Mid-Winter Market Cools a Degree

Data released today by the Real Estate Institute of New Zealand (REINZ) shows there were 5 more farm sales (+1.3%) for the three months ended July 2018 than for the three months ended July 2017. Overall, there were 397 farm sales in the three months ended July 2018, compared to 427 farm sales for the three months ended June 2018 (-7.0%), and 392 farm sales for the three months ended July 2017. 1,472 farms were sold in the year to July 2018, 15.4% fewer than were sold in the year to July 2017, with 2.9% less dairy farms, 8.7% less finishing farms, 21.7% fewer arable and 21.9% fewer grazing farms sold over the same period.

The median price per hectare for all farms sold in the three months to July 2018 was $21,302 compared to $27,158 recorded for three months ended July 2017 (-21.6%). The median price per hectare fell 2.0% compared to June.

The REINZ All Farm Price Index rose 5.6% in the three months to July 2018 compared to the three months to June 2018. Compared to July 2017 the REINZ All Farm Price Index rose 3.7%. 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.

Half of the 14 regions recorded increases in the number of farm sales for the three months ended July 2018 compared to the three months ended July 2017. Manawatu/Wanganui (+24), Waikato (+17) and Hawke’s Bay (+12) were the top three regions to increase the number of farm sales compared to July 2017. Canterbury recorded the most substantial decline in sales (-26 sales) followed by Auckland (-12 sales). Compared to the three months ended June 2018, nine regions recorded a decrease in sales with the biggest drop being in Bay of Plenty (-15 sales).

Brian Peacocke, Rural Spokesman, at REINZ says: “Farm sales data for the period ending July 2018 reflect reasonable consistency with the same period in 2017 but show a significant 15% reduction from the equivalent period in 2016.

“As anticipated for the mid-winter when calving is getting under way and farmers are preparing for lambing, sales volumes in all categories apart from forestry show a distinct reduction for the specific month of July 2018.

“Expectations within the rural sector remain cautiously optimistic, albeit strongly tempered by central government moves which are likely to translate into an increase in costs in all activities relating to employment, thus exacerbating an existing and serious problem in the agricultural sector.

“The balancing factors have been:

(i) a relatively mild winter to date, although total rainfall has again impacted negatively on intensive grazing situations across the country

(ii) product prices which are particularly strong for lamb, venison and horticulture, solid for beef, dairy and forestry, albeit frustratingly low for wool.

“Mycoplasma bovis continues to be a strong point of focus across the country,” he concludes.

General points of Interest around New Zealand include:

• Dairy - very quiet in most regions with Waikato being the only province to experience much activity. Given the increasing age of farmers and frustration with labour in particular, there may well be a solid number of dairy farms available during the forthcoming season, in spite of the current drop in values as recorded in the latest Dairy Farm Price Index
• Finishing - a general easing in total sales but steady activity from Waikato to the North, solid in Hawke’s Bay, Manawatu/Wanganui and Canterbury, with a strong flourish in Southland
• Grazing - very strong activity in Northland, a solid level of sales in Waikato, Manawatu/Wanganui and Southland, but constrained in other regions
• Arable - a simmering of sales in the lower North Island, Canterbury and Otago, but very quiet elsewhere
• Horticulture - a dramatic reduction in sales volumes across all horticultural regions as the market gauges the likely impact on future demand as a result of very strong sales of product across the boar
• Forestry - a registration of sales confined to the Northland, Manawatu/Wanganui and Otago regions, where the industry appears to be underpinned by a healthy degree of optimism.
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Grazing farms accounted for the largest number of sales with a 36% share of all sales over the three months to July 2018, Finishing farms accounted for 31%, Horticulture accounted for 11%, and Dairy properties accounted for 10% of all sales. These four property types accounted for 88% of all sales during the three months ended July 2018.

Dairy Farms

For the three months ended July 2018, the median sales price per hectare for dairy farms was $31,881 (39 properties), compared to $31,881 for the three months ended June 2018 (57 properties) and $36,332 (36 properties) for the three months ended July 2017. The median price per hectare for dairy farms has decreased 12.3% over the past 12 months. The median dairy farm size for the three months ended July 2018 was 115 hectares.

On a price per kilo of milk solids basis, the median sales price was $32.01 per kg of milk solids for the three months ended July 2018, compared to $33.37 per kg of milk solids for the three months ended June 2018 (-4.1%) and $35.97 per kg of milk solids for the three months ended July 2017 (-11.0%).

The REINZ Dairy Farm Price Index increased 0.7% in the three months to July 2018 compared to the three months to June 2018. Compared to July 2017, the REINZ Dairy Farm Price Index fell 14.5%. 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 July 2018, the median sale price per hectare for finishing farms was $26,531 (123 properties), compared to $26,245 for the three months ended June 2018 (120 properties) and $30,882 (152 properties) for the three months ended July 2017. The median price per hectare for finishing farms has fallen 14.1% over the past 12 months. The median finishing farm size for the three months ended July 2018 was 50 hectares.

Grazing Farms

For the three months ended July 2018, the median sales price per hectare for grazing farms was $10,196 (143 properties) compared to $10,113 for the three months ended June 2018 (143 properties) and $11,274 (105 properties) for the three months ended July 2017. The median price per hectare for grazing farms has fallen 9.6% over the past 12 months. The median grazing farm size for the three months ended July 2018 was 152 hectares.

Horticulture Farms

For the three months ended July 2018, the median sales price per hectare for horticulture farms was $281,468 (44 properties) compared to $279,543 (57 properties) for the three months ended June 2018 and $149,251 (52 properties) for the three months ended July 2017. The median price per hectare for horticulture farms has risen 88.6% over the past 12 months. The median horticulture farm size for the three months ended July 2018 was eight hectares.

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