Emerging Caution Balances Gains in Rural Property Market

News Release

15 May 2012

Emerging Caution Balances Recent Gains in Rural Property Market

Data released today by the Real Estate Institute of NZ (“REINZ”) shows there were 153 more farm sales (+52.8%) for the three months ended April 2012 than for the three months ended April 2011. Overall, there were 443 farm sales in the three months to end of April 2012, compared with 290 farm sales in the three months to April 2011. This is the highest number of farm sales in a three month period since August 2008.

The number of sales rose by 46 (+11.6%) in the three months to April 2012 compared to the three months ended March 2012. 1,384 farms were sold in the year to April 2012, 50.8% more than were sold in the year to April 2011.

The median price per hectare for all farms sold in the three months to April 2012 was $18,617; a 7.2% decrease on the $20,056 recorded for three months ended March 2012 and up $679 per hectare (+3.8%) on the $17,938 recorded for the three months to April 2011.

All regions, apart from Hawkes Bay and Otago, recorded increases in sales volumes for the three months ended April 2012 compared to the three months ended April 2011. Waikato recorded the largest increase in sales (+32 sales), followed by Canterbury (+28 sales) and Manawatu/Wanganui (+23 sales). Hawkes Bay recorded five fewer sales in the three months to April 2012 compared to the three months to April 2011, while Otago recorded four fewer sales. Compared to the three months ended March 2012 all but Auckland and Waikato recorded increases in sales.

“Whilst sales volumes, as opposed to prices, reflect positive gains over the corresponding period twelve months ago, the warning signs confirming the market is slowing down are clearly visible,” says REINZ Rural Market Spokesman Brian Peacocke. “Sales figures for April 2012 show reductions in volumes for dairy, finishing and grazing properties, with the remaining minor categories holding steady or showing small increases.”

The earlier confidence arising from the very good season just past is being replaced by a distinct note of caution as purchasers take account of recent reductions in market returns for dairy products, mutton and lamb. Within the rural market, there is acknowledgement that income levels are likely to be down in the forthcoming season. As a result, land purchase decisions are being carefully assessed before commitments are entered into ”

Included in sales for the month of April were 20 dairy farms at an average sale value of $30,207 per hectare. The average farm size was 118.4 hectares with a range of 28 hectares in Southland to 370 hectares in the Wairarapa. The average production per hectare across all dairy farms sold in April 2012 was 790 kgs of milk solids.

Grazing properties accounted for the largest number of sales with 52.6% share of all sales over the three months. Finishing properties accounted for 15.8%, Dairy properties 15.3%, and Special and Horticulture properties 5.0% each. These five property types accounted for 93.7% of all sales during the three months ended April 2012.

For the three months ended April the median sales price per hectare for dairy farms was $33,132 (68 properties), compared to $32,294 for the three months ended March 2012 (61 properties), and $30,879 (52 properties) for the three months ended April 2011. The median dairy farm size for the three months ended April2012 was 101 hectares.

For the three months ended April 2012 the median sales price per hectare for finishing farms was $14,551 (70 properties), compared to $19,676 for the three months ended March 2012 (66 properties), and $10,470 (38 properties) for the three months ended April 2011. The median finishing farm size for the three months ended April 2012 was 114 hectares.

For the three months ended April 2012 the median sales price per hectare for grazing farms was $15,036 (233 properties) compared to $15,696 for the three months ended March 2012 (214 properties), and $13,772 (140 properties) for the three months ended April 2011. The median grazing farm size for the three months ended April 2012 was 79 hectares.

For the three months ended April 2012 the median sales price per hectare for horticulture farms was $126,110 (22 properties) compared to $165,929 (14 properties) for the three months ended March 2012, and $130,806 (28 properties) for the three months ended April 2011. The median horticulture farm size for the three months ended April 2012 was 6 hectares.

The lifestyle property market also saw a 28.5% increase in sales in the three months to April 2012 compared to April 2011. 1,459 sales were recorded in the three months to April 2012 compared to 1,135 sales in the three months to April 2011. 112 more sales were recorded compared to the three months to March 2012 (+8.3%).

11 regions recorded increases in sales compared to March while two recorded falls. Waikato recorded the largest increase (+19 sales), followed by Wellington (+16 sales) and Northland and Bay of Plenty (+15 sales). Manawatu/Wanganui recorded the largest drop in sales (-3 sales), followed by Otago (-1 sale) and West Coast (no change).

The national median price for lifestyle blocks rose by $10,000 (+2.2%) from $450,000 for the three months to March to $460,000 for the three months to April. Compared to three months to April 2011 the median price also rose by $10,000 (+2.2%).

Commenting on the lifestyle property market statistics Brian Peacocke said, “Reports from around the country reflect a patchy market varying from reasonably active to very difficult. Expectations are for the market to continue to slow as we move into winter.”

ENDS

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