Momentum Building In Spring Property Market

18 November 2013

Momentum Building In Spring Property Market

Data released today by the Real Estate Institute of NZ (“REINZ”) shows there were 93 more farm sales (+36.3%) for the three months ended October 2013 than for the three months ended October 2012. Overall, there were 349 farm sales in the three months to end of October 2013, compared to 342 farm sales for the three months ended September 2013 (+2.0%). 1,629 farms were sold in the year to October 2013, 15.6% more than were sold in the year to October 2012, and the first time the annual number of sales has passed 1,600 since April 2009; over four and a half years ago.

The median price per hectare for all farms sold in the three months to October 2013 was $24,590 compared to $19,872 recorded for three months ended October 2012 (+23.7%). The median price per hectare rose 7.6% compared to September.

The REINZ All Farm Price Index fell by 4.1% in the three months to October compared to the three months to September, from 3,194.8 to 3,064.1. Compared to October 2012 the REINZ All Farm Price Index rose by 7.4%. The REINZ All Farm Price Index adjusts for differences in farm size, location and farming type compared to the median price per hectare, which does not adjust for these factors.

Nine regions recorded increases in sales volume for the three months ended October 2013 compared to the three months ended October 2012. Bay of Plenty recorded the largest increase in sales (+24 sales), followed by Waikato (+20 sales) and Northland (+16 sales). Four regions recorded decreases in sales volume with Nelson recording the largest fall (-19 sales), followed by Canterbury (-4 sales) and Auckland (-2 sales). Compared to the three months ended September 2013 eight regions recorded an increase in sales.

“Early spring sales reflect a healthy trend but it will be November before significant sales evidence emerges from the numerous marketing programmes being conducted during the month of October”, says REINZ Rural Spokesman Brian Peacocke, “Reports around NZ indicate a variable market ranging from active and strong to patchy and quirky. ”

“Good properties are selling well, but with the combination of prudent purchasers and careful bankers, a hint of buyer resistance is emerging in the face of higher price expectations from vendors. Whilst current farm prices are improving, it is of interest to note the levels are significantly below the peak of farm prices recorded mid October 2008.”
Noteworthy points throughout the regions include: -

• strong first farm enquiry in Northland; average dairy farm prices range from $15,000 to $22,000 per hectare to $27,000 per hectare lower North, excluding shares;
• a Tatua supply farm in Waikato sold very strongly at $65,000 per hectare excluding MSE’s with other dairy farms selling from $24,000 per hectare to better than $50,000 per hectare excluding shares;
• a strong Te Puke market for kiwifruit green at $230,000 to $260,000 per canopy hectare, and a Whakatane dairy farm making $50,000 per hectare;
• steady activity for dairy farms in Rotorua / Taupo in the $27,000 to $33,000 per hectare excluding shares; dairy support blocks varying around $12,000 per hectare;
• activity still building in lower North Island; a very good Taranaki dairy farm made $74,000 per hectare including shares;
• a quieter market in Marlborough balanced by increased plantings of sauvignon blanc confirming confidence in the viticultural sector;
• strong enquiry in Canterbury with $52,500 per hectare being paid for a very good Ashburton dairy farm;
• a busy market in Otago spread between dairy at around$23,000 per hectare excluding shares, and strong demand for good sheep and beef properties in the $9,000 to $10,000 per hectare range. As is the case in Canterbury, a big gap in value between irrigated and non-irrigated land; and
• two top end dairy farms in Southland selling for $44,000 per hectare excluding shares.

Grazing properties accounted for the largest number of sales with 45.0% share of all sales over the three months to October, Finishing properties accounted for 20.3%, Horticulture properties accounted for 11.5% and Dairy properties accounted for 10.6% of all sales. These four property types accounted for 87.4% of all sales during the three months ended October 2013.

Dairy Farms
For the three months ended October 2013 the median sales price per hectare for dairy farms was $32,701 (37 properties), compared to $34,912, for the three months ended September (28 properties), and $27,368 (13 properties) for the three months ended October 2012. The median dairy farm size for the three months ended October 2013 was 107 hectares.

Included in sales for the month of October were 19 dairy farms at a median sale value of $32,701 per hectare. The median farm size was 105 hectares with a range of 58 hectares in Taranaki to 325 hectares in Otago. The median production per hectare across all dairy farms sold in October 2013 was 846 kgs of milk solids.

The REINZ Dairy Farm Price Index fell by 0.6% in the three months to October compared to the three months to September, from 1,782.5 to 1,772.0. Compared to October 2012 the REINZ Dairy Farm Price Index fell by 2.3%. 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 October 2013 the median sale price per hectare for finishing farms was $21,331 (71 properties), compared to $25,338 for the three months ended September (93 properties), and $20,402 (41 properties) for the three months ended October 2012. The median finishing farm size for the three months ended October 2013 was 55 hectares.

Grazing Farms
For the three months ended October 2013 the median sales price per hectare for grazing farms was $18,750 (157 properties) compared to $17,517 for the three months ended September (136 properties), and $11,671 (129 properties) for the three months ended October 2012. The median grazing farm size for the three months ended October 2013 was 48 hectares.

Horticulture Farms
For the three months ended October 2013 the median sales price per hectare for horticulture farms was $143,852 (40 properties) compared to $127,667 (37 properties) for the three months ended September, and $157,838 (35 properties) for the three months ended October 2012. The median horticulture farm size for the three months ended October 2013 was six hectares.

Lifestyle Properties
The lifestyle property market saw a 16.8% (+228 sales) increase in sales volume in the three months to October 2013 compared to October 2012. 1,606 sales were recorded in the three months to October 2013 compared to 1,378 sales in the three months to October 2012. 41 fewer sales were recorded compared to the three months to September 2013 (-2.5%). For the 12 months to October 2013 there were 6,594 unconditional sales of lifestyle properties, an increase of 18.1% (+1,012 sales) over the 12 months to October 2012.

11 regions recorded increases in sales compared to October 2012 while three recorded decreases in sales. Northland recorded the largest increase (+73 sales), followed by Auckland (+52 sales) and Wellington (+32 sales). Compared to September 2013, six regions recorded an increase in sales with eight regions recording decreases.

The national median price for lifestyle blocks rose by $29,250 (+6.4%) from $460,250 for the three months to October 2012 to $489,500 for the three months to October 2013. The median price for lifestyle blocks in Auckland rose by 12.7% in the year to October 2013 to $800,000. The median price rose by 0.1% in Waikato, and by 17.6% in Canterbury. Compared to September 2013 the median price rose by $9,500 (+2.0%) from $480,000 in September to $489,500 in October.

The number of days to sell for lifestyle properties improved by five days, from 78 days for the three months to the end of September to 73 days for the three months to the end of October. Compared to the three months ended October 2012 the number of days to sell eased by two days from 71 days to 73 days. Gisborne recorded the shortest number of days to sell in October at 22 days, followed by Canterbury at 44 days and Taranaki at 53 days. Nelson recorded the longest number of days to sell at 175 days, followed by Hawkes Bay at 117 days and Northland at 109 days.

Commenting on the lifestyle property market Brian Peacocke said, “the Auckland region dominated the lifestyle sector during October with other areas such as Northland, Waikato, Bay of Plenty and the lower North Island experienced increasing volumes of sales. Canterbury continues recent good form with growth potential emerging as the new Marshlands residential subdivision comes closer to release.”

“A number of regions have confirmed a hardening of attitude from purchasers as interest rates increase and the impact of LVR come into the equation. In all regions, good properties are selling well apart from those cases where vendor expectations are ahead of the market.”

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 October 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 October 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.

ends

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