Further Improvement in Rural Sales Volumes During May

News Release 15 June 2011

Further Improvement in Rural Sales Volumes During May

Data released today by the Real Estate Institute of NZ (“REINZ”) shows there was a further strong lift in the number rural sales across New Zealand in three months to May 2011. Overall, there were 364 farm sales in the three months to end of May 2011 compared with 290 sales in the three months to April 2011 and 319 sales in the three months to May 2010.

The median price per hectare for all farms sold in the three months to May 2011 was $17,199 compared to $17,938 in the three months to April 2011 and $18,230 for the three months to May 2010.

The Waikato region recorded the strongest increase in sales between April and May, followed by Canterbury and Southland. Three regions recorded a fall in sales between April and May, although these falls were only minor.

The number of farm sales for the year ended May 2011 was 930, equal to the number of farm sales for the year ended May 2010, and up from 918 sales recorded for the year ended April 2011.

“The upturn in farm sales that came through in the April data has continued into May, with a further lift in grazing and dairy support property sales in the South Island,” says REINZ Rural Market Spokesman Brian Peacocke. “For the month of May alone there were 130 sales, which is the strongest May result in three years. Confidence in the rural sector has been rising for some time now and along with continued high commodity prices, this is now translating into greater confidence in buying farms.”

“The level of enquiry has certainly increased over the past few months, however, farm prices are not moving up as yet. Buyers remain cautious and are clearly doing their due diligence. There is also further anecdotal evidence of finance becoming easier to source for good quality farms,” said Mr Peacocke.

Included in sales for the month of May were 21 dairy farms at an average sale value of $28,028 per hectare and $36 per kg of milk solids (MS). The average farm size was 184 hectares with a range of 61 hectares in Bay of Plenty to 1,400 hectares in Southland. The average production per hectare across all dairy farms sold in May 2011 was 770 kgs.

Grazing properties accounted for the largest number of sales with 51.1% share of all sales over the three months. Dairy properties accounted for 16.5%, Finishing properties 15.1% and Horticulture properties 7.7%. These four property types accounted for 90.4% of all sales during the three months ended May 2011.

For the three months ended May 2011 the median sales price per hectare for dairy farms was $30,828 (60 properties) compared to $30,879 for the three months ended April 2011 (52 properties), and $33,509 (42 properties) for the three months ended May 2010. The median dairy farm size for the three months ended May 2011 was 112 hectares.

For the three months ended May 2011 the median sales price per hectare for finishing farms was $10,860 (55 properties) compared to $10,470 for the three months ended April 2011 (38 properties), and $11,979 (43 properties) for the three months ended May 2010. The median finishing farm size for the three months ended May 2011 was 163 hectares.

For the three months ended May 2011 the median sales price per hectare for grazing farms was $13,490 (186 properties) compared to $13,772 for the three months ended April 2011 (140 properties), and $14,004 (151 properties) for the three months ended May 2010. The median grazing farm size for the three months ended May 2011 was 93 hectares.

For the three months ended May 2011 the median sales price per hectare for horticulture farms was $129,572 (28 properties) compared to $130,806 for the three months ended April 2011 (28 properties), and $131,250 (45 properties) for the three months ended May 2010. The median horticulture farm size for the three months ended May 2011 was 6 hectares.

The lifestyle property market also saw a strong lift in volume in the three months to May 2011 and a modest lift in the median price. All regions apart from Northland, Gisborne and Hawkes Bay saw an increase in sales, with Auckland again recording the strongest increase. Canterbury, Waikato,
Bay of Plenty and Southland also recording notable increases in sales volumes.

The national median price rose by $10,000 to $460,000 for the three months to May 2011 compared to the three months to April, and rose $15,000 compared to the three month to May 2010. Total sales completed for the three months to May 2011 were 1,311, up 176 (15.5%) compared to the three months ended April 2011, and up 133 (11.3%) compared to the three months ended May 2010.

Commenting on the lifestyle property market statistics Brian Peacocke said, “The lifestyle property market is also demonstrating rising sales volumes, in line with the farming sector, although the levels of activity are still patchy across the country. The increase in the median price, although modest, will be welcome news for some, although the increase was generally confined to the Auckland region, Hawkes Bay and Canterbury.”

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