A Steady Opening to the New Year

Data released today by the Real Estate Institute of New Zealand (REINZ) shows there were 125 fewer farm sales (-24.0%) for the three months ended January 2018 than for the three months ended January 2017. Overall, there were 396 farm sales in the three months ended January 2018, compared to 394 farm sales for the three months ended December 2017 (+0.5%), and 521 farm sales for the three months ended January 2017. 1,527 farms were sold in the year to January 2018, 12.7% fewer than were sold in the year to January 2017, with 20.1% more finishing farms, 28.2% more dairy farms and 31.9% fewer grazing and 38.0% fewer arable farms sold over the same period.

The median price per hectare for all farms sold in the three months to January 2018 was $28,257 compared to $27,058 recorded for three months ended January 2017 (+4.4%). The median price per hectare fell 3.4% compared to December.

The REINZ All Farm Price Index fell 0.5% in the three months to January 2018 compared to the three months to December 2017. Compared to January 2017 the REINZ All Farm Price Index rose 5.8%. 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.

Eleven of 14 regions recorded decreases in the number of farm sales for the three months ended January 2018 compared to the three months ended January 2017. Otago recorded the most substantial decline in sales (-26 sales) followed by Northland (-25 sales). Gisborne (+5), Nelson (+2) and Southland (+2) were the three regions to increase the number of farm sales compared to January 2017. Compared to the three months ended December 2017, six regions recorded a decrease in sales with the biggest drop being in Bay of Plenty (-10 sales).

Brian Peacocke, Rural Spokesman, at REINZ says: “Sales figures for the 3 month period ending January 2018 are reasonably consistent compared to the previous 3 month period, albeit significantly lower than the equivalent periods in 2016 and 2017.

“The grazing category (-32%) and the arable category (-40%) reflect the greatest reduction in volumes as opposed to steadier numbers for the dairy, finishing and horticulture sectors,” he continues.

“Widespread rain during January has alleviated the feed supply situation throughout much of the country, however, parts of Otago and Southland were amongst those areas less fortunate,” points out Peacocke

“Whilst the benefit has been widespread, the market remains relatively constrained, particularly in the dairy sector where the Dairy Farm Price Index records an easing in price for the last 12 months of 8.9%, this being in strong contrast to the All Farm Price Index which showed an increase of 5.8% over the period,” he concludes.

Points of Interest around New Zealand include:

• Northland – a quieter period with limited listings; purchasers are being very selective but good quality properties are drawing a good response; marginal dairy units being considered for beef; strong demand in the far north for land for planting avocados, albeit water consents for such plantings are a constraint

• Waikato – Farmers’ confidence is improving with good rain and a steady payout; listings are currently slower, and purchasers constrained and careful; good properties continue to sell well, with no demand for lower quality farms; dairy farm prices are down 10% plus; a quieter post-holiday period

• Bay of Plenty/Rotorua – a similar situation to the Waikato region with reduced activity, even in the horticultural sector where sales were down by 50% on the previous two months

• Taranaki – a busy January with solid sales of dairy units, often as a result of pre-Christmas auction and tender programmes that did not sell at the time; very few top farms available and prices for 2nd and 3rd tier properties are down 10% - 15%; listings currently short; quality labour in dairy sector being sought out strongly

• Hawke’s Bay/Manawatu – solid activity on good finishing and grazing properties throughout the central region with a strong focus on quality units; minimal activity on dairy

• Wairarapa – good demand during January with successful outcomes on sheep & beef units and runoff-type Wellington properties; dairy farms slow

• Nelson/Marlborough/West Coast – very quiet in the upper South Island with minimal sales activity during the period

• Canterbury – reasonable activity on finishing units but overall, a constrained market with a medium level of listings and reduced number of buyers; climatic conditions have suppressed activity in the arable and vegetable growing sectors; purchasers being very selective with reports of bank advice impacting on prices

• Otago – a good run of sales of finishing and grazing properties but climatic conditions have had a considerable impact on the region

• Southland – the combination of holidays and dry weather reduced market activity in January, although sales continued in the dairy, finishing and grazing sectors; the outlay for capital stock and the need for higher equity is keeping the market for sheep and beef properties sluggish; mycoplasma bovis is creating major concerns surrounding movements of dairy cows and replacement heifers, an issue that has the potential to impact negatively on the rural sector throughout the country.

Grazing farms accounted for the largest number of sales with a 29% share of all sales over the three months to January 2018, Finishing farms accounted for 25%, Dairy properties accounted for 24%, and Horticulture properties accounted for 12% of all sales. These four property types accounted for 90% of all sales during the three months ended January 2018.

Dairy Farms

For the three months ended January 2018, the median sales price per hectare for dairy farms was $37,235 (96 properties), compared to $40,484 for the three months ended December 2017 (79 properties), and $44,322 (94 properties) for the three months ended January 2017. The median price per hectare for dairy farms has decreased 16.0% over the past 12 months. The median dairy farm size for the three months ended January 2018 was 100 hectares.

On a price per kilo of milk solids basis, the median sales price was $36.91 per kg of milk solids for the three months ended January 2018, compared to $36.67 per kg of milk solids for the three months ended December 2017 (+0.7%), and $39.75 per kg of milk solids for the three months ended January 2017 (-7.1%).

The REINZ Dairy Farm Price Index rose 1.3% in the three months to January 2018 compared to the three months to December 2017. Compared to January 2017, the REINZ Dairy Farm Price Index fell 8.9%. 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 January 2018, the median sale price per hectare for finishing farms was $30,328 (100 properties), compared to $32,000 for the three months ended December 2017 (97 properties), and $28,268 (136 properties) for the three months ended January 2017. The median price per hectare for finishing farms has risen 7.3% over the past 12 months. The median finishing farm size for the three months ended January 2018 was 42 hectares.

Grazing Farms

For the three months ended January 2018, the median sales price per hectare for grazing farms was $11,828 (113 properties) compared to $11,937 for the three months ended December 2017 (110 properties) and $11,102 (166 properties) for the three months ended January 2017. The median price per hectare for grazing farms has risen 6.5% over the past 12 months. The median grazing farm size for the three months ended January 2018 was 139 hectares.

Horticulture Farms

For the three months ended January 2018, the median sales price per hectare for horticulture farms was $205,807 (47 properties) compared to $242,988 (58 properties) for the three months ended December 2017 and $204,281 (53 properties) for the three months ended January 2017. The median price per hectare for horticulture farms has risen 0.7% over the past 12 months. The median horticulture farm size for the three months ended January 2018 was eight hectares.

ENDS

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.

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