Rural Market: Steady Volumes at End of Season

20 June 2018

For immediate release

Steady Volumes at End of Season

Data released today by the Real Estate Institute of NZ (REINZ) shows there were 71 fewer farm sales (-13.8%) for the three months ended May 2018 than for the three months ended May 2017. Overall, there were 443 farm sales in the three months ended May 2018, compared to 418 farm sales for the three months ended April 2018 (+6.0%), and 514 farm sales for the three months ended May 2017. 1,453 farms were sold in the year to May 2018, 18.8% fewer than were sold in the year to May 2017, with 4.0% more finishing farms, 1.7% fewer dairy farms, 36.3% fewer grazing and 34.3% fewer arable farms sold over the same period.

The median price per hectare for all farms sold in the three months to May 2018 was $26,219 compared to $27,212 recorded for three months ended May 2017 (-3.6%). The median price per hectare fell 4.0% compared to April.

The REINZ All Farm Price Index rose 1.2% in the three months to May 2018 compared to the three months to April 2018. Compared to May 2017 the REINZ All Farm Price Index rose 5.8%. 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.

Across the country, 10 of 14 regions recorded decreases in the number of farm sales for the three months ended May 2018 compared to the three months ended May 2017. Northland recorded the most substantial decline in sales (-33 sales) followed by Otago (-22 sales) and Waikato (-12 sales). Manawatu/Wanganui (+14), West Coast (+9) and Bay of Plenty (+6) were the top three regions to increase the number of farm sales compared to May 2017. Compared to the three months ended April 2018, five regions recorded a decrease in sales with the biggest drop being in Auckland (-3 sales).

Brian Peacocke, Rural Spokesman, at REINZ says: “The 2017/2018 farm sales season ended on a good note with sales figures reflecting a solid degree of confidence, albeit an easing in volumes from an annual perspective.

“The confidence referred to appears to have been carried through into attendance and purchase figures at the recent National Fieldays at Mystery Creek in the Waikato, reinforced by an improving dairy payout, strong markets for beef and lamb, and the continuation of lower interest rates which in turn reflect the current low-inflation economy,” he continues.

“Regretfully, however, the optimism stemming from an extremely benevolent autumn has been dominated by the pervasive impact of the mycoplasma bovis disease which is having a dramatic financial and social impact on many in the rural sector. Time will tell if the Ministry of Primary Industries in tandem with other animal health entities and the wider farming community are to be successful with the current plan to eradicate as opposed to managing this difficult-to-detect biosecurity invader,” he concludes.

Points of Interest around New Zealand include:

Dairying – a consistent surge of later sales in the Waikato region with some particularly strong results in the eastern areas for Tatua and special end-use dairy land; quieter in the Upper North; constrained in Taranaki and the lower North Island; several reasonable outcomes in Canterbury and Southland

Finishing – strong results and values throughout much of the country, with particular success in the Waikato/Bay of Plenty, Taranaki, Manawatu, Canterbury, Otago and Southland regions

Grazing – again, encouraging results in many districts, including an upturn in the Nelson/Marlborough region, with standout performances in the Manawatu/Wanganui and Otago provinces

Horticulture – Bay of Plenty again dominated this sector with great consistency in volumes and strong prices, with Hawke’s Bay sales during May being equal to the better months recorded over the last two years

Arable – patches of activity throughout the main cropping regions of the country with Nelson/Marlborough recording one of its stronger results for a considerable period of time

Forestry – light activity in general with those few sales recorded being in the Upper North, Taranaki and Southland.

Finishing farms accounted for the largest number of sales with a 33% share of all sales over the three months to May 2018, Grazing farms accounted for 27%, Dairy properties accounted for 17%, and Horticulture properties accounted for 14% of all sales. These four property types accounted for 90% of all sales during the three months ended May 2018.

Dairy Farms

For the three months ended May 2018, the median sales price per hectare for dairy farms was $35,901 (74 properties), compared to $36,028 for the three months ended April 2018 (82 properties), and $34,789 (89 properties) for the three months ended May 2017. The median price per hectare for dairy farms has increased 3.2% over the past 12 months. The median dairy farm size for the three months ended May 2018 was 96 hectares.

On a price per kilo of milk solids basis, the median sales price was $36.45 per kg of milk solids for the three months ended May 2018, compared to $37.38 per kg of milk solids for the three months ended April 2018 (-2.5%), and $36.26 per kg of milk solids for the three months ended May 2017 (+0.5%).

The REINZ Dairy Farm Price Index increased 0.4% in the three months to May 2018 compared to the three months to April 2018. Compared to May 2017, the REINZ Dairy Farm Price Index fell 8.2%. 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 May 2018, the median sale price per hectare for finishing farms was $29,093 (145 properties), compared to $29,427 for the three months ended April 2018 (134 properties), and $27,141 (157 properties) for the three months ended May 2017. The median price per hectare for finishing farms has risen 7.2% over the past 12 months. The median finishing farm size for the three months ended May 2018 was 49 hectares.

Grazing Farms

For the three months ended May 2018, the median sales price per hectare for grazing farms was $10,687 (120 properties) compared to $10,692 for the three months ended April 2018 (109 properties) and $14,160 (155 properties) for the three months ended May 2017. The median price per hectare for grazing farms has fallen 24.5% over the past 12 months. The median grazing farm size for the three months ended May 2018 was 125 hectares.

Horticulture Farms

For the three months ended May 2018, the median sales price per hectare for horticulture farms was $277,842 (60 properties) compared to $278,258 (52 properties) for the three months ended April 2018 and $181,427 (64 properties) for the three months ended May 2017. The median price per hectare for horticulture farms has risen 53.0% over the past 12 months. The median horticulture farm size for the three months ended May 2018 was eight hectares.

ENDS

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.

Editor’s 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 May refer to the period from 1 March 2018 to 31 May 2018.

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 May 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.

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