A Solid Start To 2021

Data released today by the Real Estate Institute of New Zealand (REINZ) shows there were 154 more farm sales (+42.4%) for the three months ended January 2021 than for the three months ended January 2020. Overall, there were 517 farm sales in the three months ended January 2021, compared to 520 farm sales for the three months ended December 2020 (-0.6%), and 363 farm sales for the three months ended January 2020.

1,486 farms were sold in the year to January 2021, 16.4% more than were sold in the year to January 2020, with 39.2% more Dairy farms, 6.5% less Grazing farms, 29.7% more Finishing farms and 26.2% less Arable farms sold over the same period.

The median price per hectare for all farms sold in the three months to January 2021 was $25,868 compared to $21,221 recorded for three months ended January 2020 (+21.9%). The median price per hectare decreased 5.3% compared to December 2020.

The REINZ All Farm Price Index increased 1.7% in the three months to January 2021 compared to the three months to December 2020. Compared to the three months ending January 2020 the REINZ All Farm Price Index rose 6.1%. 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 the 14 regions recorded an increase in the number of farm sales for the three months ended January 2021 compared to the three months ended January 2020, with the most notable being Waikato and Canterbury (+26). Otago recorded the most notable decline in sales (-9). Compared to the three months ended December 2020, six regions recorded an increase in sales with the biggest increases being in Northland (+10), and Manawatu/Wanganui (+9).

Brian Peacocke, Rural Spokesman, at REINZ says: “Sales data for the 3-month period ending January 2021 confirms most categories of rural properties were comfortably ahead in terms of volumes of sales compared to the same periods in 2020 and 2019, as shown on the chart below.

“Whilst the above figures reflect the resilience in the rural sector in spite of environmental and health constraints, the consistency of the median selling price per hectare, horticulture aside, indicates that the majority of sectors are in good health and not at risk from over-confidence.

“The current mood in the rural sector is one of determination, with the will to cope with climatic and market variations, backed up by an underlying feeling of cautious optimism, irrespective of the disruption caused by the COVID-19 pandemic which is particularly greater in the off-shore markets as opposed to the New Zealand internal market.

From a product perspective, acknowledging of course the “Achilles-heel” of the availability of suitable labour in most sectors, the dairy industry is performing very well; lamb, beef and venison are experiencing varying degrees of price volatility; returns from the forthcoming crop for the horticulture sector look really promising. The only real “fly in the ointment” currently is the availability of shipping containers, the shortage of which is impacting heavily on all sectors,” he concludes.

Points of Interest include the following:

• Northland/Auckland - strong volumes of sales of grazing blocks in particular throughout Northland backed up by a good level of strongly priced finishing properties with a scattering of moderately priced dairy units bringing up the rear; Auckland region also achieved high prices for quality albeit smaller finishing properties
• Waikato/Bay of Plenty/Rotorua - a distinct easing in sales volumes in all categories of farms throughout the Waikato/King Country region although prices were good, particularly for two arable properties in the central region; zero results in the Taupo district; improved outcomes for dairy units in the Rotorua and Whakatane districts with an easing of horticultural property sales in the Western Bay of Plenty where a good G3 (gold) orchard achieved a strong result
• Gisborne/Hawke’s Bay - minimal results in Gisborne and light activity throughout Hawke’s Bay with a Patoka dairy farm sale proving not everyone was on holiday
• Taranaki - a degree of well spread consistency in Taranaki with several strongly priced dairy farm sales being recorded; grazing and dairy support units also added to the mix
• Manawatu/Wanganui/Tararua - solid activity on drystock units in Wanganui albeit overshadowed by stellar results across all categories in the Rangitikei and Manawatu districts with Tararua scoring good results in the grazing category
• Wairarapa/Wellington - sleep mode throughout this region with one solitary grazing unit sale
• Nelson/Marlborough - typically quieter at this time of the season; one sale in each of the dairy, finishing, dairy support and grazing categories
• Canterbury/West Coast - moderate results in all categories throughout the region but solid prices achieved for dairy and finishing properties with Timaru district in particular featuring strongly in those categories, this being reinforced by a good run of grazing unit sales in the MacKenzie district; not to be outdone, the West Coast did well with sales of dairy and grazing properties
• Otago - consistent sales of grazing properties throughout the province but generally quiet in other respects
• Southland - a drop-off from the very strong performance last month but still strong results on lesser numbers of finishing, dairy, dairy support and arable properties, topped off by a good outcome for a smaller deer unit.

Finishing farms accounted for the largest number of sales with a 30% share of all sales over the three months to January 2021, Grazing farms accounted for 28%, Dairy accounted for 18% and Horticulture accounted for 10% of all sales. These four property types accounted for 86% of all sales during the three months ended January 2021.

Dairy Farms

For the three months ended January 2021, the median sales price per hectare for dairy farms was $33,444 (91 properties), compared to $33,126 (78 properties) for the three months ended December 2020, and $35,967 (43 properties) for the three months ended January 2020. 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 January 2021 was 127 hectares.

On a price per kilo of milk solids basis the median sales price was $34.78 per kg of milk solids for the three months ended January 2021, compared to $35.26 per kg of milk solids for the three months ended December 2020 (-1.4%), and $38.72 per kg of milk solids for the three months ended January 2020 (-10.2%).

The REINZ Dairy Farm Price Index rose 0.4% in the three months to January 2021 compared to the three months to December 2020. Compared to January 2020, the REINZ Dairy Farm Price Index rose 2.8%. 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 2021, the median sale price per hectare for finishing farms was $34,699 (156 properties), compared to $34,482 (169 properties) for the three months ended December 2020, and $30,032 (98 properties) for the three months ended January 2020. The median price per hectare for finishing farms has increased 15.5% over the past 12 months. The median finishing farm size for the three months ended January 2021 was 36 hectares.

Grazing Farms

For the three months ended January 2021, the median sales price per hectare for grazing farms was $11,472 (146 properties), compared to $10,602 (135 properties) for the three months ended December 2020 and $9,910 (125 properties) for the three months ended January 2020. The median price per hectare for grazing farms has increased 15.8% over the past 12 months. The median grazing farm size for the three months ended January 2021 was 122 hectares.

Horticulture Farms

For the three months ended January 2021, the median sales price per hectare for horticulture farms was $308,960 (53 properties), compared to $308,960 (57 properties) for the three months ended December 2020 and $283,807 (24 properties) for the three months ended January 2020. The median price per hectare for horticulture farms has increased 8.9% over the past 12 months. The median horticulture farm size for the three months ended January 2021 was 6 hectares.

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