Prices surging, but volumes steady in Rural Property Market

20 November 2014

Prices surging, but volumes steady in October Rural Property Market

Summary
Data released today by the Real Estate Institute of NZ (“REINZ”) shows there were three fewer farm sales (-0.9%) for the three months ended October 2014 than for the three months ended October 2013. Overall, there were 346 farm sales in the three months to end of October 2014, compared to 347 farm sales for the three months ended September 2014 (-0.3%) and 349 farm sales for the three months to the end of October 2013. 1,920 farms were sold in the year to October 2014, 17.9% more than were sold in the year to October 2013.

The median price per hectare for all farms sold in the three months to October 2014 was $27,898 compared to $24,590 recorded for three months ended October 2013 (+13.5%). The median price per hectare rose 7.3% compared to September.

The REINZ All Farm Price Index fell 0.1% in the three months to October compared to the three months to September, moving from 3,127.7 to 3,123.2. Compared to October 2013 the REINZ All Farm Price Index rose by 1.9%. The REINZ All Farm Price Index adjusts for differences in farm size, location and farming type, unlike the median price per hectare, which does not adjust for these factors.

Six regions recorded increases in sales volume for the three months ended October 2014 compared to the three months ended October 2013. Northland recorded the largest increase in sales (+20 sales), followed by Nelson (+14 sales) and Auckland (+6 sales). Compared to the three months ended September 2014, eight regions recorded an increase in sales.

“Sales figures for the three month period ending October reflect an awakening market, with a strong build-up moving into spring”, says REINZ Rural Spokesman Brian Peacocke, “a large number of properties throughout the North Island have been marketed during October, but with unconditional dates after the end of the month the results will not be known until the November data is available.”

“Feedback from around the country indicates strong buyer enquiry, careful due diligence being undertaken by purchases and a market fully firm on last season.”

Highlights Include:
• A mixed market in Northland with some concerns regarding the likely dairy payout for next season. Second tier farms are struggling for support;
• Very strong prices for dairy farms in the Waikato with record prices being paid for select Tatua-supply properties. Quality dairy support properties and cropping blocks are in strong demand with very high prices being paid;
• Lower levels of listings in Taranaki, although the market is just starting to gain momentum;
• Good results being achieved for well located, quality finishing properties in the Wairarapa;
• Prices holding strongly for sheep, beef and dairy support properties in the mid to lower south of the South Island; and
• Strong demand across New Zealand for quality finishing properties, driven in part by the very strong beef and lamb schedules, with current supply insufficient to meet demand.

Grazing properties accounted for the largest number of sales with 48.0% share of all sales over the three months to October 2014, Horticulture properties accounted for 17.1%, Finishing properties accounted for 13.0% and Arable properties accounted for 8.4% of all sales. These four property types accounted for 86.4% of all sales during the three months ended October 2014.

Dairy Farms
For the three months ended October 2014 the median sales price per hectare for dairy farms was $43,299 (23 properties), compared to $40,462 for the three months ended September 2014 (20 properties), and $32,701 (37 properties) for the three months ended October 2013. The median dairy farm size for the three months ended October 2014 was 97 hectares.

Included in sales for the month of October were nine dairy farms at a median sale value of $31,873 per hectare. The median farm size was 117 hectares with a range of 51 hectares in the Waikato region to 328 hectares on the West Coast. The median production per hectare across all dairy farms sold in October 2014 was 1,062 kgs of milk solids.

The REINZ Dairy Farm Price Index rose by 7.3% in the three months to October compared to the three months to September, from 2,218.8 to 2,381.0. Compared to October 2013, the REINZ Dairy Farm Price Index rose by 34.4%. 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 2014 the median sale price per hectare for finishing farms was $31,878 (45 properties), compared to $30,437 for the three months ended September 2014 (48 properties), and $21,331 (71 properties) for the three months ended October 2013. The median finishing farm size for the three months ended October 2014 was 37 hectares.

Grazing Farms
For the three months ended October 2014 the median sales price per hectare for grazing farms was $14,290 (166 properties) compared to $15,165 for the three months ended September 2014 (162 properties), and $18,750 (157 properties) for the three months ended October 2013. The median grazing farm size for the three months ended October 2014 was 55 hectares.

Horticulture Farms
For the three months ended October 2014 the median sales price per hectare for horticulture farms was $179,894 (59 properties) compared to $149,763 (54 properties) for the three months ended September 2014, and $143,852 (40 properties) for the three months ended October 2013. The median horticulture farm size for the three months ended October 2014 was seven hectares.

Lifestyle Properties
The lifestyle property market saw a 4.2% fall (-67 sales) in sales volume in the three months to October 2014 compared to October 2013. 1,539 sales were recorded in the three months to October 2014 compared to 1,606 sales in the three months to October 2013. 62 more sales were recorded compared to the three months to September 2014 (+4.2%). For the 12 months to October 2014 there were 6,333 unconditional sales of lifestyle properties, an decrease of 4.0% (-263 sales) over the 12 months to October 2013.

Six regions recorded an increase in sales compared to October 2013 while seven recorded decreases in sales. Compared to September 2014, ten regions recorded an increase in sales with three regions recording decreases.

The national median price for lifestyle blocks rose by $15,500 (+3.2%) from $489,500 for the three months to October 2013 to $505,000 for the three months to October 2014. The median price for lifestyle blocks in Auckland rose by $75,000 (+9.4%) from $800,000 for the three months to October 2013 to $875,000 for the three months to October 2014. Over the same time period, the median price rose by 10.6% in Waikato to $489,750, and rose by 1.2% in Canterbury to $565,000. Compared to September 2014, the national median sales price was steady at $505,000.

The median number of days to sell for lifestyle properties improved by five days, from 87 days for the three months to the end of September to 82 days for the three months to the end of October. Compared to the three months ended October 2013 the median number of days to sell eased by nine days from 73 days to 82 days. Gisborne and Taranaki recorded the shortest number of days to sell in October 2014 at 36 days, followed by Canterbury at 57 days and Auckland at 61 days. West Coast recorded the longest number of days to sell at 204 days, followed by Wellington at 136 days and Manawatu/Wanganui at 133 days.

Commenting on the lifestyle property market Brian Peacocke said, “Reports from around the country indicate that the market in Auckland is improving, there is strong buyer enquiry in the Waikato, particularly in the $1 million to - $1.4 million range, with solid enquiry from Auckland. The lower end of the market is sluggish with some vendor expectations too high. A shortage of listing is emerging in the Bay of Plenty.”

“There is steady activity in the mid North Island, although patchy to slow in the lower North Island. Prices are holding in the mid South Island, albeit under some pressure, with reports of a shortage of good quality listings. Well located and well presented properties are selling well in 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 October 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 October 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 for big version.

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.

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 September refer to the period from 1 August 2014 to 31 October 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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