Rural Market Ends Season On High Note

Rural Market Ends Season On High Note

Figures released today by the Real Estate Institute of New Zealand (REINZ) for the three months to July round off the season on a high note with dairy farm prices in particular showing a solid performance.

REINZ National Councillor and rural spokesperson Peter McDonald says with around 40 dairy farms changing hands in the three months to July 2009, the average national price of $41 per kilogram of milk solids and more than $35,500 per hectare is a good result.

The average size of dairy farms sold in the three months to July 2009 was 147 hectares with production on average of 904 kilograms of milk solids per hectare.

“It’s good to see the season finish on a consistent note,” Mr McDonald says. “Despite all the gloomy predictions, the average figures we’re seeing are good news, especially combined with encouraging news such as the 25 percent increase in powder sales reported by Fonterra.”

The biggest battle the rural market is facing, like all exporters, Mr McDonald says, is continuing uncertainty over the dollar.

Disappointingly, but not altogether unexpected over the winter months, there was reduced turnover of properties across the rural sector with 229 sales for the current period compared with 601 in the corresponding period to July 2008 and 285 in the three months to June 2009.

There was a drop in the number of sales in all districts except for Northland where the number of sales rose from 31 to 33. Sales were buoyant in Canterbury with 35 farms sold in the three months to July 2009. Thirty properties sold in Waikato and 24 in Bay of Plenty.

There was, however, a slight rise in the median sales price nationally from $1,155,000 in the three months to June 2009 to $1,200,000 in the three months to July 2009. Prices rose in eight out of 14 regions, with most notable gains from the three months to June 2009 to the three months to July 2009 in Taranaki

(up from $528,500 to $813,500), Wellington (up from $2,450,000 to $3,100,000) and Nelson (up from $625,000 to $1,106,600).

“The figures still have a long way to get back to the peak of the market in July 2008 when the national average was $1.8m,” Mr McDonald says, “but we are definitely seeing consistency across the market.”

The rural lifestyle market continues to hold firm with the median sale price in the three months to July 2009 at $420,000 compared with $421,250 in the three months to June 2008. Turnover is also solid with 1,393 sales in the three months to July 2009 compared with 1,354 in the three months to June 2009. This is a good increase on the July 2008 turnover of 1105 rural lifestyle properties.

Mr McDonald says it will be interesting to see how the market shapes up going into Spring.

“At the end of the day, a lot will depend on the value of the dollar.”

ENDS

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