Farm Prices Steady but Volumes Falling in March Quarter

News Release 20 April 2015

Farm Prices Steady but Sales Volumes Falling in March Quarter

Summary

Data released today by the Real Estate Institute of NZ (“REINZ”) shows there were 47 fewer farm sales (-10%) for the three months ended March 2015 than for the three months ended March 2014. Overall, there were 425 farm sales in the three months to end of March 2015, compared to 464 farm sales for the three months ended February 2015 (-8.4%) and 472 farm sales for the three months to the end of March 2014. 1,802 farms were sold in the year to February 2015, 2.2% fewer than were sold in the year to March 2014.

The median price per hectare for all farms sold in the three months to March 2015 was $27,957 compared to $22,342 recorded for three months ended March 2014 (+25.1%). The median price per hectare fell by less than 1% compared to February.

The REINZ All Farm Price Index rose 2.7% in the three months to March compared to the three months to February, moving from 3,256.6 to 3,343.8. Compared to March 2014 the REINZ All Farm Price Index rose by 5.3%. The REINZ All Farm Price Index adjusts for differences in farm size, location and farming type, unlike the median price per hectare, which does not adjust for these factors.

Three regions recorded increases in sales volume for the three months ended March 2015 compared to the three months ended March 2014. Auckland recorded the largest increase in sales (+8 sales), followed by Hawkes Bay (+5 sales) and Wellington (+2 sales). Compared to the three months ended February 2015, six regions recorded an increase in sales.

“The general tone of the market for the three months ended March has been very solid, with demand ensuring quality properties have sold extremely well”, says REINZ Rural Spokesman Brian Peacocke, “The impact from the subsequent shortage of supply has resulted in increased focus on a number of properties which for a variety of reasons including contour and location have been harder to sell.”

“The reduced dairy payout and the high NZ dollar are being carefully assessed by prudent purchasers, with the drought conditions in particular have had a negative impact on some regions in the South Island.”

Highlights include:
• A continuing level of healthy sales activity in Northland where purchasers have been able to buy larger properties at values lower than in regions to the south;
• Steady prices in the Waikato but a general easing from the strong levels of volumes and price prevailing in previous months;
• Strong dairy prices in Taranaki but low volumes; and
• Steady activity on dairy farms and very solid volumes of dry stock properties throughout Canterbury, Otago and Southland where listings are now in short supply.

Grazing properties accounted for the largest number of sales with 42.0% share of all sales over the three months to March 2015, Dairy properties accounted for 20.3%, Finishing properties accounted for 15.1% and Horticulture properties accounted for 13.2% of all sales. These four property types accounted for 90.4% of all sales during the three months ended March 2015.

Dairy Farms
For the three months ended March 2015 the median sales price per hectare for dairy farms was $37,761 (86 properties), compared to $45,105 for the three months ended February 2015 (97 properties), and $34,474 (102 properties) for the three months ended March 2014. The median dairy farm size for the three months ended March 2015 was 112 hectares.

Included in sales for the month of March were 38 dairy farms at a median sale value of $34,208 per hectare. The median farm size was 110 hectares with a range of 22 hectares in Waikato to 366 hectares on the West Coast. The median production per hectare across all dairy farms sold in March 2015 was 932 kgs of milk solids.

The REINZ Dairy Farm Price Index fell by 2.0% in the three months to March compared to the three months to February, from 2,060.2 to 2020.0. Compared to March 2014, the REINZ Dairy Farm Price Index rose by 14.3%. 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 March 2015 the median sale price per hectare for finishing farms was $21,670 (64 properties), compared to $22,186 for the three months ended February 2015 (63 properties), and $20,303 (101 properties) for the three months ended March 2014. The median finishing farm size for the three months ended March 2015 was 57 hectares.

Grazing Farms
For the three months ended March 2015 the median sales price per hectare for grazing farms was $15,226 (178 properties) compared to $16,161 for the three months ended February 2015 (203 properties), and $13,588 (181 properties) for the three months ended March 2014. The median grazing farm size for the three months ended March 2015 was 74 hectares.

Horticulture Farms
For the three months ended March 2015 the median sales price per hectare for horticulture farms was $240,522 (56 properties) compared to $264,745 (58 properties) for the three months ended February 2015, and $152,711 (44 properties) for the three months ended March 2014. The median horticulture farm size for the three months ended March 2015 was five hectares.

Lifestyle Properties
The lifestyle property market saw a 6.7% lift (+108 sales) in sales volume in the three months to March 2015 compared to March 2014. 1,712 sales were recorded in the three months to March 2015 compared to 1,604 sales in the three months to March 2014. 92 more sales were recorded compared to the three months to February 2015. For the 12 months to March 2015 there were 6,529 unconditional sales of lifestyle properties, a decrease of 2.5% (-170 sales) over the 12 months to March 2014.

Five regions recorded an increase in sales compared to March 2014 while eight recorded decreases in sales. Compared to February 2015, seven regions recorded an increase in sales with seven regions recording decreases.

The national median price for lifestyle blocks rose by $40,000 (+7.8%) from $510,000 for the three months to March 2014 to $550,000 for the three months to March 2015, a new record national median price for lifestyle blocks. The median price for lifestyle blocks in Auckland rose by $140,000 (+16.7%) from $840,000 for the three months to March 2014 to $980,000 for the three months to March 2015. Over the same time period, the median price fell by 3.2% in Waikato to $455,000 and rose by 1.8% in Canterbury to $641,250, a new record median for the region. Compared to February 2015, the national median sales price rose by $20,000 (+3.8%).

The median number of days to sell for lifestyle properties eased by five days, from 68 days for the three months to the end of February to 73 days for the three months to the end of March. Compared to the three months ended March 2014 the median number of days to sell improved by one day from 74 days to 73 days. Auckland recorded the shortest number of days to sell in March 2015 at 46 days, followed by Canterbury at 56 days and Wellington at 65 days. West Coast recorded the longest number of days to sell at 134 days, followed by Bay of Plenty at 123 days, and Hawkes Bay at 120 days.

Commenting on the lifestyle property market Brian Peacocke said, “Sales volumes for the three month period ending March 2015 confirm a resilient market in the lifestyle sector with a particularly strong lift in sales in the Auckland region.”

Highlights Include:
• Strong activity in the $1m - $2m range on the southern fringe of Auckland City, with additional sales being stimulated by re-zoning;
• Easing volumes in the Waikato but a stronger level of sales in the Bay of Plenty;
• Steady throughout the centre of the North Island;
• A reduction of activity in the Wellington / Wairarapa region where listings are reported as heavy but buyer enquiry light;
• A steady market around Christchurch with development pushing to the southwest of the city, although slower in North Canterbury; and
• A good consistent market in the Otago / Southland region with healthy activity in the Queenstown / Lake Districts.

REINZ_Rural_Market_Report__March_2015.pdf

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