Finishing Properties Maintain The Lead

Data released today by the Real Estate Institute of New Zealand (REINZ) shows there were 118 more farm sales (+45.4%) for the three months ended October 2020 than for the three months ended October 2019. Overall, there were 378 farm sales in the three months ended October 2020, compared to 401 farm sales for the three months ended September 2020 (-5.7%), and 260 farm sales for the three months ended October 2019. 1,331 farms were sold in the year to October 2020, 0.3% fewer than were sold in the year to October 2019, with 19.2% less Dairy farms, 10.5% less Grazing farms, 1.3% more Finishing farms and 17.4% less Arable farms sold over the same period.

The median price per hectare for all farms sold in the three months to October 2020 was $28,399 compared to $25,637 recorded for three months ended October 2019 (+10.8%). The median price per hectare increased 5.5% compared to September 2020.

The REINZ All Farm Price Index decreased 3.5% in the three months to October 2020 compared to the three months to September 2020. Compared to the three months ending October 2019 the REINZ All Farm Price Index fell 1.7%. 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.

Twelve of the 14 regions recorded an increase in the number of farm sales for the three months ended October 2020 compared to the three months ended October 2019, with the most notable being Waikato (+34) and Taranaki (+15). Bay of Plenty recorded the only decline in sales (-4) with Otago recording the same number of sales as last year. Compared to the three months ended September 2020, four regions recorded an increase in sales with the biggest increases being in Nelson (+7), and Waikato (+6).

Brian Peacocke, Rural Spokesman, at REINZ says: “Sales statistics for the 3-month period ending October 2020 reflect an easing in volumes from the previous quarter but a healthy 45% increase in sales from the equivalent period in both 2018 and 2019.

“Finishing properties remain the dominant category followed closely by grazing farms with dairy farm sales a distant fifth behind both horticulture and arable sales.

“Irrespective of the above-referred to placings, the overall pastoral sector within rural New Zealand appears to be in good health, a reassuring factor given the heavy damage caused to other sectors in the economy as a result of the COVID-19 pandemic.

“Spring conditions throughout much of the country are the most favourable experienced for many years, with most regions, albeit not all, reporting reasonable levels of rain and very good grass growing conditions, these being early indicators of a productive season ahead.

“On the product front, in spite of fluctuating prices within the Global Dairy Trade Auction system, the dairy payout sits at a very solid level; beef prices are behind last season, reflective of volatile trading conditions off-shore; lamb prices look equally solid but probably assisted by a reduced level of production, and horticulture products remain very good, as long as the supply chain remains robust enough to get product to the market.

“Reports from the financial sector indicate an improving climate from that which has prevailed in recent times, but the volume of farm sales to come will clearly be the indicator of any such improvement,” he concludes.

Points of Interest around New Zealand include the following:

• Northland/Auckland - strong prices paid for finishing properties throughout Northland and Auckland backed up by scattered sales of grazing blocks; zero results on dairy, and light activity for horticulture
• Waikato - in keeping with the trend, strong volumes at strong prices for finishing and dairy support properties across the greater Waikato and northern King Country; a smaller number of grazing blocks and an early lift on dairy farm sales predominantly in the Waipa district
• Bay of Plenty/Rotorua - a cluster of kiwifruit orchard sales in the Western Bay of Plenty; one dairy farm sale at Reporoa with a burst of activity surrounding dairy farms and a strongly priced finishing unit in the Whakatane district
• Gisborne/Hawke’s Bay - a bit of everything at Gisborne with strong sales on finishing, arable and horticulture properties backed up by a reasonable sized grazing unit; sluggish in Hawke’s Bay with a single strike in each of the above categories
• Taranaki - quieter in Taranaki but still strong prices being paid for light volumes of dairy support and finishing properties
• Manawatu/Wanganui - good activity across the board from Ruapehu to Manawatu to Tararua with again, strong prices paid for finishing properties, on par for grazing blocks and steady to solid on the handful of dairy units sold; quiet in Horowhenua
• Wairarapa/Wellington - steady results on dairy support and grazing properties in the Masterton and South Wairarapa districts, backed up by a solid sale of a finishing unit closer to Wellington
• Nelson/Marlborough - strongly priced sales of finishing units were again a feature of both the Marlborough and Tasman districts, a good dairy support sale in the Tasman region plus several strong sales of sauvignon vineyards in both localities
• Canterbury - Canterbury performed on a similar basis to the rest of the country achieving a solid range of sales of finishing, grazing and dairy support properties with the southern districts, particularly Waimate, achieving better results than those in the north of the province; no farm sales on the West Coast
• Otago - strongly priced sales of finishing units remained consistent in Otago, underscored by a duo of grazing properties, with the greater share of activity being experienced in the Clutha district
• Southland - good, healthy volumes of sales of dairy support, finishing and grazing properties with the second deer farm sale for the country being added to the mix for the month; one dairy farm sale with pricing being on par for the region.

Finishing farms accounted for the largest number of sales with a 31% share of all sales over the three months to October 2020, Grazing farms accounted for 26%, Dairy accounted for 6% and Horticulture accounted for 13% of all sales. These four property types accounted for 76% of all sales during the three months ended October 2020.

Dairy Farms

For the three months ended October 2020, the median sales price per hectare for dairy farms was $38,321 (22 properties), compared to $43,176 (14 properties) for the three months ended September 2020, and $41,204 (11 properties) for the three months ended October 2019. The median price per hectare for dairy farms has decreased 7.0% over the past 12 months. The median dairy farm size for the three months ended October 2020 was 96 hectares.

On a price per kilo of milk solids basis the median sales price was $34.85 per kg of milk solids for the three months ended October 2020, compared to $33.77 per kg of milk solids for the three months ended September 2020 (+3.2%), and $44.71 per kg of milk solids for the three months ended October 2019 (-22.1%).

The REINZ Dairy Farm Price Index fell 2.6% in the three months to October 2020 compared to the three months to September 2020. Compared to October 2019, the REINZ Dairy Farm Price Index fell 14.9%. 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 October 2020, the median sale price per hectare for finishing farms was $34,131 (119 properties), compared to $32,085 (124 properties) for the three months ended September 2020, and $34,553 (62 properties) for the three months ended October 2019. The median price per hectare for finishing farms has decreased 1.2% over the past 12 months. The median finishing farm size for the three months ended October 2020 was 35 hectares.

Grazing Farms

For the three months ended October 2020, the median sales price per hectare for grazing farms was $11,305 (99 properties), compared to $11,347 (120 properties) for the three months ended September 2020 and $10,410 (86 properties) for the three months ended October 2019. The median price per hectare for grazing farms has increased 8.6% over the past 12 months. The median grazing farm size for the three months ended October 2020 was 90 hectares.

Horticulture Farms

For the three months ended October 2020, the median sales price per hectare for horticulture farms was $243,944 (51 properties), compared to $283,951 (55 properties) for the three months ended September 2020 and $216,383 (44 properties) for the three months ended October 2019. The median price per hectare for horticulture farms has risen 12.7% over the past 12 months. The median horticulture farm size for the three months ended October 2020 was 7 hectares.

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