Volumes Easing – Prices Solid

Data released today by the Real Estate Institute of New Zealand (REINZ) shows there were 26 more farm sales (+7.8%) for the three months ended July 2021 than for the three months ended July 2020. Overall, there were 359 farm sales in the three months ended July 2021, compared to 400 farm sales for the three months ended June 2021 (-10.3%), and 333 farm sales for the three months ended July 2020.

1,720 farms were sold in the year to July 2021, 42.5% more than were sold in the year to July 2020, with 146.7% more Dairy farms, 17.9% more Dairy Support, 27.8% more Grazing farms, 58.4% more Finishing farms and 38.1% less Arable farms sold over the same period.

The median price per hectare for all farms sold in the three months to July 2021 was $27,015 compared to $24,050 recorded for three months ended July 2020 (+12.3%). The median price per hectare decreased 0.6% compared to June 2021.

The REINZ All Farm Price Index increased 10.4% in the three months to July 2021 compared to the three months to June 2021. Compared to the three months ending July 2020 the REINZ All Farm Price Index increased 16.9%. 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.

7 regions recorded an increase in the number of farm sales for the three months ended July 2021 compared to the three months ended July 2020, with the most notable being Otago (+14 sales) and Northland and Nelson/Marlborough (+12 sales). Manawatu-Wanganui (-14 sales) and Wellington (-8 sales) recorded the biggest decreases in sales. Compared to the three months ended June 2021, 3 regions recorded an increase in sales, Auckland, Bay of Plenty and Wellington (+2 sales).

Brian Peacocke, Rural Spokesman, at REINZ says: “Sales volumes for the 3 month period ending July 2021 reflect an easing in most categories, albeit still remaining stronger than the equivalent periods in 2019 and 2020.

“The exception to the easing trend which is expected during the winter period, is the category of finishing properties sales which continue to hold at current strong levels, this being a continuing feature in the current marketplace.

“Whilst issues such as the COVID-19 pandemic and the recent Olympics have dominated the media in recent weeks, the rural community has continued steadily with the demands of feeding animals during wildly variable weather conditions, which is situation normal for the July period.

“Calving in the national dairy herd is well advanced, as is the case for lambing in the national flock, apart from the southern high country, so to date, flooding has been more of an issue rather than heavy dumps of snow.

“On the livestock front, reasonable feed reserves have resulted in extra-ordinarily high prices being paid for last season’s lambs to be finished for the late winter / early spring market; the beef schedule is moving upwards on an incremental basis with a promise of more to come, and the dairy industry pensively observes the recent pattern of volatility in the global dairy trade auction system with questions regarding the impact on the payout for the current season.

“Shortages of labour is the constant thorn in the side of the rural sector, with compliance issues relating to water and climate change hovering on the periphery of an unrelenting and unsympathetic political landscape,” he concludes.

Points of Interest around New Zealand include:

Northland/Auckland

• Steadysales of finishing and grazing properties scattered throughout Northland with horticulture blocks hovering on the radar; no activity in the dairy sector; light results on finishing and dairy support units to the north and west of Auckland city.

Waikato/King Country/Taupo

• Solid activity in the Hauraki district on dairy, dairy support and finishing properties, with similar results in the northern and western segments of the Waikato district; a good spurt of results for dairy, finishing and grazing units well spread throughout the Otorohanga, South Waikato and Taupo localities.

Bay of Plenty/Rotorua

• Sales of horticultural blocks, particularly kiwifruit orchards, were the dominant features in the Western Bay of Plenty and Whakatane districts, with one standout sale in terms of price for a dairy support unit in the Pongakawa district; lighter dry stock activity south of Rotorua.

Gisborne/Hawke’s Bay

• A solid lift in sales for smaller horticultural blocks in Gisborne backed up by sales of reasonably-sized dry stock units in the central and coastal localities; solid sales of larger orchards / horticultural land in the Heretaunga plains region of Hawke’s Bay with Central Hawke’s Bay registering on the finishing/grazing/arable scale.

Taranaki

• Very quiet in the Energy province - one finishing unit sale only.

Wanganui/Manawatu/Tararua

• A lack of stimulus from their north-western neighbor resulted in minimal activity in this usually very busy region.

Wairarapa/Wellington

• Winter malaise clearly drifted into the Lower North Island with light activity on smaller finishing units only.

Tasman/Nelson/Marlborough

• Good activity within the Tasman and Marlborough districts with solid prices achieved for well-located vineyards in both districts, with additional sales of finishing, grazing and forestry properties.

Canterbury/West Coast

• Registrable results scattered over the widespread Canterbury region with sales of finishing, dairy, dairy support and forestry units recorded in the Hurunui, Waimakariri, Selwyn, Ashburton, and Waimate districts; the enthusiasm clearly did not extend to the West Coast with zero activity shown showing on the sales chart.

Otago

• In keeping with their opposing northern province, steady activity with steady prices paid for the range of dairy, dairy support, finishing and grazing properties throughout the Waitaki, Central Otago and Clutha districts.

Southland

• Again, in keeping with the consistent theme throughout much of the South Island, good enthusiastic activity at steady prices on the full range of dairy, finishing and grazing properties, particularly within the Gore and Southland districts.

In July 2021, Finishing farms accounted for a 33% share of all sales. Grazing farms accounted for 31% of all sales, Horticulture farms accounted for 13% of all sales and Dairy farms accounted for 10% of all sales. These four property types accounted for 86% of all sales during the three months ended July 2021.

Dairy Farms

For the three months ended July 2021, the median sales price per hectare for dairy farms was $35,740 (36 properties), compared to $35,310 (58 properties) for the three months ended June 2021, and $24,820 (18 properties) for the three months ended July 2020. The median price per hectare for dairy farms has increased 44.0% over the past 12 months. The median dairy farm size for the three months ended July 2021 was 136 hectares.

On a price per kilo of milk solids basis the median sales price was $33.30 per kg of milk solids for the three months ended July 2021, compared to $31.53 per kg of milk solids for the three months ended June 2021 (+5.6%), and $32.50 per kg of milk solids for the three months ended July 2020 (+2.5%).

The REINZ Dairy Farm Price Index increased 1.6% in the three months to July 2021 compared to the three months to June 2021. Compared to July 2020, the REINZ Dairy Farm Price Index increased 17.4%. 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 2021, the median sale price per hectare for finishing farms was $33,345 (117properties), compared to $34,805 (118 properties) for the three months ended June 2021, and $31,170 (98 properties) for the three months ended July 2020. The median price per hectare for finishing farms has increased 7.0% over the past 12 months. The median finishing farm size for the three months ended July 2021 was 42 hectares.

Grazing Farms

For the three months ended July 2021, the median sales price per hectare for grazing farms was $11,905 (112 properties), compared to $11,405 (124 properties) for the three months ended June 2021 and $10,190 (100 properties) for the three months ended July 2020. The median price per hectare for grazing farms has increased 16.8% over the past 12 months. The median grazing farm size for the three months ended July 2021 was 117 hectares.

Horticulture Farms

For the three months ended July 2021, the median sales price per hectare for horticulture farms was $241,650 (45 properties), compared to $320,435 (40 properties) for the three months ended June 2021 and $275,275 (48 properties) for the three months ended July 2020. The median price per hectare for horticulture farms has decreased -12.2% over the past 12 months. The median horticulture farm size for the three months ended July 2021 was 8 hectares.

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