Strong Lift In Rural Sales In April

News Release 13 May 2011News Release 13 May 2011

Strong Lift In Rural Sales In April

Data released today by the Real Estate Institute of NZ (“REINZ”) shows there was a strong lift in rural sales across New Zealand in April 2011. Overall, there were 290 farm sales in the three months to end of April 2011 compared with 190 sales in the three months to March 2011 and 267 sales in the three months to April 2010. For the month of April alone there were 152 sales, the largest number in a single month since July 2008.

Most of the increase in sales occurred in the South Island with Canterbury, Otago and Southland accounting for half the national increase in sales. There was a significant increase in sales of dairy support blocks in the South Island as farmers positioned themselves for winter grazing. All regions, apart from Wellington, recorded an increase in sales between March and April. No regions reported a decrease in sales between March and April.

The number of farm sales for the year ended April 2011 was 918, up from 869 for the year ended March 2011 and higher than the 909 sales recorded for the year ended April 2010.

“There has been something of a turnaround in farm sales during April particularly with grazing and dairy support properties in the South Island,” says REINZ Rural Market Spokesman Peter McDonald. “We have been noting rising confidence in the rural sector for some months now and along with higher commodity prices, this is now translating into greater confidence in buying farms, particularly in the dairy support sector.”

“We are also seeing good levels of interest in rural properties coming from investors and it would seem that finance is becoming a little easier to obtain,” said Mr McDonald. “The rural property market has been very quiet for the past two years but it is too early to tell whether this lift in activity is merely ‘catching up’ or the beginning of a more sustained trend in farm transactions.”

Included in sales for the month of April were 24 dairy farms at an average sale value of $29,153 per hectare and $34 per kg of milk solids (MS). There was considerable variability in these numbers with the values ranging from $19 per kg of MS in Manawatu to $55 per kg of MS in Taranaki. The average farm size was 177 hectares with a range of 52 hectares in Waikato to 559 hectares in Northland. The average production per hectare across all dairy farms sold in April was 863 kgs.

Grazing properties accounted for the largest number of sales with 48.3% share of all sales over the three months. Dairy properties accounted for 17.9%, Finishing properties 13.1% and Horticulture properties 9.7%. These four property types accounted for 89.0% of all sales during the three months ended April 2011.

For the three months ended April 2011 the average sales price per hectare for dairy farms was $30,879 (52 properties) compared to $32,533 for the three months ended March 2011 (35 properties), and $34,941 (40 properties) for the three months ended April 2010. The average dairy farm size for the three months ended April 2011 was 113 hectares.

For the three months ended April 2011 the average sales price per hectare for finishing farms was $10,470 (38 properties) compared to $10,497 for the three months ended March 2011 (28 properties), and $12,660 (35 properties) for the three months ended April 2010. The average finishing farm size for the three months ended March 2011 was 150 hectares.

For the three months ended April 2011 the average sales price per hectare for grazing farms was $13,772 (140 properties) compared to $13,220 for the three months ended March 2011 (86 properties), and $14,116 (123 properties) for the three months ended April 2010. The average grazing farm size for the three months ended April 2011 was 97 hectares.

For the three months ended April 2011 the average sales price per hectare for horticulture farms was $130,806 (28 properties) compared to $128,077 for the three months ended March 2011 (20 properties), and $118,750 (37 properties) for the three months ended April 2010. The average horticulture farm size for the three months ended April 2011 was 5 hectares.

The lifestyle property market also saw a strong lift in volume in the three months to April 2011 although the median price eased back a little. All regions apart from West Coast saw an increase in sales, with Auckland recording the strongest increase. No regions saw a decrease in sales for April 2011.

The national median price was $450,000 for the three months to April 2011, down $5,000 compared to the three months to March 2011, and up $10,000 compared to the three months ended April 2010. Total sales completed for the three months to April 2011 were 1,135, up 189 (20.0%) compared to the three months ended March 2011, but only down 32 (2.7%) compared to the three months ended April 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 an easing in prices compared to March but a lift in prices when compared to April last year. However, volumes across the board are stronger than we would have expected for April.”

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