis in gold kiwifruit varieties;

- A solid dairy market in the Rotorua/Taupo area with a reasonable level of listings but some indications of price resistance;

- A mixed market in Taranaki with dairy farms easing from last year’s prices to a level deemed cautious; a difficult market for lesser quality farms;

- Solid market conditions in Manawatu/Wanganui and the lower North Island with some good individual sales; good demand for good properties but evidence of fewer buyers and a note of caution emerging as stock prices ease, caution regarding the potential for El Nino, and reluctance from solid operators to borrow, even with good support from the banks;

- Continuing interest in viticulture in the Nelson / Marlborough region but sales limited due to shortage of stock; good interest in properties with diversity of income and a positive, confident mood within the region;

- An easing market in Canterbury where drought conditions have been a disincentive to selling; good demand for summer-safe farms and moderate activity surrounding finishing and arable properties;

- Good demand for good sheep and beef properties in Otago, but buyers are cautious on pricing; dry conditions are impacting on parts of the region with an expectation some irrigation schemes are likely to come under pressure due to the lack of rain; and

- A good market in Southland with a strong emphasis on quality; stronger enquiry for sheep and beef rather than dairy properties.

Grazing properties accounted for the largest number of sales with 38.7% share of all sales over the three months to November 2015, Finishing properties accounted for 20.7%, Horticulture properties accounted for 16.1% and Dairy properties accounted for 10.1% of all sales. These four property types accounted for 85.6% of all sales during the three months ended November 2015.

Dairy Farms

For the three months ended November 2015 the median sales price per hectare for dairy farms was $35,554 (42 properties), compared to $31,552 for the three months ended October 2015 (18 properties), and $36,825 (55 properties) for the three months ended November 2014. The median dairy farm size for the three months ended November 2015 was 107 hectares.

Included in sales for the month of September were 27 dairy farms at a median sale value of $37,887 per hectare. The median farm size was 101 hectares with a range of 50 hectares in Taranaki to 309 hectares in Bay of Plenty. The median production per hectare across all dairy farms sold in November 2015 was 903 kgs of milk solids.

The REINZ Dairy Farm Price Index fell 10.8% in the three months to November compared to the three months to October. Compared to November 2014, the REINZ Dairy Farm Price Index fell by 22.5%. The REINZ Dairy Farm Price Index adjusts for differences in farm size and location compared to the median price per hectare, which does not adjust for these factors.

Finishing Farms

For the three months ended November 2015 the median sale price per hectare for Finishing farms was $24,409 (86 properties), compared to $25,333 for the three months ended October 2015 (67 properties), and $26,545 (57 properties) for the three months ended November 2014. The median finishing farm size for the three months ended November 2015 was 40 hectares.

Grazing Farms

For the three months ended November 2015 the median sales price per hectare for Grazing farms was $16,949 (161 properties) compared to $19,253 for the three months ended October 2015 (153 properties), and $14,811 (155 properties) for the three months ended November 2014. The median grazing farm size for the three months ended November 2015 was 48 hectares.

Horticulture Farms

For the three months ended November 2015 the median sales price per hectare for Horticulture farms was $176,783 (67 properties) compared to $171,482 (68 properties) for the three months ended October 2015, and $186,615 (61 properties) for the three months ended November 2014. The median horticulture farm size for the three months ended November 2015 was seven hectares.

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