Number of Farm Sales Hits New All Time Low

14 April 2011

The were 190 farm sales in the three months ended March 2011 compared to 204 in the three months ended February 2011 and 210 in the three months to March 2010 continuing the trend of falling farm sales over the past three years. The number of farm sales for the year ended March 2011 was 869, compared to 2,692 farm sales for the year ended March 2008, a drop of almost 68%.

“The data for the three months to March shows the weakest number of farm sales we have seen for more than 15 years,” says REINZ Rural Market Spokesman Peter McDonald. “While there are certainly signs of confidence in the rural sector with rising payouts and a strong improvement in sheep and beef farm profitability, this is not yet being translated in property activity.”

“This is frustrating for the rural real estate industry, with a number of well presented and sound properties available for sale, and good interest from buyers,” said Mr McDonald. “This may be due to conservatism on the part of buyers in ensuring that properties they are looking at really meet their needs, or continued restraints on rural lending by the banking sector.”

Included in sales for the month of March were 15 dairy farms at an average sale value of $29,272 per hectare and $34 per kg of milk solids (MS). There was considerable variability in these numbers with the values ranging from $23 per kg of MS in Manawatu to $52 per kg of MS in Taranaki. The average farm size was 163 hectares with a range of 31 hectares in Taranaki to 509 hectares in Hawkes Bay. The average production per hectare across all farms sold in February was 870 kgs. Further, a 3,400 hectare high country property was sold in the Nelson region for in excess of $5.5 million during the month of March.

Grazing properties accounted for the largest number of sales with 45.2% share of all sales over the three months. Dairy properties accounted for 18.4%, Horticulture properties 10.5% and Finishing properties 14.7%. These four property types accounted for 88.8% of all sales during the three months ended February 2011.

Beginning this month REINZ is moving away from reporting median farm prices and will instead report average selling price per hectare figures instead. The falling number of farm sales has made the median farm price a less consistent measure of the value of rural properties and moving to average selling prices per hectare should provide a more reliable and consistent measure of farm values moving forward. The REINZ database has farm sizes matched to farm sales so full historical comparability can be measured.

“By switching to this new measure REINZ will be able to provide more accurate information about the trends in farm prices and values, as well as provide greater insight into the trends apparent with each farming type,” said Peter McDonald. “We have been reporting sales price per hectare for dairy farms for some time now, and this new presentation of the data extends this across all farm types.”

For the three months ended March 2011 the average sales price per hectare for dairy farms was $32,533 (35 properties) compared to $36,687 for the three months ended February 2011 (50 properties), and $32,000 (35 properties) for the three months ended March 2010. The average dairy farm size for the three months ended March 2011 was 113 hectares.

For the three months ended March 2011 the average sales price per hectare for finishing farms was $10,497 (28 properties) compared to $8,953 for the three months ended February 2011 (18 properties), and $12,660 (29 properties) for the three months ended March 2010. The average finishing farm size for the three months ended March 2011 was 119 hectares.

For the three months ended March 2011 the average sales price per hectare for grazing farms was $13,220 (86 properties) compared to $13,569 for the three months ended February 2011 (84 properties), and $13,274 (92 properties) for the three months ended March 2010. The average grazing farm size for the three months ended March 2011 was 97 hectares.

For the three months ended March 2011 the average sales price per hectare for horticulture farms was $128,077 (20 properties) compared to $129,310 for the three months ended February 2011 (21 properties), and $134,689 (28 properties) for the three months ended March 2010. The average horticulture farm size for the three months ended March 2011 was 4 hectares.

The lifestyle property market saw something of a lift in volume and median prices in the three months to March 2011. REINZ is not changing the measurement basis for lifestyle properties and is retaining the median sale price measure for this property type.

The national median price was $455,000 for the three months to March 2011, up $19,500 compared to the three months to February 2011, and up $15,000 compared to the three months ended March 2010. Total sales completed for the three months to March 2011 were 946, up 16 (1.7%) compared to the three months ended February 2011, but down 172 (15.4%) compared to the three months ended March 2010.

Commenting on the lifestyle property market statistics Peter McDonald said, “The pattern with the lifestyle properties is consistent with the residential statistics released earlier this week, with strong volume and price growth in Auckland, but a generally weaker trend elsewhere.”

“We are seeing clear evidence of rising confidence in the farming sector and increasing farm returns, which should translate into higher levels of activity in the rural property sector”, said Peter McDonald.

Regional Commentaries –March 2011
The information provided by the Real Estate Institute in relation to the rural and lifestyle real estate market covers a three month period. Therefore references to March results refer to the period from 1 January 2011 – 31 March 2011 and references to February refer to the period from 1 December 2010 – 28 February 2011.

Northland
The average selling price per hectare in Northland increased to $12,521 in March (February 2011: $11,618; March 2010: $12,097). 12 farms sold (February 2011: 13; March 2010: 15). The 12 farms sold consisted of eight grazing, three dairy and one horticulture.
The median price for a lifestyle block increased to $352,500 in March, from $292,500 in February (March 2010: $320,000). 94 lifestyle blocks sold during the period (February 2011: 84; March 2010: 87).

Auckland
The average selling price per hectare in Auckland fell from $177,778 in February to $67,202 in March (March 2010: $26,198). Because of the small number of sales that are occurring in the Auckland region these figures need to be treated with some caution. Nine farms sold (six horticulture, two grazing, and one forestry). (February 2011: 6; March 2010: 8).

The number of lifestyle blocks sold increased to 183 in March (February 2011: 144; March 2010: 210). The median price also increased to $747,000 in March (February 2011: $701,500; March 2010: $735,000).

Waikato
19 farms (13 grazing, three dairy, one finishing, one arable and one special) sold in March, down on the 22 sold in February and 33 sold in March 2010. The average selling price per hectare increased from $15,475 in February to $16,967 in March (March 2010: $47,071).

109 lifestyle blocks sold in March, up from the 107 sold in February and 120 in March 2010. The median price was flat compared to February 2011 at $395,000 (March 2010: $447,500.

Bay of Plenty
The average selling price per hectare was $28,659 in March (February 2011: $32,715; February 2010: $117,708). 13 farms (five horticulture, five grazing, two forestry and one special) sold in March, easing down from the 17 sold in February (March 2010: 20).

62 lifestyle blocks sold in March (February 2011: 64; March 2010: 78). The median price fell to $475,000 in March (February 2011: $503,000; March 2010: $487,500).

Gisborne
The average selling price per hectare fell to $40,568 in March (February 2011: $117,000). Three farms sold, consisting of one horticulture, one finishing and one forestry. (February 2011: one; March 2010: one). Extreme care needs to be taken with these figures due to the very low level of sales in this region.

Lifestyle block sales volume was down with nine sold (February 2011: 11; March 2010: 6). The median price dropped to $420,000 from February’s $450,000 (March 2010: $323,000).

Hawkes Bay
The average selling price per hectare increased slightly to $9,627 in March, up from $9,412 in February (March 2010: $8,503). 15 farms sold (February 2011: 12; March 2010: 11) consisting of six grazing, three horticulture, and two each of dairy, finishing and forestry.

39 lifestyle blocks sold in March, remaining steady with the 39 sold in February, but down on the 58 sold in March 2010. The median price increased to $405,000 (February 2011: $382,500; March 2010 $457,500).

Taranaki
The average selling price per hectare in Taranaki was $35,011 in March, down from $39,459 in February (March 2010: $33,892). 17 farms (11 dairy and six grazing) sold in March (February 2011: 26; March 2010: 18).

23 lifestyle blocks sold in March (February 2011: 28; March 2010: 46). The median price eased down to $345,000 in March (February 2011: $353,000; March 2010: $398,500).

Manawatu/Wanganui
15 farms (eight grazing, three finishing, two dairy and two special) sold in March, down three on the 18 sold in February (March 2010: 25). The average selling price per hectare eased to $17,177 from February’s $18,405 (March 2010: $9,092).

The median price for a lifestyle block eased to $260,000 in March from $290,000 in February (March 2010: $286,500). In total 72 lifestyle blocks sold, compared to 77 sold in February (March 2010: 104).

Wellington
The average selling price per hectare in Wellington rose to $19,608 in March, from $10,432 in February (March 2010: $11,438). Three farms sold in March, remaining the same as in February (March 2010: five) consisting one each of finishing, grazing and special.

63 lifestyle blocks sold in March (February 2011: 66; March 2010: 68). The median price eased to $510,000 in March from $520,000 in February (March 2010: $405,000).

Nelson/Marlborough
The average selling price per hectare fell to $8,893 in March from $14,095 in February. The number of farm sales eased to six (two grazing and one each of dairy, finishing, horticulture, and South Island High Country). (February 2011: seven; March 2010: seven).

55 lifestyle blocks sold in March, down slightly on the 57 sold in March 2011 (March 2010: 54). The median price remained steady at $465,000 (March 2010: $465,000).

West Coast
The average selling price per hectare rose slightly to $13,889 in March from $13,533 in February (March 2010: $8,737). The number of farm sales rose to five consisting of four grazing and one dairy. (February 2011: two; March 2010: four).

The median price for a lifestyle block eased to $137,500 (February 2011 $142,500; March 2010: $166,000). 10 lifestyle blocks sold in March (February 2011: 14; March 2010: 16).

Canterbury
23 farms (20 grazing, two dairy and one forestry) sold in March, down on the 31 sold in February (March 2010: 27). The average selling price per hectare rose slightly to $21,021 in March from $20,953 in February (March 2010: $18,817).

146 lifestyle blocks sold, remaining steady with the 147 sold in January, but well down on the 174 sold in March 2010. The median price eased to $467,500 from $515,000 in February (March 2010: $422,000

Otago
The average selling price per hectare fell to $9,060 in March, from $13,990 in February (March 2010: $11,939). 25 farms sold (February 2011: 21; March 2010: 17). The farms sold consisted of eight grazing, seven finishing, three dairy, two each of arable, horticulture and special, and one forestry.

42 lifestyle blocks sold in March (February 2011: 47; March 2010: 57). The median price eased to $385,000 in March from $405,000 in February (March 2010: $380,000).

Southland
Farm sales remained steady with 25 farms (13 finishing, seven dairy, three grazing and one each of arable and horticulture) sold in March (February 2011: 25; March 2010: 19). The average selling price per hectare eased to $23,836 in March from $26,403 in February (March 2010: $14,004).

39 lifestyle blocks sold in March, down 6 on the 45 that sold in February. The median price eased to $327,826 (February 2010: $335,000). In March 2010, 40 lifestyle blocks sold with a median price of $333,250.

ENDS

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