A Bright June – July Looking Gloomy

Data released today by the Real Estate Institute of New Zealand (REINZ) shows there were 137 more farm sales (+53.7%) for the three months ended June 2021 than for the three months ended June 2020. Overall, there were 392 farm sales in the three months ended June 2021, compared to 450 farm sales for the three months ended May 2021 (-12.9%), and 255 farm sales for the three months ended June 2020.

1,748 farms were sold in the year to June 2021, 51.5% more than were sold in the year to June 2020, with 148.1% more Dairy farms, 47.6% more Dairy Support, 40.1% more Grazing farms, 67.5% more Finishing farms and 30.5% less Arable farms sold over the same period.

The median price per hectare for all farms sold in the three months to June 2021 was $27,181 compared to $23,678 recorded for three months ended June 2020 (+14.8%). The median price per hectare decreased 3.8% compared to May 2021.

The REINZ All Farm Price Index increased 2.1% in the three months to June 2021 compared to the three months to May 2021. Compared to the three months ending June 2020 the REINZ All Farm Price Index increased 10.7%. 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.

11 regions recorded an increase in the number of farm sales for the three months ended June 2021 compared to the three months ended June 2020, with the most notable being Northland (+34 sales) and Waikato (+29 sales). Wellington (-4 sales) and Taranaki (-2 sales) recorded the biggest decreases in sales. Compared to the three months ended May 2021, 3 regions recorded an increase in sales, the most notable being Gisborne/Hawkes Bay (+7 sales) and Auckland and Nelson/Marlborough/Tasman (+4 sales).

Brian Peacocke, Rural Spokesman, at REINZ says: “Sales figures for the 3-month period ending June 2021 reflect an easing on the previous quarter, as to be expected for the early part of winter, but nevertheless, was a strong result and significantly ahead of the equivalent periods in 2019 and 2020.

“Grazing and finishing properties tussled for top spot in the numbers game, with dairy farm sales coming a distant third.

“Putting the statistics to one side, on-farm conditions in many regions reflected a continuation of the late autumn with mild weather and surprisingly good grass-growing conditions.

“After a pandemic-induced cancellation last year, attendance at Fieldays 2021 set an all-time record with that enthusiasm being reflected in a level of onsite sales sufficient to rejuvenate many exhibitors.

“However, that enthusiasm evaporated as a rapid onset of winter with heavy frosts, cold winds, snow and floods brought those earlier ‘smiley’ conditions to a rapid halt.

“Coinciding with such change, ongoing compliance rules, freshwater regulations, the continuing shortage of labour and a fresh raft of unwelcome tax rules, have finally resulted in a dramatic surge of publicly expressed discontent, with howls of protest from the rural sector saying ‘enough is enough’.

“Central government has rasped a raw nerve and the rural community is reacting in a manner close to rebellion, so interesting times lie ahead.

“On the product front, lamb prices are hitting record levels, beef has quickly achieved prices reflective of a shortening of supply, the milk payout appears strong in spite of volatility on the Global Dairy Trade auction platform and given the ability to cope with supply chain disruptions, returns for kiwifruit and other horticultural products look highly promising.

“The ‘dark horse’ in the race, however, would appear to be the future level of the Official Cash Rate, and the resulting impact on interest rates should a rise in the OCR come about.

“As is always the case, the agricultural sector is in a constant state of motion,” he concludes.

Points of Interest around New Zealand include:

Northland/Auckland

A raft of well spread, strongly priced sales of finishing and grazing properties, with a discernible level of activity in the forestry sector throughout the Northland region; Auckland competed strongly on sales of finishing units but experienced lower activity in the other sectors.

Waikato/King Country/Taupo

The theme of sales of strongly priced albeit smaller finishing properties and several solid dairy farm sales continued throughout the Waikato region, but those results were overshadowed by strong prices paid for two quality dairy support units in the Piako district. King country and Taupo failed to get off the blocks in June.

Bay of Plenty/Rotorua

Western Bay of Plenty benefited from reasonable activity in the horticulture sector with avocado orchards being the predominant point of focus; Rotorua and Opotiki districts recorded light activity in the finishing and grazing sectors.

Gisborne/Hawke’s Bay

Moderate activity in the Gisborne district on arable blocks with a good sale of a finishing unit in Tolaga Bay; Hawke’s Bay benefitted from one of the better periods of activity experienced for some time with very solid sales of finishing and grazing units in the Hastings district backed up by reasonable activity in the eastern sector of Central Hawke’s Bay.

Taranaki

Moderate results on finishing, dairy support and grazing units in the Taranaki province; quiet on dairy farms due to the time of the year.

Manawatu/Wanganui/Tararua

Good results evenly balanced throughout this widespread region with some very strong prices paid for finishing properties, particularly within the Rangitikei and Manawatu districts; several grazing units sold at current prices in Tararua and a solid result was achieved on a dairy farm in the Horowhenua district.

Wairarapa/Wellington

Very quiet throughout the lower North apart from one solid dairy farm sale in the South Wairarapa district.

Tasman/Nelson/Marlborough

Consistently solid activity within the region with Tasman just holding off Marlborough in numbers but both districts achieved good results on finishing, grazing and horticulture properties.

Canterbury/West Coast

Continuing the theme from its northern neighbour, great results at strong prices for finishing properties throughout the Hurunui, Waimakariri, Selwyn and Timaru regions; Timaru also scored the only run on the dairy front with a good sale in the Clandeboye district; quiet in the Ashburton and MacKenzie districts.

West Coast registered solid activity with good results on dairy, dairy support and grazing properties in the Grey and Westland districts.

Otago

A flurry of activity on grazing properties at solid prices throughout the Waitaki district, backed up by steady sales at good prices for finishing and grazing units spread throughout the Wanaka, Dunedin, Clutha and Gore localities; quiet on the dairy front.

Southland

Never to be outdone by their northern neighbours, a great spurt of sales at good prices for finishing, dairy and grazing properties in Southland, well spread throughout the province.

In June 2021, Grazing farms accounted for a 31% share of all sales. Finishing farms accounted for 30% of all sales, Dairy farms accounted for 14% of all sales and Horticulture farms accounted for 10% of all sales. These four property types accounted for 85% of all sales during the three months ended June 2021.

Dairy Farms

For the three months ended June 2021, the median sales price per hectare for dairy farms was $34,282 (55 properties), compared to $32,536 (86 properties) for the three months ended May 2021, and $23,843 (23 properties) for the three months ended June 2020. The median price per hectare for dairy farms has increased 43.8% over the past 12 months. The median dairy farm size for the three months ended June 2021 was 109 hectares.

On a price per kilo of milk solids basis the median sales price was $31.53 per kg of milk solids for the three months ended June 2021, compared to $ 33.22 per kg of milk solids for the three months ended May 2021 (-5.1%), and $31.99 per kg of milk solids for the three months ended June 2020 (-1.4%).

The REINZ Dairy Farm Price Index increased 0% in the three months to June 2021 compared to the three months to May 2021. Compared to June 2020, the REINZ Dairy Farm Price Index increased 21.3%. 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 June 2021, the median sale price per hectare for finishing farms was $35,747 (116 properties), compared to $37,178 (118 properties) for the three months ended May 2021, and $32,578 (70 properties) for the three months ended June 2020. The median price per hectare for finishing farms has increased 9.7% over the past 12 months. The median finishing farm size for the three months ended June 2021 was 40 hectares.

Grazing Farms

For the three months ended June 2021, the median sales price per hectare for grazing farms was $11,284 (123 properties), compared to $11,199 (123 properties) for the three months ended May 2021 and $8,733 (69 properties) for the three months ended June 2020. The median price per hectare for grazing farms has increased 29.2% over the past 12 months. The median grazing farm size for the three months ended June 2021 was 131 hectares.

Horticulture Farms

For the three months ended June 2021, the median sales price per hectare for horticulture farms was $329,108 (39 properties), compared to $376,155 (49 properties) for the three months ended May 2021 and $204,953 (33 properties) for the three months ended June 2020. The median price per hectare for horticulture farms has increased 60.6% over the past 12 months. The median horticulture farm size for the three months ended June 2021 was 8 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.

Editor’s 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 June 2021 refer to the period from 1 April 2021 to 30 June 2021.

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.

From March 2021 there has been a change in the methodology for calculating rural statistics. To date, the rural statistics have referred to a Return Period which is the month in which a sale record was submitted to REINZ. Going forward, the rural statistics will refer to an Unconditional Month i.e., the month in which the sale went unconditional. This change in methodology ensures that sales that took place in April, for instance, are recorded against April even if they were submitted to REINZ late. The change also brings Rural statistics calculation into line with the Residential statistics calculation, where the Unconditional Month approach has been used successfully to calculate Residential Statistics for several years now. The Unconditional Month methodology also ensures that the most up-to-date state of the REINZ database is reported at the time the data is released with revision of prior months statistics often occurring to reflect the submission of late data or sale amendments that took place after the prior statistics release.

In addition to the calculation period change there are two additional changes to the data worth noting:

1. 12 Districts have been replaced by 13 Regions. These are consistent with the parts of the residential press release and it has been done to be consistent with regional definitions outside REINZ e.g., Statistics NZ

2. Dairy Support is a new farm category and we now have the ability to separate Lifestyle Blocks into Bareland and Farmlets.

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