Autumn Colours Signal Seasonal Slowdown

Autumn Colours Signal Seasonal Slowdown

Data released today by the Real Estate Institute of NZ (“REINZ”) shows there were 13 fewer farm sales (-2.6%) for the three months ended April 2015 than for the three months ended April 2014. Overall, there were 485 farm sales in the three months to end of April 2015, compared to 425 farm sales for the three months ended March 2015 (+14.1%) and 498 farm sales for the three months to the end of April 2014. 1,798 farms were sold in the year to April 2015, 2.8% fewer than were sold in the year to April 2014.

The median price per hectare for all farms sold in the three months to April 2015 was $28,668 compared to $24,574 recorded for three months ended April 2014 (+16.7%). The median price per hectare rose 2.5% compared to March.

The REINZ All Farm Price Index rose 1.9% in the three months to April compared to the three months to March. Compared to April 2014 the REINZ All Farm Price Index rose by 0.8%. 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.

Seven regions recorded increases in sales volume for the three months ended April 2015 compared to the three months ended April 2014. Auckland recorded the largest increase in sales (+12 sales), followed by Bay of Plenty (+11 sales) and Taranaki (+7 sales). Compared to the three months ended March 2015, 11 regions recorded an increase in sales.

“In contrast to the very topical discussions relating to the reduction in the dairy payout, beef prices remain strong, good properties continue to sell at values deemed fully firm, and large areas around the country are experiencing excellent autumn growing conditions”, says REINZ Rural Spokesman Brian Peacocke, “Unfortunately for those in parts of Canterbury and further north, drought conditions still prevail.”

Highlights include:

• An ongoing level of good enquiry into Northland from further south yet to come to fruition, with reduced sales resulting in a higher level of listings in parts of the region;
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• Strong sales activity in the greater Waikato region for dairy and grazing properties where values for the better farms are holding well;
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• A big lift in horticultural sales in the Bay of Plenty where investors and existing operators are competing strongly, with an emphasis on top quality production blocks rather than those with good homes. Prices for such blocks currently are equal to or above pre-PSA levels e.g. $500,000 per canopy hectare for gold kiwifruit and up to $375,000 per canopy hectare for green;
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• Good activity surrounding a limited number of available properties in Hawkes Bay, with the current shortage expected to prevail until the spring;
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• Steady activity on dry stock properties throughout the Taranaki / Wanganui / Manawatu / Wairarapa regions where local buyers dominate, albeit reduced stocks are having an influence;
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• A shortage of listings in Canterbury resulting in reduced sales, with an expectation prices will reflect the medium term outlook rather than the short term reality; and
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• Good well located properties throughout Otago and Southland continue to sell well with lesser quality and outlying farms being harder to attract enquiry unless vendor price expectations match the market.
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Grazing properties accounted for the largest number of sales with 39.6% share of all sales over the three months to April 2015, Dairy properties accounted for 20.0%, Finishing properties accounted for 15.9% and Horticulture properties accounted for 15.1% of all sales. These four property types accounted for 90.5% of all sales during the three months ended April 2015.

Dairy Farms

For the three months ended April 2015 the median sales price per hectare for dairy farms was $38,802 (97 properties), compared to $37,761 for the three months ended March 2015 (86 properties), and $34,615 (105 properties) for the three months ended April 2014. The median dairy farm size for the three months ended April 2015 was 108 hectares.

Included in sales for the month of March were 26 dairy farms at a median sale value of $37,879 per hectare. The median farm size was 101 hectares with a range of 41 hectares in Waikato to 231 hectares in Auckland. The median production per hectare across all dairy farms sold in April 2015 was 1,088 kgs of milk solids.

The REINZ Dairy Farm Price Index rose by 6.9% in the three months to April compared to the three months to March. Compared to March 2014, the REINZ Dairy Farm Price Index rose by 15.5%. 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 April 2015 the median sale price per hectare for finishing farms was $20,966 (77 properties), compared to $21,670 for the three months ended March 2015 (64 properties), and $22,108 (107 properties) for the three months ended April 2014. The median finishing farm size for the three months ended April 2015 was 52 hectares.

Grazing Farms

For the three months ended April 2015 the median sales price per hectare for grazing farms was $16,741 (192 properties) compared to $15,226 for the three months ended March 2015 (178 properties), and $15,324 (185 properties) for the three months ended April 2014. The median grazing farm size for the three months ended April 2015 was 56 hectares.

Horticulture Farms

For the three months ended April 2015 the median sales price per hectare for horticulture farms was $266,883 (73 properties) compared to $240,522 (56 properties) for the three months ended March 2015, and $175,462 (48 properties) for the three months ended April 2014. The median horticulture farm size for the three months ended April 2015 was five hectares.

Lifestyle Properties

The lifestyle property market saw a 13.7% lift (+233 sales) in sales volume in the three months to April 2015 compared to April 2014. 1,940 sales were recorded in the three months to April 2015 compared to 1,707 sales in the three months to April 2014. 229 more sales were recorded compared to the three months to March 2015. For the 12 months to April 2015 there were 6,650 unconditional sales of lifestyle properties, an increase of 0.1% (+8 sales) over the 12 months to April 2014.

Eight regions recorded an increase in sales compared to April 2014 while five recorded decreases in sales. Compared to March 2015, 11 regions recorded an increase in sales with one region recording a decrease.

The national median price for lifestyle blocks rose by $42,500 (+8.3%) from $510,000 for the three months to April 2014 to $552,500 for the three months to April 2015, a new record national median price for lifestyle blocks. The median price for lifestyle blocks in Auckland rose by $140,000 (+16.3%) from $860,000 for the three months to April 2014 to $1,000,000 for the three months to April 2015. Over the same time period, the median price rose by 0.9% in Waikato to $474,000 and rose by 2.6% in Canterbury to $607,500. Compared to March 2015, the national median sales price rose by $2,500 (+0.5%).

The median number of days to sell for lifestyle properties eased by one day, from 73 days for the three months to the end of March to 74 days for the three months to the end of April. Compared to the three months ended April 2014 the median number of days to sell improved by one day. Auckland recorded the shortest number of days to sell in April 2015 at 51 days, followed by Canterbury at 53 days and Wellington at 65 days. Hawkes Bay recorded the longest number of days to sell at 125 days, followed by Bay of Plenty at 108 days, and Manawatu/Wanganui at 103 days.

Commenting on the lifestyle property market Brian Peacocke said, “Whilst figures for the 3-month period ending April 2015 reflect a healthy increase in sales volumes, an emerging trend indicates the market has been harder during the month of April.”

Highlights Include:

• A decrease in sales volumes in the Auckland region but a solid increase in the median price, particularly evident in the growth areas to the south of the city where prices have lifted strongly, resulting in a number of sales in the $1m - $3m price range;
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• Steady prices in the Waikato where fewer listings have resulted in older stocks moving, although distinct buyer caution and slower decision making is evident, particularly relating to monolithic dwellings where re-cladding expenses are being factored in to those decisions;
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• A healthy increase in sales activity in the Bay of Plenty, but slower through the mid-North Island regions;
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• Solid activity in Wairarapa with Wellington purchasers evident in the marketplace;
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• Consistent volumes in Canterbury in the mid-price range but slower at the top end, partially due to a trend of older farmers retiring to town rather than on to lifestyle blocks; and
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• A difficult market at the top end in the Otago and Southland regions, but good enquiry at the entry to mid-level, with notably strong activity in the Wanaka / Cromwell / Lakes Districts areas.
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ENDS

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