A Restrained Early Spring Market

Data released today by the Real Estate Institute of New Zealand (REINZ) shows there were 20 more farm sales (+8.0%) for the three months ended September 2019 than for the three months ended September 2018. Overall, there were 270 farm sales in the three months ended September 2019, compared to 265 farm sales for the three months ended August 2019 (+1.9%), and 250 farm sales for the three months ended September 2018. 1,361 farms were sold in the year to September 2019, 6.7% fewer than were sold in the year to September 2018, with 37.0% less Dairy farms, 3.2% more Grazing farms, 7.8% less Finishing farms and 4.4% less Arable farms sold over the same period.

The median price per hectare for all farms sold in the three months to September 2019 was $25,754 compared to $25,447 recorded for three months ended September 2018 (+1.2%). The median price per hectare increased 1.6% compared to August 2019.

The REINZ All Farm Price Index fell 4.3% in the three months to September 2019 compared to the three months to August 2019. Compared to September 2018 the REINZ All Farm Price Index fell 3.9%. 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.

Eight of the 14 regions recorded an increase in the number of farm sales for the three months ended September 2019 compared to the three months ended September 2018 with the most notable being Bay of Plenty (+16) and Otago (+9). Southland recorded the most substantial decline in sales (-16 sales) followed by Auckland (-7 sales). Compared to the three months ended August 2019, six regions recorded an increase in sales with the biggest increase being in both Bay of Plenty and Otago (+4 sales).

Brian Peacocke, Rural Spokesman, at REINZ says: “Sales volumes for the 3 month period ending September 2019 reflect a small lift compared to 12 months ago, but are consistent with both last month and the equivalent period 2 years ago.

“As noted, prices remain steady currently on relatively light volumes, but reflect a gradual easing over the last 2 years.

“That is a fair reflection on the current market and whilst the outlook remains good in terms of income for sheep, beef, horticulture and dairy, well supported by low interest rates and a benevolent exchange rate, as a result of the overwhelming raft of compliance and water quality issues, coupled with the continuing reports of a restrictive lending environment within the banking sector, a definable mood of caution remains within the rural sector.

“That mood will be tested in the coming months as more properties come to the market.

“Spring conditions throughout the country are conducive to good levels of production, and blustery, unpleasant, equinox type conditions aside, rainfall to date should ensure a continuation of benevolent conditions for the mid spring period ahead,” he concludes.

Points of Interest around New Zealand include:

• Upper North - a solid level of sales of finishing and grazing properties in Northland with good prices being paid for quality units, very quiet in the Auckland region and no activity in the dairy sector

• Central Regions - Unsurprisingly, given farmers have been emerging from peak workload periods, no dairy farm sales in the Waikato and minimal activity within the other categories; a better level of activity in the Bay of Plenty/Rotorua area albeit the two dairy farm sales reflect an intended conversion to kiwifruit, some good prices achieved on finishing units and a cross-section of smaller horticulture property sales

• Western North Island - zero activity on dairy units throughout; very light activity on drystock properties in Taranaki, Wanganui, Manawatu and Horowhenua but a stirring of bones with several sales in the arable sector

• Eastern North Island - sufficient activity to just register with a scattering of finishing and grazing property sales, most of which occurred in Central Hawke’s Bay; a cross-section of activity in the Wairarapa with a good sale of a versatile intensive arable/finishing unit and a strong price on a bare land block in the wine growing region of Martinborough

• Upper South Island - solid prices paid on smaller finishing and grazing units in the Marlborough and Tasman districts, with a very strong result for a smaller horticulture block south west of Blenheim

• Central South Island - no activity in the dairy sector but some good strong results in the drystock arena, particularly with finishing units in the Selwyn district, and a good sale of arable land in the Ashburton district; the buds of the spring market are still waiting to burst on the West Coast

• Lower South Island - light activity in North and Central Otago but a strong run of sales of grazing properties in the Dunedin to Clutha districts, with prices remaining on par with recent levels; a brighter patch in Southland with a string of good sales at good prices for smaller finishing units backed up by sales of several grazing blocks and a dairy unit, all at good solid prices.

Grazing farms accounted for the largest number of sales with a 35% share of all sales over the three months to September 2019, Finishing farms accounted for 27%, Horticulture accounted for 17%, and Arable properties accounted for 8% of all sales. These four property types accounted for 87% of all sales during the three months ended September 2019.

Dairy Farms

For the three months ended September 2019, the median sales price per hectare for dairy farms was $38,102 (10 properties), compared to $29,470 (14 properties) for the three months ended August 2019, and $30,876 (14 properties) for the three months ended September 2018. The median price per hectare for dairy farms has increased 23.4% over the past 12 months. The median dairy farm size for the three months ended September 2019 was 107 hectares.

On a price per kilo of milk solids basis the median sales price was $31.06 per kg of milk solids for the three months ended September 2019, compared to $31.11 per kg of milk solids for the three months ended August 2019 (-0.2%), and $30.65 per kg of milk solids for the three months ended September 2018 (+1.3%).

The REINZ Dairy Farm Price Index rose 10.3% in the three months to September 2019 compared to the three months to August 2019. Compared to September 2018, the REINZ Dairy Farm Price Index rose 20.6%. 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 2019, the median sale price per hectare for finishing farms was $33,643 (74 properties), compared to $31,660 (79 properties) for the three months ended August 2019, and $32,412 (74 properties) for the three months ended September 2018. The median price per hectare for finishing farms has risen 3.8% over the past 12 months. The median finishing farm size for the three months ended September 2019 was 34 hectares.

Grazing Farms

For the three months ended September 2019, the median sales price per hectare for grazing farms was $11,090 (94 properties), compared to $11,337 (89 properties) for the three months ended August 2019 and $11,936 (85 properties) for the three months ended September 2018. The median price per hectare for grazing farms has fallen 7.1% over the past 12 months. The median grazing farm size for the three months ended September 2019 was 90 hectares.

Horticulture Farms

For the three months ended September 2019, the median sales price per hectare for horticulture farms was $212,985 (45 properties), compared to $212,509 (44 properties) for the three months ended August 2019 and $193,517 (43 properties) for the three months ended September 2018. The median price per hectare for horticulture farms has risen 10.1% over the past 12 months. The median horticulture farm size for the three months ended September 2019 was 7 hectares.

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