An Historic Month

Data released today by the Real Estate Institute of New Zealand (REINZ) shows there were 50 less farm sales (-15.1%) for the three months ended March 2020 than for the three months ended March 2019. Overall, there were 281 farm sales in the three months ended March 2020, compared to 329 farm sales for the three months ended February 2020 (-14.6%), and 331 farm sales for the three months ended March 2019. 1,216 farms were sold in the year to March 2020, 15.9% fewer than were sold in the year to March 2019, with 32.6% less Dairy farms, 14.3% less Grazing farms, 26.1% less Finishing farms and 14.1% less Arable farms sold over the same period.

The median price per hectare for all farms sold in the three months to March 2020 was $21,130 compared to $23,383 recorded for three months ended March 2019 (-9.6%). The median price per hectare increased 2.7% compared to February 2020.

The REINZ All Farm Price Index rose 0.8% in the three months to March 2020 compared to the three months to February 2020. Compared to the three months ending March 2019 the REINZ All Farm Price Index fell 12.8%. 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.

Three of the 14 regions recorded an increase in the number of farm sales for the three months ended March 2020 compared to the three months ended March 2019 with the most notable being Northland (+9) and Canterbury (+6). Taranaki recorded the most substantial decline in sales (-23) followed by Bay of Plenty (-13). Compared to the three months ended February 2020, three regions recorded an increase in sales with the biggest increase being in Canterbury (+3) and Hawke’s Bay (+2)

Brian Peacocke, Rural Spokesman, at REINZ says: “History will record the month of March 2020 as being unique in that for the first time on record, the national and global economies as well as the populations within the majority of countries were universally impacted by the COVID-19 virus, albeit as events unfolded, evidence confirmed several countries had been fighting the virus for a period prior to the world-wide escalation.

“New Zealanders will long remember 25 March 2020 as the date when our country went into lockdown. That was the day when national interests took priority over economic and personal pursuits and for an especially rare occasion, our population united in a combined effort to fight the deadly COVID -19 disease.

“In such circumstances, minor issues such as information relating to farm and lifestyle sales pale into insignificance in comparison to the events occurring within New Zealand and around the world.

“Whilst being heavily impacted and abiding by the same rules applying to the broader population, rural NZ, by virtue of being declared an essential industry, has had the necessary benefit of freedom of movement within their specific properties and general workplaces, more so than has been the case for their urban cousins.

“Widespread drought conditions of recent months aside, morale within the rural community in general terms appears to be good. This mood will be significantly enhanced if the banking sector, aided by a relaxation of Reserve Bank criteria for the building of capital reserves, adopts a more pragmatic and empathetic approach towards their rural clientele.

“One of the unfortunate consequences of the rules governing those sectors deemed essential industries, particularly the meat industry, is that it would appear processing costs will increase significantly, possibly by 25% for lamb and at this stage, by an undisclosed percentage increase in the killing charges for cattle.

“At a time when border restrictions are placing world market access for NZ exports under pressure, such increases will have a detrimental impact on incomes within the wider primary industry, to an extent which is yet to be determined.

“However, it is clear the rural sector will again emerge as being the sustainable mainstay for the NZ economy, without the vulnerability evident in the tourism sector,” he concludes.

Points of Interest around New Zealand include the following:

• Northland/Auckland - Light activity at moderate prices on the dairy front in Northland; a healthy number of sales of finishing and grazing units, predominantly smaller and in the lower price category; registrable activity in horticulture and forestry; several finishing properties sold in the Auckland district
• Waikato - Light activity in dairy sales compared to two years ago, albeit top end prices are holding well; one larger King Country dairy is being de-commissioned; fewer sales of finishing and grazing units and quiet in the Taupo district
• Bay of Plenty/Rotorua - Horticulture sales continue steadily but very light results in the other sectors with one grazing and one forestry sale
• Gisborne/Hawke’s Bay - Minimal results in Gisborne with just one small horticulture sale; good activity with grazing blocks at current prices from Wairoa to Central Hawke’s Bay; reasonable horticulture sales activity including stone fruit orchards and vineyards on the Heretaunga Plains
• Wairarapa/Wellington - Minimal results with just one grazing block sale in the Horowhenua district
• Nelson/Marlborough - Several smaller finishing unit sales spread between Tasman to Kaikoura; one small vineyard sale in Marlborough
• Canterbury/West Coast - Light dry stock activity in North Canterbury; good results at good prices for finishing units and arable properties in the mid Canterbury region with Ashburton featuring well, strongly supported by Timaru where a dairy property sale was included in the mix; light grazing unit activity on the West Coast
• Otago - A strong level of sales of finishing and grazing units in the North Otago and Clutha districts plus one dairy property sale; one vineyard sale in the Cromwell region and a standout sale of a good finishing unit at Glenorchy in the Queenstown/Lakes region
• Southland - Light activity recorded with 2 grazing property sales.

Grazing farms accounted for the largest number of sales with a 28% share of all sales over the three months to March 2020, Finishing farms accounted for 24%, Dairy accounted for 13% and Horticulture accounted for 11% of all sales. These four property types accounted for 76% of all sales during the three months ended March 2020.

Dairy Farms

For the three months ended March 2020, the median sales price per hectare for dairy farms was $30,299 (37 properties), compared to $35,142 (50 properties) for the three months ended February 2020, and $37,100 (43 properties) for the three months ended March 2019. The median price per hectare for dairy farms has decreased 18.3% over the past 12 months. The median dairy farm size for the three months ended March 2020 was 123 hectares.

On a price per kilo of milk solids basis the median sales price was $32.55 per kg of milk solids for the three months ended March 2020, compared to $35.29 per kg of milk solids for the three months ended February 2020 (-7.8%), and $38.69 per kg of milk solids for the three months ended March 2019 (-15.9%).

The REINZ Dairy Farm Price Index fell 8.2% in the three months to March 2020 compared to the three months to February 2020. Compared to March 2019, the REINZ Dairy Farm Price Index fell 13.0%. 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 2020, the median sale price per hectare for finishing farms was $29,372 (67 properties), compared to $28,911 (80 properties) for the three months ended February 2020, and $31,059 (80 properties) for the three months ended March 2019. The median price per hectare for finishing farms has fallen 5.4% over the past 12 months. The median finishing farm size for the three months ended March 2020 was 31 hectares.

Grazing Farms

For the three months ended March 2020, the median sales price per hectare for grazing farms was $9,663 (79 properties), compared to $10,090 (112 properties) for the three months ended February 2020 and $10,373 (117 properties) for the three months ended March 2019. The median price per hectare for grazing farms has fallen 6.8% over the past 12 months. The median grazing farm size for the three months ended March 2020 was 143 hectares.

Horticulture Farms

For the three months ended March 2020, the median sales price per hectare for horticulture farms was $220,718 (31 properties), compared to $243,421 (27 properties) for the three months ended February 2020 and $240,064 (46 properties) for the three months ended March 2019. The median price per hectare for horticulture farms has fallen 8.1% over the past 12 months. The median horticulture farm size for the three months ended March 2020 was 6 hectares.

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 March 2020 refer to the period from 1 January 2020 to 31 March 2020.

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.

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