Good Farms In Short Supply In Strong Rural Market

Good Farms In Short Supply In Strong Rural Market

A very buoyant rural market has resulted in stronger sale statistics than a year ago with good farms in very short supply according to figures released today by QV Valuations, a division of Quotable Value New Zealand.

The attraction of land as an investment and a shortage of quality farms are two of the factors leading to the strong result, says QV Valuations Principal Consultant Ian Bunt.

The figures, covering six months to the end of June 2003, show that the QV Rural Price Index has risen 4.7 per cent compared to a 2.8 per cent rise for the same period last year and 4.0 per cent for the six months to December 2002.

The QV Rural Price Index measures the ratio of Sale Price to Rating Valuation with a base of 1,000 in December 1989.

The Rural Price Indexes for individual farm land categories were all positive with the highest being Arable at 11.3 per cent indicating the strength of the market through the period of the half year to 30 June 2003.

"Despite something of a downturn driven by a fall in international commodity prices and a disadvantageous shift in exchange rates, the market has remained buoyant," Mr Bunt says.

"Its strength is due to rural land becoming viewed as a relatively good investment, some superior properties becoming available, a general shortage of listings, the events of September 11 and New Zealand's image as a clean, green and safe haven."

The most noteworthy features of the market through the period, he says, are that despite a drop of 32 per cent in the payout for milk solids, dairy farm sales have more than held their own in terms of sale price and the huge interest in "X Factor" properties with special qualities especially in the South Island high country.

Among the more interesting trends to emerge from the latest figures was the revitalised lifestyle market, Mr Bunt says. In the six months to June 2003, there were 4,046 (provisional) sales in the category totalling $1,113.6 million compared to 4,093 (actual) sales totalling $1,064.6 million in the corresponding period a year ago.

These sales eclipsed farm sales and by comparison the sales of viable farmland units for the June 2003 half year totalled $655.4 million from 545 sales compared to $793.3 million from 723 sales in the six months to June 2002.

"These are very interesting figures which illustrate just how significant the lifestyle market is in New Zealand, where it influences and underpins farm values in some areas, and also that the farm market has suffered from a distinct lack of listings leading to fewer sales but higher unit prices," Mr Bunt says.

Through the various categories, the volume of finishing farm sales was down 29 per cent compared to a year ago, while the average sale price rose 9 per cent and also from an average of $452 per stock unit to $507 per stock unit.

Grazing unit sales were down dramatically by 50 per cent in volume but up from an average of $310 per stock unit to $473 on the year before.

In the category of economic dairy farms there were 260 sales down 16 per cent from 310 last year, but against predictions the sale price per hectare increased from an average of $14,884 per hectare to $15,877 and on a productive basis from $26.70 per kilogram milk solids to $26.90.

Mr Bunt says, "An analysis of the latest statistics showed some very interesting trends and also that the market had performed well against falling commodity prices and industry predictions."

"Overall the QV Valuations half year statistics show a still buoyant property market even in a declining rural economy, and one which is likely remain so while a shortage of property stock exists."

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