Sales Volumes Strong, With Prices Steady in February Market

Full release with charts: REINZ_Rural_Press_Release__February_2014.pdf
Report: REINZ_Rural_Market_Report__February_2014.pdf

News Release 17 March 2014

Sales Volumes Strong, With Prices Steady in February Market

Summary

Data released today by the Real Estate Institute of NZ (“REINZ”) shows there were 155 more farm sales (+40.9%) for the three months ended February 2014 than for the three months ended February 2013. Overall, there were 534 farm sales in the three months to end of February 2014, compared to 564 farm sales for the three months ended January 2014 (-5.3%). 1,829 farms were sold in the year to February 2014, 26.6% more than were sold in the year to February 2013, the largest number of sales in a 12-month period since February 2009.

The median price per hectare for all farms sold in the three months to February 2014 was $22,644 compared to $21,951 recorded for three months ended February 2013 (+3.2%). The median price per hectare is the same as it was in January.

The REINZ All Farm Price Index fell by 4.7% in the three months to February compared to the three months to January, from 3,332.2 to 3,176.0. Compared to February 2013 the REINZ All Farm Price Index rose by 8.0%. 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.

All 14 regions recorded increases in sales volume for the three months ended February 2014 compared to the three months ended February 2013. Otago and Taranaki both recorded the largest increase in sales (+28 sales), followed by Northland (+16 sales), Bay of Plenty and Southland (+15 sales). Compared to the three months ended January 2014, six regions recorded an increase in sales.

“Solid volumes of farm sales for the 3 month period ending February 2014 reflect continuing confidence in the rural sector”, says REINZ Rural Spokesman Brian Peacocke, “The recent increase in the Fonterra payout has both widened the smiles of those within the dairy industry and provided a genuine boost to the regional and national economies.”

“However, across the country there is an underlying tone of caution due to the issues within the red meat sector, the impact of the semi-drought in significant areas of the North Island, and the emerging reality of interest rate increases in the short to medium term future.”
Noteworthy points include: -

• Strong sales activity in the Waikato resulting in a current shortage of properties available for sale
• A very strong market for kiwifruit orchards, both green and gold, in the Te Puke region with values for top properties doubling in the last 12 months
• A buoyant dairy market in the Central Plateau where values in some instances have lifted by 10 % to 20 %
• Genuine interest in well farmed properties in Hawkes Bay where demand has outstripped supply
• Continuing strong demand in the Taranaki region with most available properties having been sold
• A quiet market in Nelson / Marlborough, partly due to the dry weather, with anticipation of an exceptional harvest in the viticulture sector
• Buyer caution in Canterbury due to the impact of the Regional Water Plan; prices still strong with sales of cropping / grazing properties exceeding vendor expectations
• Purchasers pro-active on the West Coast albeit decision making slower
• Extremely strong market for sheep & beef properties in Otago, partly due to shortage of listings; buyer resistance emerging at current price levels
• A good season and a busy market in Southland, strong focus on dairy support and finishing properties; corporate purchasers still active
Grazing properties accounted for the largest number of sales with 39.9% share of all sales over the three months to February, Finishing properties accounted for 21.9%, Dairy properties accounted for 23.0% and Horticulture properties accounted for 6.7% of all sales. These four property types accounted for 91.6% of all sales during the three months ended February 2014.

Dairy Farms
For the three months ended February 2014 the median sales price per hectare for dairy farms was $34,499 (123 properties), compared to $36,509, for the three months ended January (127 properties), and $33,254 (77 properties) for the three months ended February 2013. The median dairy farm size for the three months ended February 2014 was 123 hectares.

Included in sales for the month of February were 36 dairy farms at a median sale value of $34,766 per hectare. The median farm size was 121 hectares with a range of 60 hectares in the Auckland region to 454 hectares in Otago. The median production per hectare across all dairy farms sold in February 2014 was 986 kgs of milk solids.

The REINZ Dairy Farm Price Index fell by 5.1% in the three months to February compared to the three months to January, from 1,886.2 to 1,789.8. Compared to February 2013, the REINZ Dairy Farm Price Index rose by 3.9%. 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 February 2014 the median sale price per hectare for finishing farms was $20,720 (117 properties), compared to $20,720 for the three months ended January (119 properties), and $19,029 (71 properties) for the three months ended February 2013. The median finishing farm size for the three months ended February 2014 was 79 hectares.

Grazing Farms
For the three months ended February 2014 the median sales price per hectare for grazing farms was $14,444 (213 properties) compared to $13,995 for the three months ended January (238 properties), and $12,900 (169 properties) for the three months ended February 2013. The median grazing farm size for the three months ended February 2014 was 83 hectares.

Horticulture Farms
For the three months ended February 2014 the median sales price per hectare for horticulture farms was $133,125 (36 properties) compared to $132,474 (36 properties) for the three months ended January, and $118,371 (30 properties) for the three months ended February 2013. The median horticulture farm size for the three months ended February 2014 was six hectares.

Lifestyle Properties
The lifestyle property market saw a 7.2% (+101 sales) increase in sales volume in the three months to February 2014 compared to February 2013. 1,504 sales were recorded in the three months to February 2014 compared to 1,403 sales in the three months to February 2013. 35 fewer sales were recorded compared to the three months to January 2014 (-2.3%). For the 12 months to February 2014 there were 6,681 unconditional sales of lifestyle properties, an increase of 13.4% (+791 sales) over the 12 months to February 2013.

Ten regions recorded increases in sales compared to February 2013 while three recorded decreases in sales. Northland recorded the largest increase (+38 sales), followed by Otago (+31 sales) and Hawkes Bay (+25 sales). Compared to January, seven regions recorded an increase in sales with seven regions recording decreases.

The national median price for lifestyle blocks rose by $21,000 (+4.2%) from $495,000 for the three months to February 2013 to $516,000 for the three months to February 2014. The median price for lifestyle blocks in Auckland rose by $117,750 (+15.8%) from $743,500 for the three months to February 2013 to $861,250 for the three months to February 2014. Over the same time period for the 3 months ending February, the median price rose by 9.9% in Waikato to $492,500, and by 10.0% in Canterbury to $595,000. Compared to January 2014, the National median sales price dropped by $19,000 (-3.6%) from $535,000 in January to $516,000 in February.

The number of days to sell for lifestyle properties eased by nine days, from 60 days for the three months to the end of January to 69 days for the three months to the end of February. Compared to the three months ended February 2013 the number of days to sell eased by one day from 68 days to 69 days. Gisborne recorded the shortest number of days to sell in February at 31 days, followed by Auckland at 44 days. West Coast recorded the longest number of days to sell at 431 days, followed by Nelson at 115 days and Bay of Plenty at 97 days.

Commenting on the lifestyle property market Brian Peacocke said, “The lifestyle market remains in good heart with activity and prices varying between the northern and southern regions.”
Noteworthy points include: -
• Strong activity in the South Auckland region, with an increase in the range above $1m
• Strong activity in the Waikato, with increased focus closer to Hamilton in the $1m to $2m range
• A good level of sales in the Rotorua region
• Steady demand for reasonably priced properties in Taranaki
• A slight easing of sales volumes in the Nelson / Marlborough region
• Properties in the mid Canterbury region selling readily in the $400,000 to $800,000 range but slow at the top end of the market
• Steady sales activity in Otago and Southland

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 February 2014.

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 February 2014.

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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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.
Editors 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 February refer to the period from 1 November 2013 to 28 February 2014.
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.

Full release with charts: REINZ_Rural_Press_Release__February_2014.pdf
Report: REINZ_Rural_Market_Report__February_2014.pdf

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