Dairy Real Estate Remains Strong

13 October 2008

Dairy Real Estate Remains Strong

Despite the announced drop in milk payouts to dairy farmers, dairy farm sales and prices remained relatively firm in September, with most rural real estate agencies reporting brisk activity according to the Real Estate Institute of New Zealand (REINZ).

Commenting on the September figures released today, REINZ National Councillor and rural spokesperson Peter McDonald said Fonterra’s announced reduced payouts appeared to have had little immediate impact on last month’s record dairy farm prices.

“Dairy farmers are versatile and adaptable,” Mr McDonald says. “In the same way as they weather climatic challenges such as droughts and floods, they adapt to financial ups and downs. Despite the lower milk solids payout announced by Fonterra, there is still confidence in the sector and it needs to be remembered the reduced payout announced is still considerably higher than it was a couple of years ago.”

Mr McDonald says interest from genuine farmers, as opposed to investors, is still strong.

“Early season sales are indicating similar levels to last year,” he said. “No doubt there will be an adjustment, but it’s too early to tell where the new levels will be. In the meantime, we continue to receive lots of enquiries.”

The median price for dairy farms sold for the three months to September was $4,500,000, slightly down from $4,650,000 for the three months to August but more than double the median price in the corresponding period September 2006 period of $2,060,000. Fifty-five dairy farms changed hands in the three months to September, compared with 67 to August.

The total number of all farms sold for the three months to September was considerably down on the three months to August, from 516 to 430 and compared with same period of sales in September 2007 of 557.
However, the median price for those farms sold at $1,672,500 is on a par with August’s figure of $1,742,500 and well up on the corresponding period last year of $1,320,000.

One of the highlights in the three months to September was the sale of a high country merino farm in the South Island which fetched an impressive $23,500,000 million.

“It just goes to show there are people in the market still interested in farm properties if they find what they are looking for,” Mr McDonald said.

The lifestyle farm market continues to hold well and has been reasonably active, Mr McDonald said.

“Lifestyle farm sales are maintaining their hold where they have been for the last three or four months both in numbers of sales and median values.”

For the three months to September, 1071 lifestyle farms were sold compared with 1050 in the three months to August, with a median value of $435,000 compared with $450,000 to August.

In other farming categories, finishing farms remained steady on median sales of $1,950,000 on a par with the corresponding period last year which had median sales at $1,974,174. However, the number of sales was down in the sector from 120 in September last year to 57 this year.

Grazing farm prices were also firm with a median price of $1,478,893 on 225 sales for the three months to September compared with $1,123,762 for 227 sales to August.

ENDS

Explanatory Note:

The information provided by the Real Estate Institute in relation to the rural real estate market covers a three month period. Therefore references to September results refer to the period from 1 July – 30 September and references to August refer to the period from 1 June – 31 August.

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.

Rural Regional Highlights – September 2008
Northland
The median farm price in Northland dipped to $1,077,500 in September, from $1,152,500 in August (September 2007: $875,000). 30 farms sold (August 2008: 32; September 2007:39). The 30 farms sold consisted of 17 grazing, six horticulture, four dairy, two finishing and one arable). The median price for a lifestyle block decreased to $375,000 in September, from $380,000 in August (September 2007: $317,500). 90 lifestyle blocks sold during the month (August 2008: 105; September 2007: 136).

Auckland
The median farm price in Auckland dropped to $850,000 in September (August 2008: $1,200,000; September 2007: $1,580,000). 16 farms (12 grazing, three horticulture and one dairy) sold (August 2008: 21; September 2007: 31).

The number of lifestyle blocks sold was steady at 128 in September. (August 2008: 128; September 2007: 302). The median price reached $763,750 in September, up from $750,000 in August (September 2007: $750,000).

Waikato
42 farms (31 grazing, eight dairy, two arable and one finishing) sold in September, down from the 52 sold in August (September 2007: 46). The median price was up at $2,540,000 from $2,050,000 in August (September 2007: $1,285,000).

122 lifestyle blocks sold in September, up on the 119 sold in August. The median price dipped to $457,250 from $485,000 in August. In September 2007, 228 lifestyle blocks sold with a median price of $435,000.

Bay of Plenty
The median price for a farm eased to $1,312,500 in September (August 2008: $1,500,000; September 2007: $935,000). 30 farms (15 horticulture, ten grazing, three dairy and two forestry) sold in September, up on the 26 sold in August (September 2007:32).

55 lifestyle blocks sold in September (August 2008:69; September 2007:128). The median price rose to $630,000 from August’s $540,000. (September 2007: $512,500).

Gisborne
Two farms, one grazing and one horticulture, sold in September (August 2008: three; September 2007: ten). The median price dropped to $983,375 in September, from $2,525,000 in August (September 2007: $1,625,000).

Lifestyle block sales increased with 18 sold (August 2008: 14; September 2007:15). The median price eased to $467,500 from $475,000 in August (September 2007: $460,000).

Hawkes Bay
The median farm price eased up slightly to $1,306,000 in September, from $1,162,000 in August (September 2007: $1,300,000). 16 farms sold (August 2008:17; September 2007: 20) consisting of 13 grazing, and three horticulture.

48 lifestyle blocks sold in September, down from on the 49 sold in August. The median price slipped to $420,000 from $430,000 in August. In September 2007, 54 lifestyle blocks sold with a median sales price of $442,500.

Taranaki
The median farm price in Taranaki dropped to $1,160,000 in September, from $1,532.500 in August (September 2007: $1,476,039). 23 farms (14 grazing, four forestry, four dairy and one special) sold in September up on the 20 sold in August (September 2007:16).

42 lifestyle blocks sold in September (August 2008:45; September 2007: 60). The median price remained steady at $410,000. In September (August 2008: $410,000; September 2007: 362,500).

Manawatu/Wanganui
42 farms (31 grazing, six finishing, three dairy and two arable) sold in September (August 2008: 55; September 2007: 45). The median price was down at $1,410,000 from $1,860,000 in August (September 2007: $1,136,000).

The median price for a lifestyle block fell to $327,000 in September (August 2008: $345,000; September 2007: $292,000). In total 107 lifestyle blocks sold, up on the 95 sold in August (September 2007: 123).

Wellington
The median price for a Wellington farm dipped to $2,475,000 in September, down from $3,000,000 in August (September 2007: $1,410,000). Eight farms, all grazing, sold in September, up one from the seven sold in August (September 2007: seven).

51 lifestyle blocks sold in September (August 2008: 55; September 2007: 104). The median price rose to $370,000 from $340,000 in August (September 2007: $400,000).

Nelson/Marlborough
The median farm price dropped to $971,500 in September, from $1,300,000 in August (September 2007: $815,000). In total, 18 farms (six grazing, three each dairy, forestry and horticulture, two special and one arable) sold, down on the 21 sold in August, and down on the 29 sold in September 2007.

59 lifestyle blocks sold in September, an increase on the 55 sold in August 2008. (September 2007: 81). The median price fell to $437,000 from $470,000 in August (September 2007: $450,000).

West Coast
12 farms (nine dairy and one each finishing, grazing and horticulture) sold in September, down on the 16 farms sold in August (September 2007: 9). The median price was steady at $2,526,725 (August 2008: 2,526,725; September 2007: $1,900,000).

The median price for a lifestyle block fell to $150,000 in September, from $237,500 in August (September 2007: $135,000). 21 lifestyle blocks sold in September, up on the 16 sold in August (September 2007: 13).

Canterbury
79 farms (31 grazing, 16 special, 15 arable, eight finishing, seven dairy and one each Sth Island HC Merino and forestry) sold in September, down on the 100 sold in August (September 2007: 100). The median price rose to $1,800,000 from $1,780,750 in August and $1,550,000 in September last year.

199 lifestyle blocks sold, compared with 179 sold in August. The median price decreased to $450,000 from $465,000 in August. In September 2007, 256 lifestyle blocks sold with a median price of $362,500.

Otago
The median farm price reached $2,225-,000 in September, up from $1,800,000 in August (September 2007: $1,100,000). 40 farms sold (August 2008: 55; September 2007: 64). The farms sold consisted of 18 finishing, 11 grazing, four each special and dairy, two horticulture and one arable. 63 lifestyle blocks sold in August (August 2008: 56; September 2007: 74). The median price fell to $360,000 from $446,000 in August and $452,500 in September 2007.

Southland
72 farms (39 grazing, 17 finishing, nine dairy, five special and one each arable and forestry) sold in September, down on the 91 sold in August 2008 (September 2007: 109). The median price rose to $2,200,000 in September from $1,950,000 in August (September 2007: $1,800,000).

68 lifestyle blocks sold in September, an increase on the 65 sold in August. The median price also increased to $313,000 from $305,000 in August. In September 2007, 71 lifestyle blocks sold with a median price of $240,000.

ENDS

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