Sales Volumes Rising, With Prices Lifting in April Market

15 May 2014

Sales Volumes Rising, With Prices Lifting in April Market

Summary
Data released today by the Real Estate Institute of NZ (“REINZ”) shows there were 55 more farm sales (+12.4%) for the three months ended April 2014 than for the three months ended April 2013. Overall, there were 498 farm sales in the three months to end of April 2014, compared to 472 farm sales for the three months ended March 2014 (+5.5%). 1,849 farms were sold in the year to April 2014, 27.2% more than were sold in the year to April 2013.

The median price per hectare for all farms sold in the three months to April 2014 was $24,574 compared to $20,241 recorded for three months ended April 2013 (+21.4%). The median price per hectare rose 10.0% compared to March.

The REINZ All Farm Price Index rose 6.4% in the three months to April compared to the three months to March, moving from 3,174.7 to 3,378.6. Compared to April 2013 the REINZ All Farm Price Index rose by 14.7%. 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.

Eight regions recorded increases in sales volume for the three months ended April 2014 compared to the three months ended April 2013. Bay of Plenty recorded the largest increase in sales (+25 sales), followed by Otago and Northland with nine sales each, and Nelson with eight sales. Compared to the three months ended March 2014, six regions recorded an increase in sales.

“Sales volumes for the three month period ending 30 April continue the upward trend over recent months, with confidence in the market being demonstrated by a lift in prices for the April sales”, says REINZ Rural Spokesman Brian Peacocke, “Rural morale has rebounded following drought breaking rainfall in the northern regions. Conversely, the surplus of rain that has been great for the pastoral sector in the South Island has impacted heavily on some in the arable sector.”

Noteworthy points include: -
• A good steady market for dairy and grazing properties in Northland
• Strong activity and prices surrounding good dairy and dairy support properties throughout the wider Waikato region has resulted in the current shortage of listings
• A strong upturn in prices in the Bay of Plenty for good quality, well situated kiwifruit orchards with local buyers to the fore
• Following a healthy period of activity, a distinct winding down of the market in Taranaki as the season draws to a close
• Steady sales volumes for dairy and grazing properties in Manawatu but a quieter market in the south eastern North Island
• Depleted stocks are tied to the seasonal slowdown in Canterbury – still good enquiry for quality dairy farms albeit buyer resistance to higher prices has become evident
• Continuing strong enquiry but a shortage of properties available in Otago
• A busy market across all fronts in Southland with additional interest stimulated by the release of a number of Solid Energy properties within the province

Grazing properties accounted for the largest number of sales with 37.1% share of all sales over the three months to April, Finishing properties accounted for 21.5%, Dairy properties accounted for 21.1% and Horticulture properties accounted for 9.6% of all sales. These four property types accounted for 89.4% of all sales during the three months ended April 2014.

Dairy Farms
For the three months ended April 2014 the median sales price per hectare for dairy farms was $34,615 (105 properties), compared to $34,474, for the three months ended March (102 properties), and $34,819 (87 properties) for the three months ended April 2013. The median dairy farm size for the three months ended April 2014 was 120 hectares.

Included in sales for the month of April were 28 dairy farms at a median sale value of $31,518 per hectare. The median farm size was 125 hectares with a range of 62 hectares in the Bay of Plenty region to 594 hectares in Otago. The median production per hectare across all dairy farms sold in April 2014 was 787 kgs of milk solids.

The REINZ Dairy Farm Price Index rose by 5.7% in the three months to April compared to the three months to March, from 1,768.0 to 1,869.0. Compared to April 2013, the REINZ Dairy Farm Price Index rose by 6.1%. 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 April 2014 the median sale price per hectare for finishing farms was $22,108 (107 properties), compared to $20,303 for the three months ended March (101 properties), and $20,293 (83 properties) for the three months ended April 2013. The median finishing farm size for the three months ended April 2014 was 63 hectares.

Grazing Farms
For the three months ended April 2014 the median sales price per hectare for grazing farms was $15,324 (185 properties) compared to $13,588 for the three months ended March (181 properties), and $12,900 (205 properties) for the three months ended April 2013. The median grazing farm size for the three months ended April 2014 was 75 hectares.

Horticulture Farms
For the three months ended April 2014 the median sales price per hectare for horticulture farms was $175,462 (48 properties) compared to $152,711 (44 properties) for the three months ended March, and $118,119 (31 properties) for the three months ended April 2013. The median horticulture farm size for the three months ended April 2014 was seven hectares.

Lifestyle Properties
The lifestyle property market saw a 0.6% (+11 sales) increase in sales volume in the three months to April 2014 compared to April 2013. 1,707 sales were recorded in the three months to April 2014 compared to 1,696 sales in the three months to April 2013. 103 more sales were recorded compared to the three months to March 2014 (+6.4%). For the 12 months to March 2014 there were 6,642 unconditional sales of lifestyle properties, an increase of 9.0% (+550 sales) over the 12 months to April 2013.

Six regions recorded increases in sales compared to April 2013 while seven recorded decreases in sales. Otago recorded the largest increase (+43 sales), followed by Northland (+29 sales) and Hawkes Bay (+15 sales). Compared to March, 12 regions recorded an increase in sales with two regions recording decreases.

The national median price for lifestyle blocks declined by $8,500 (-1.6%) from $518,500 for the three months to April 2013 to $510,000 for the three months to April 2014. The median price for lifestyle blocks in Auckland rose by $55,000 (+6.8%) from $805,000 for the three months to April 2013 to $860,000 for the three months to April 2014. Over the same time period for the three months ending April, the median price rose by 4.8% in Waikato to $470,000, and by 7.2% in Canterbury to $592,000. Compared to March 2014, the National median sales price was steady at $510,000

The number of days to sell for lifestyle properties eased by one day, from 74 days for the three months to the end of March to 75 days for the three months to the end of April. Compared to the three months ended April 2013 the number of days to sell eased by three days from 72 days to 75 days. Southland recorded the shortest number of days to sell in April at 47 days, followed by Canterbury at 50 days. West Coast recorded the longest number of days to sell at 175 days, followed by Wellington at 110 days and Northland at 106 days.

Commenting on the lifestyle property market Brian Peacocke said, “In tandem with farm sales, lifestyle sales volumes continue their healthy upward trend, albeit prices for the three month period have declined to a minor degree.”

Noteworthy points include: -
• A robust market to the north of Auckland City albeit sales numbers for April are down
• A steady market in the Waikato with a reduction in listings as the season winds down
• A solid to steady market in the Manawatu / Wanganui region with consistent sales volumes
• Good activity in Canterbury where businesses are generating good cash flows although a shortage of stock is now causing the market to slow down
• A reasonably consistent level of sales 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 April 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.

Click for big version.

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 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.

Click here for further information.

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.

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 February 2014 to 30 April 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.

ENDS

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