Rural Property Market Prepares For Spring

News Release
15 October 2014

Rural Property Market Prepares For Spring

Summary

Data released today by the Real Estate Institute of NZ (“REINZ”) shows there were five more farm sales (+1.5%) for the three months ended September 2014 than for the three months ended September 2013. Overall, there were 347 farm sales in the three months to end of September 2014, compared to 407 farm sales for the three months ended August 2014 (-14.7%). 1,917 farms were sold in the year to September 2014, 21.8% more than were sold in the year to September 2013.

The median price per hectare for all farms sold in the three months to September 2014 was $26,000 compared to $22,851 recorded for three months ended September 2013 (+13.8%). The median price per hectare fell 2.2% compared to August.

The REINZ All Farm Price Index rose 0.1% in the three months to September compared to the three months to August, moving from 3,126.1 to 3,127.7. Compared to September 2013 the REINZ All Farm Price Index fell by by 2.1%. The REINZ All Farm Price Index adjusts for differences in farm size, location and farming type compared to the median price per hectare, which does not adjust for these factors.

Five regions recorded increases in sales volume for the three months ended September 2014 compared to the three months ended September 2013. Northland recorded the largest increase in sales (+22 sales), followed by Auckland (+12 sales) and Nelson (+10 sales). Compared to the three months ended August 2014, four regions recorded an increase in sales.

“The rural market was reasonably quiet in September this year with sales volumes similar to September last year”, says REINZ Rural Spokesman Brian Peacocke, “However, comments from around the regions confirm strong buyer interest for good quality, well located properties, with indications of a reasonable supply of listings as spring advances.”

“In contrast to the dairy sector where the reduction in payout has dominated the news, the sheep and beef sector is experiencing increasing prices and an improving outlook for product returns. September sales in the horticultural sector were better than for the same month in the previous two years.”

Highlights Include:
• Early sales of dairy units in the Waikato have achieved per hectare levels firm on last season with quality dairy support units also having sold strongly;
• Horticultural sales in the Bay of Plenty reflect improving conditions in the kiwifruit industry with both green and gold orchards in good locations being keenly sought after at very good prices;
• Nelson and Marlborough have also experienced a solid September in the horticultural sector;
• Sales of finishing and grazing properties remain steady across the country; and
• There is healthy enquiry from the investment sector for quality rural properties.

Grazing properties accounted for the largest number of sales with 46.7% share of all sales over the three months to September 2014, Horticulture properties accounted for 15.6%, Finishing properties accounted for 13.8% and Arable properties accounted for 12.1% of all sales. These four property types accounted for 88.1% of all sales during the three months ended September 2014.

Dairy Farms
For the three months ended September 2014 the median sales price per hectare for dairy farms was $40,462 (20 properties), compared to $43,125 for the three months ended August 2014 (26 properties), and $34,912 (28 properties) for the three months ended September 2013. The median dairy farm size for the three months ended September 2014 was 93 hectares.

Included in sales for the month of September were nine dairy farms at a median sale value of $47,561 per hectare. The median farm size was 90 hectares with a range of 35 hectares in the Waikato region to 400 hectares in Marlborough. The median production per hectare across all dairy farms sold in September 2014 was 750 kgs of milk solids.

The REINZ Dairy Farm Price Index rose by 3.9% in the three months to September compared to the three months to August, from 2,135.5 to 2,218.8. Compared to September 2013, the REINZ Dairy Farm Price Index rose by 24.5%. The REINZ Dairy Farm Price Index adjusts for differences in farm size and location compared to the median price per hectare, which does not adjust for these factors.

Finishing Farms
For the three months ended September 2014 the median sale price per hectare for finishing farms was $30,437 (48 properties), compared to $30,194 for the three months ended August 2014 (66 properties), and $25,388 (93 properties) for the three months ended September 2013. The median finishing farm size for the three months ended September 2014 was 41 hectares.

Grazing Farms
For the three months ended September 2014 the median sales price per hectare for grazing farms was $15,165 (162 properties) compared to $14,995 for the three months ended August 2014 (192 properties), and $17,517 (136 properties) for the three months ended September 2013. The median grazing farm size for the three months ended September 2014 was 61 hectares.

Horticulture Farms
For the three months ended September 2014 the median sales price per hectare for horticulture farms was $149,763 (54 properties) compared to $126,236 (52 properties) for the three months ended August 2014, and $127,667 (37 properties) for the three months ended September 2013. The median horticulture farm size for the three months ended September 2014 was eight hectares.

Lifestyle Properties
The lifestyle property market saw a 10.3% fall (-170 sales) in sales volume in the three months to September 2014 compared to September 2013. 1,477 sales were recorded in the three months to September 2014 compared to 1,647 sales in the three months to September 2013. 32 more sales were recorded compared to the three months to August 2014 (+2.2%). For the 12 months to September 2014 there were 6,337 unconditional sales of lifestyle properties, a decrease of 2.8% (-185 sales) compared with the 12 months to September 2013.

Six regions recorded an increase in sales compared to September 2013 while eight recorded decreases in sales. Compared to August 2014, eight regions recorded an increase in sales with five regions recording decreases.

The national median price for lifestyle blocks rose by $25,000 (+5.2%) from $480,000 for the three months to September 2013 to $505,000 for the three months to September 2014. The median price for lifestyle blocks in Auckland fell by $17,000 (-1.9%) from $872,000 for the three months to September 2013 to $855,000 for the three months to September 2014. Over the same time period, the median price rose by 1.0% in Waikato to $470,000, and rose by 18.4% in Canterbury to $556,250. Compared to August 2014, the national median sales price fell by $5,510 (-1.1%) to $505,000.

The median number of days to sell for lifestyle properties eased by three days, from 84 days for the three months to the end of August to 87 days for the three months to the end of September. Compared to the three months ended September 2013 the median number of days to sell eased by nine days from 78 days to 87 days. Gisborne recorded the shortest number of days to sell in September 2014 at 36 days, followed by Canterbury at 64 days and Auckland at 67 days. West Coast recorded the longest number of days to sell at 226 days, followed by Nelson at 132 days and Manawatu/Wanganui at 131 days.

Commenting on the lifestyle property market Brian Peacocke said, “Properties on the fringe of Auckland continue to be the bright spot in the lifestyle market with very strong activity to the north of the city, although activity quickly diminishes further to the north.”

“Sales volumes across the country have been steady to slightly reducing with Manawatu/Wanganui and Wellington being the only other regions to experience improved sales volumes in September. Generally speaking the market is expected to improve as spring advances.”

REINZ All Farm Price Index – Additional Data
The table below sets out the returns for the REINZ All Farm Price Index for the three months ending September 2014.

The graph below shows the trends in the REINZ All Farm Price Index compared to an index of movements in the $/hectare measure of farm prices.

REINZ Dairy Farm Price Index – Additional Data
The table below sets out the returns for the REINZ Dairy Farm Price Index for the three months ending September 2014.

The graph below shows the trends in the REINZ Dairy Farm Price Index compared to an index of movements in the $/hectare measure of farm prices.

Real Estate Institute of New Zealand
For more real estate information and market trends data, visit www.reinz.co.nz. For New Zealand's most comprehensive range of listings for residential, lifestyle, rural, commercial, investment and rental properties, visit www.realestate.co.nz REINZ's official property directory website.

Editors Note:
The information provided by REINZ in relation to the rural real estate market covers the most recently completed three month period; thus references to September refer to the period from 1 July 2014 to 30 September 2014.

The REINZ Farm Price Indices have been developed in conjunction with the Reserve Bank of New Zealand. It adjusts sale prices for property specific factors such as location, size and farm type which can affect the median $/hectare calculations and provides a more accurate measure of farm price movements. The REINZ Farm Price Indices has been calculated with a base of 1,000 for the three months ended March 1996. The REINZ Farm Price Indices is best utilised in assessing percentage changes over various time periods rather than trying to apply changes in the REINZ Farm Price Index to specific property transactions.

ENDS

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