Buyer Confidence In rural Real Estate

FOR IMMEDIATE RELEASE
News Release
12 June 2009Buyer Confidence In rural Real Estate

Rural real estate statistics covering the three months to May 2009 were released today by the Real Estate Institute of New Zealand (REINZ) showing buyer confidence in a steady market.

REINZ National Councillor and rural spokesperson Peter McDonald said it was heartening that the 08 / 09 year had finished on a strong note, with evidence of buyer confidence including the sale of a $20 million dairy farm in Mossburn.

The number of farms sold in the last three months to May 2009 was 288, up from 266 in the three months to April 2009 which in turn was up from 231 in the three months to March 2009. This steady increase is very pleasing, Mr McDonald says, “Although we have a way to go to return to the turnover we were seeing at this time two and three years ago when sales were in the 600 – 700 range, the fact we are not trending down is good to see.”

Mr McDonald said despite the adjusted Fonterra payout to $4.55, the number of dairy farms sold in the three months to May 2009 has risen by more than 25 percent. This shows there is still belief in the market and with the average sale price for milk solids per kilogram for the period at $41, the rural sector is holding firm.

The current sales figures include 62 dairy farms (up from 47 in the three months to April 2009), 124 grazing farms (up from 119) and 40 horticultural properties (up from 37).

“The institute is not in the business of predicting the future. We can give the most up-to-date data and our analysis of it, but exactly where we are going no-one can say for certain. However, there can be no argument the upwards trend we have seen over the past few months is continuing to rise slowly but surely. I believe this justifies our cautious optimism,” Mr McDonald says.

“As we have noted in previous months, the market continues to mirror the position of the 2007 levels. And as activity continues to increase, the trends in rural real estate are following a similar pattern to those we’re seeing in the residential market of a returning confidence.”

There has been a solid increase in the number of lifestyle properties sold also. These have risen from 1353 in the three months to May 2009, compared with 1178 in the three months to April 2009 which again was higher than the 1041 lifestyle properties sold in the three months to March 2009.

“Three consecutive rises in turnover are a good indication of the return to a more buoyant environment.”

The median sale price nationally across all farm type has improved on the three months to April 2009 at $1,042,500, with the May figure of $1,150,000 similar to the $1,175,000 for the three months to March 2009, again an indication that prices are firming across the country.

“Even in the worst months of last year, rural prices didn’t ever show a dramatic drop in median prices. It was turnover that was hardest hit,” Mr McDonald recalls.

Prices rose in seven out of 14 districts and held steady in two. In the three months period to May 2009 compared with the corresponding period to April 2009, farms sale prices were up in Wellington from $1,800,000 to $2,000,000; in Northland ($520,000 to $850,000), Auckland ($790,000 to $895,000), Bay of Plenty ($915,000 to $$1,150,000) on the West Coast ($2,100,000 to $2,900,000), Manawatu / Wanganui ($945,000 to $1,100,000) and Taranaki ($1,257,000 to $1,501,250).

There was a slight fall in Waikato from $2,140,000 to $2,090,000. The biggest drops were in Hawkes Bay, down from $1,322,500 to $900.000 and Southland, down from $1,766,000 to $1,276,914. Prices were unchanged in Nelson and Canterbury on $583,750 and $1,050,000 respectively.

National median sale figures for lifestyle blocks showed a slight increase to $428,000 in the three months to May from $442,222 for the three months to April 2009.

“Lifestyle blocks again have been consistent performers,” Mr McDonald said.

“We’re ending the year on a positive note. The new season’s levels will tell us more in September / October.”

ENDS

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