Drought Declarations in March Dominate Rural Marketplace

News Release 18 April 2013

Drought Declarations in March Dominate Rural Marketplace

Summary

Data released today by the Real Estate Institute of NZ (“REINZ”) shows there were 21 fewer farm sales (-5.3%) for the three months ended March 2013 than for the three months ended March 2012. Overall, there were 376 farm sales in the three months to end of March 2013, compared with 379 farm sales in the three months to February 2013, a decrease of 3 sales (-0.8%). 1,433 farms were sold in the year to March 2013, 2.4% more than were sold in the year to March 2012.

The median price per hectare for all farms sold in the three months to March 2013 was $22,317; an 11.3% increase on the $20,056 recorded for three months ended March 2012. The median price per hectare increased by 1.7% compared to February.

The REINZ All Farm Price Index eased by 1.1% in the three months to March compared to the three months to February, from 2,939.42 to 2,907.18. Compared to March 2012 the REINZ All Farm Price Index fell by 7.2%. Further details on the REINZ All Farm Price Index are set out below.

Six regions recorded increases in sales volume for the three months ended March 2013 compared to the three months ended March 2012. Auckland recorded the largest increase in sales (+16 sales), followed by Waikato (+10 sales) and Hawkes Bay (+8 sales). Seven regions recorded decreases in sales volume with Canterbury recording the largest fall (-24 sales), followed by Southland (-16 sales) and Manawatu/Wanganui (-11 sales. Compared to the three months ended February 2013 nine regions recorded an increase in sales, lead by Otago (+8 sales).

“The autumn drought has been unique in that in most areas of New Zealand have been affected at the same time. However, it is clear that despite widespread drought conditions, the level of activity around the country indicates an underlying level of confidence in the medium to longer term,” says REINZ Rural Market Spokesman Brian Peacocke.

“March has featured some interesting developments, with good activity in the dairy sector in the top half of the North Island, although some areas report a shortage of listings due to drought conditions. There has also been strong demand and a shortage of supply of maize growing and dairy support properties in the Waikato.”

“Further south we are seeing good activity on sheep and beef properties in Hawkes Bay and across the full range of properties in Taranaki. There has been very good activity on larger scale dairy units in Canterbury where sheep and beef farmers are finding North Canterbury land more cost effective as good drystock properties further south are being purchased for dairy support. Southland is seeing good finishing properties being purchased by neighbouring dairy farmers and corporate interest in larger scale dairy farms.”

Grazing properties accounted for the largest number of sales with 43.4% share of all sales over the three months to March. Dairy properties accounted for 22.1%, Finishing properties accounted for 19.9% and Horticulture properties accounted for 8.0% of all sales. These four property types accounted for 93.4% of all sales during the three months ended March 2013.

Dairy Farms
For the three months ended March 2013 the median sales price per hectare for dairy farms was $35,487 (83 properties), compared to $33,254, for the three months ended February (77 properties), and $32,294 (61 properties) for the three months ended March 2012. The median dairy farm size for the three months ended March 2013 was 132 hectares.

Included in sales for the month of March were 41 dairy farms at a median sale value of $36,913 per hectare. The median farm size was 132 hectares with a range of 37 hectares in Bay of Plenty to 1,252 in Otago. The median production per hectare across all dairy farms sold in March 2013 was 940kgs of milk solids.

The REINZ Dairy Farm Price Index rose by 1.3% in the three months to March compared to the three months to February, from 1,722.22to 1,744.80. Compared to March 2012 the REINZ Dairy Farm Price Index fell by 1.8%. Further details on the REINZ Dairy Farm Price Index are set out below.

Finishing Farms
For the three months ended March 2013 the median sales price per hectare for finishing farms was $20,293 (75 properties), compared to $19,029 for the three months ended February (71 properties), and $19,676 (66 properties) for the three months ended March 2012. The median finishing farm size for the three months ended March 2013 was 56 hectares.

Grazing Farms
For the three months ended March 2013 the median sales price per hectare for grazing farms was $12,702 (163 properties) compared to $12,900 for the three months ended January (169 properties), and $15,696 (214 properties) for the three months ended March 2012. The median grazing farm size for the three months ended March 2013 was 77 hectares.

Horticulture Farms
For the three months ended March 2013 the median sales price per hectare for horticulture farms was $119,067 (30 properties) compared to $118,371 (30 properties) for the three months ended February, and $165,929 (14 properties) for the three months ended March 2012. The median horticulture farm size for the three months ended March 2013 was six hectares.

Lifestyle Properties
The lifestyle property market saw a 10.9% (+147sales) increase in sales volume in the three months to March 2013 compared to March 2012. 1,494 sales were recorded in the three months to March 2013 compared to 1,347 sales in the three months to March 2012. 91 more sales were recorded compared to the three months to February 2013 (+6.5%). For the 12 months to March 2013 there were 5,943 unconditional sales of lifestyle properties, an increase of 13.3% over the 12 months to March 2012.

Eight regions recorded increases in sales compared to March 2012 while five recorded decreases in sales. Auckland recorded the largest increase (+115 sales), followed by Waikato (+49 sales) and Canterbury (+25 sales). Compared to February 10 regions recorded increases in sales with three regions recorded decreases. Auckland recorded the largest increase in sales (+51 sales), followed by Waikato (+22 sales) and Hawkes Bay (+14 sales).

The national median price for lifestyle blocks rose by $56,750 (+12.6%) from $450,000 for the three months to March 2012 to $506,750 for the three months to March 2013 to reach a new record high. This is the first time the national median price for lifestyle blocks has risen past $500,000. Of note, the median price for lifestyle blocks in Auckland remains 4.5% below its record high set in June 2007.

The number of days to sell for lifestyle properties eased by three days, from 68 days for the three months to the end of February to 71 days for the three months to the end of March. Compared to the three months ended March 2012 the number of days to sell improved by 8 days from 79 days to 71 days. Taranaki recorded the shortest number of days to sell in March at 33 days, followed by Southland at 42 days and Canterbury at 56 days. Bay of Plenty recorded the longest number of days to sell at 109 days, followed by West Coast at 101 days and Hawkes Bay at 95 days.

Commenting on the lifestyle property market Brian Peacocke said, “Auckland and Waikato have seen the greatest lift in activity where purchase decisions appear to be based on a mix of quality of living, avoiding city congestion and land banking in anticipation of future growth opportunities. Confidence is improving in both regions.”

“Most other regions reflect quieter to steady activity, other than Canterbury where there is an emerging trend for purchasers to focus on quality properties with existing residences over the increasing costs and delays of building new homes within the region.”

REINZ All Farm Price Index – Additional Data
The table below sets out the returns for the REINZ All Farm Price Index for the three months ending March 2013.

The graph below shows the trends in the REINZ All Farm Price Index compared to an index of movements in the $/hectare measure of farm prices.

REINZ Dairy Farm Price Index – Additional Data
The table below sets out the returns for the REINZ Dairy Farm Price Index for the three months ending March 2013.

The graph below shows the trends in the REINZ Dairy Farm Price Index compared to an index of movements in the $/hectare measure of farm prices.

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