Prices, Sales Volume Continue To Rise in June Rural Market

News Release 21 July 2014

Prices and Sales Volume Continue To Rise in June Rural Market

Summary

Data released today by the Real Estate Institute of NZ (“REINZ”) shows there were 70 more farm sales (+14.8%) for the three months ended June 2014 than for the three months ended June 2013. Overall, there were 544 farm sales in the three months to end of June 2014, compared to 564 farm sales for the three months ended May 2014 (-3.5%). 1,912 farms were sold in the year to June 2014, 27.4% more than were sold in the year to June 2013.

The median price per hectare for all farms sold in the three months to June 2014 was $26,612 compared to $19.716 recorded for three months ended June 2013 (+35.0%). The median price per hectare rose 6.4% compared to May.

The REINZ All Farm Price Index rose 0.9% in the three months to June compared to the three months to May, moving from 3,374.0 to 3,405.7. Compared to June 2013 the REINZ All Farm Price Index rose by 16.7%. 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.

Nine regions recorded increases in sales volume for the three months ended June 2014 compared to the three months ended June 2013. Bay of Plenty recorded the largest increase in sales (+27 sales), followed by Otago (+12 sales) and Northland (+11 sales). Compared to the three months ended May 2014, five regions recorded an increase in sales.

“Sales volumes and prices for the three month period to June 2014 reflect the trends shown in the overall market in recent months”, says REINZ Rural Spokesman Brian Peacocke, “While figures for the 12 month period show a strong lift, from a monthly perspective evidence suggests steady incremental increases rather than ongoing dramatic surges.”

“As expected for the cross over period from one season to the next current activity is reported as being reasonably quiet. Farmers and market observers alike are cautiously gauging the potential impact on the forthcoming sales season as a result of clear signals regarding a possible reduction in incomes from the mix of lower product prices, rising interest rates and the very strong New Zealand dollar.”
Noteworthy points include: -

• A significant drop in dairy farm sales for the period, with most activity in the Waikato and Southland.
• Consistently steady sales of finishing and grazing properties, particularly in Auckland and Hawkes Bay in the North Island and Canterbury, Otago and Southland in the South Island.
• Very solid sales activity in the horticultural sector, particularly in the Bay of Plenty, which is experiencing a resurgence of interest in the kiwifruit industry.
Grazing properties accounted for the largest number of sales with 43.4% share of all sales over the three months to June, Finishing properties accounted for 21.1%, Dairy properties accounted for 12.7% and Horticulture properties accounted for 10.5% of all sales. These four property types accounted for 87.7% of all sales during the three months ended June 2014.

Dairy Farms
For the three months ended May 2014 the median sales price per hectare for dairy farms was $33,543 (69 properties), compared to $33,543, for the three months ended May (95 properties), and $29,555 (66 properties) for the three months ended June 2013. The median dairy farm size for the three months ended June 2014 was 125 hectares.

Included in sales for the month of June were 15 dairy farms at a median sale value of $45,007 per hectare. The median farm size was 111 hectares with a range of 34 hectares in the Waikato region to 521 hectares in Canterbury. The median production per hectare across all dairy farms sold in June 2014 was 1,130 kgs of milk solids.

The REINZ Dairy Farm Price Index rose by 5.2% in the three months to June compared to the three months to May, from 1,859.7 to 1,956.4. Compared to June 2013, the REINZ Dairy Farm Price Index rose by 12.5%. 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 June 2014 the median sale price per hectare for finishing farms was $26,694 (115 properties), compared to $22,692 for the three months ended May (122 properties), and $18,672 (92 properties) for the three months ended June 2013. The median finishing farm size for the three months ended June 2014 was 46 hectares.

Grazing Farms
For the three months ended June 2014 the median sales price per hectare for grazing farms was $15,833 (236 properties) compared to $15,833 for the three months ended May (228 properties), and $13,831 (228 properties) for the three months ended June 2013. The median grazing farm size for the three months ended June 2014 was 66 hectares.

Horticulture Farms
For the three months ended June 2014 the median sales price per hectare for horticulture farms was $193,745 (57 properties) compared to $186,250 (55 properties) for the three months ended May, and $120,345 (42 properties) for the three months ended June 2013. The median horticulture farm size for the three months ended June 2014 was seven hectares.

Lifestyle Properties
The lifestyle property market saw a 10.8% fall (-191 sales) in sales volume in the three months to June 2014 compared to June 2013. 1,572 sales were recorded in the three months to June 2014 compared to 1,763 sales in the three months to June 2013. 185 fewer sales were recorded compared to the three months to May 2014 (-10.5%). For the 12 months to June 2014 there were 6,510 unconditional sales of lifestyle properties, an increase of 4.8% (+296 sales) over the 12 months to June 2013.

Three regions recorded increases in sales compared to June 2013 while 11 recorded decreases in sales. Otago recorded the largest increase (+15 sales), followed by Gisborne (+8 sales) and Bay of Plenty (+3 sales). Compared to May, three regions recorded an increase in sales with 11 regions recording decreases.

The national median price for lifestyle blocks rose by $10,000 (+2.0%) from $505,000 for the three months to June 2013 to $515,000 for the three months to June 2014. The median price for lifestyle blocks in Auckland rose by $118,750 (+15.0%) from $793,750 for the three months to June 2013 to $912,500 for the three months to June 2014 to reach a new record high. Over the same time period for the three months ending June, the median price fell by 2.9% in Waikato to $482,500, and fell by 5.1% in Canterbury to $512,500. Compared to May 2014, the National median sales price fell $12,500 (-2.4%) to $515,000.

The number of days to sell for lifestyle properties eased by four days, from 71 days for the three months to the end of May to 74 days for the three months to the end of June. Compared to the three months ended June 2013 the number of days to sell eased by four days from 69 days to 74 days. Gisborne recorded the shortest number of days to sell in June at 40 days, followed by Canterbury at 49 days and Auckland at 55 days. West Coast recorded the longest number of days to sell at 182 days, followed by Nelson at 122 days and Wellington at 117 days.

Commenting on the lifestyle property market Brian Peacocke said, “Hawkes Bay and Nelson/Marlborough are the two regions that have experienced an increase over the most recent three month period in a market that has seen a significant drop in sales volumes.”

“From a national perspective prices have eased over the three month period ending June 2014, but as has been the case for some time, Auckland continues to benefit from an increase in sales prices for the period.”

Full release with charts and additional data: REINZ_Rural_Press_Release__June_2014.pdf

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