Farm Sale Volumes Ease, But Results Remain Robust

Data released today by the Real Estate Institute of New Zealand (REINZ) shows there were 50 fewer farm sales (-11.0%) for the three months ended May 2022 than for the three months ended May 2021. Overall, there were 403 farm sales in the three months ended May 2022, compared to 450 farm sales for the three months ended April 2022 (-10.4%), and 453 farm sales for the three months ended May 2021.

1,697 farms were sold in the year to May 2022, 130 fewer than were sold in the year to May 2021, with 11.9% more Dairy farms, 33.6% fewer Dairy Support, 12.9% fewer Grazing farms, 4.1% fewer Finishing farms and 15.2% fewer Arable farms sold over the same period.

The median price per hectare for all farms sold in the three months to May 2022 was $29,760 compared to $28,190 recorded for three months ended May 2021 (+5.6%). The median price per hectare increased 3.9% compared to April 2022.

The REINZ All Farm Price Index increased 1% in the three months to May 2022 compared to the three months to April 2022. Compared to the three months ending May 2021 the REINZ All Farm Price Index increased 31.4%. 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.

Four regions recorded an increase in the number of farm sales for the three months ended May 2022 compared to the three months ended May 2021, with the most notable being Southland (+13 sales) and West Coast (+5 sales). Northland (-19 sales) and Waikato (-18 sales) recorded the biggest decreases in sales. Compared to the three months ended April 2022, two regions recorded an increase in sales, the most notable being Manawatu-Whanganui and Wellington (+4 sales each).

Brian Peacocke, Rural Spokesman at REINZ, says: “Sales data for the three-month period ending May 2022 reflect an 11% easing in sales volumes from the previous three-month period, and from the equivalent period 12 months ago.

“Categories most impacted were arable, dairy, dairy support and horticulture whereas finishing properties remained resilient with solid growth in sales numbers over the last two years.

“From a climatic perspective, welcome and well-spread rain across the country during the month of May allowed those areas most affected by drought to recover to a level sufficient to provide better levels of pre-winter feed than had been anticipated.

“Early snow was a signal to the southern regions that such feed would be very much needed before spring relief arrives.

“Like most sectors within the New Zealand economy, farming is feeling the full impact of increasing costs, particularly those relating to fuel, fertilizer, general farm inputs and interest rates, with the shortage of labour being a continuing impediment to productivity, particularly in the horticulture sector.

“On a positive note, product prices have been steady, with an expectation of upward pressure on values for beef and lamb, downward pressure on the record prices for dairy products this season, and uncertainty surrounding the reduced volumes of kiwifruit and pip-fruit in the horticultural sector.

“Beyond speculation or debate, of course, is the importance of the agriculture sector to the overall economy,” he concludes.

Points of interest around the country include the following:

Northland/Auckland

Reasonable sales activity on finishing and grazing properties, albeit well down on the very strong numbers from last month – the lack of dairy, forestry and horticulture sales is of note.

Auckland as a region is succumbing to the pressures of activity on lifestyle properties as opposed to commercial farms, with just two finishing units sold during the month of May.

Waikato/King Country/Taupo

Sporadic activity was registered in most of the numerous districts within this widespread region, with strong sales of finishing properties, particularly in the Matamata/Piako, Waikato, Waipa, Waitomo and Taupo districts. Dairy farm sales came a distant second with volumes being on par with those recorded during the same period over the last two years.

Bay of Plenty/Rotorua

Activity was very subdued throughout the region compared to the last two years, particularly in the horticulture sector, with meagre results in the finishing and dairy support divisions.

Gisborne/Hawke’s Bay

Suppressed conditions prevailed throughout the eastern region with a solitary sale of a well-presented kiwifruit orchard in the Matawhero district east of Gisborne City, and a smattering of finishing and grazing sales in the Wairoa, Hastings and Central Hawke’s Bay districts.

Taranaki

Light results for dairy farm sales but strong prices achieved; enquiry and sales activity continued on grazing properties in the Uriti, Patea and Strathmore districts within the beating heart of the province.

Manawatu/Whanganui/Tararua

Sales of grazing properties were recorded in the Ruapehu, Rangitikei, Manawatu end Tararua districts, but activity was quite muted compared to previous months. The dairy sector, as would be expected for the month of May, was devoid of sales.

Wairarapa/Wellington

Quiet but solid sales of grazing properties were registered in the Masterton district, with a solid sale of a finishing property being recorded in the Kapiti district on the western perimeter.

Nelson/Tasman/Marlborough

Two sales of vineyards at steady prices along with sales of a deer unit and a finishing unit were recorded in the Marlborough district; unusually, Nelson/Tasman districts were extremely subdued with zero activity being noted.

Canterbury/West Coast

A reasonable cross section of activity on arable, dairy, dairy support and finishing properties, with the latter category again being dominant with strong prices paid in the Winchmore and Selwyn districts; the shortage of quality arable properties assisted a strong sale in that sector in the Ashburton district.

West Coast experienced subdued, wet conditions with a solitary sale of a grazing property being recorded.

Otago

The lights shine brighter as we move south where sturdy results were recorded within the finishing, grazing and dairy sectors, with such activity in the Central Otago districts of Naseby, Patearoa and Ranfurly being backed up by equally solid sales of dairy, finishing, grazing and arable properties in the Clutha, Dunedin and Waitaki districts.

Southland

Longer daylight hours in the Deep South clearly assisted the consistently solid sales activity in the finishing, grazing and dairy sectors across the well-established districts of Gore, lnvercargill and Southland, where very creditable results were achieved.

In May 2022, Finishing farms accounted for a 33% share of all sales. Grazing farms accounted for 27% of all sales, Dairy farms accounted for 18% of all sales and Horticulture farms accounted for 7% of all sales. These four property types accounted for 85% of all sales during the three months ended May 2022.

Dairy Farms

For the three months ended May 2022, the median sales price per hectare for dairy farms was $37,010 (73 properties), compared to $36,925 (92 properties) for the three months ended April 2022, and $32,535 (86 properties) for the three months ended May 2021. The median price per hectare for dairy farms has increased 13.8% over the past 12 months. The median dairy farm size for the three months ended May 2022 was 128 hectares.

On a price per kilo of milk solids basis the median sales price was $34.81 per kg of milk solids for the three months ended May 2022, compared to $32.63 per kg of milk solids for the three months ended April 2022 (+6.7%), and $33.22 per kg of milk solids for the three months ended May 2021 (+4.8%).

The REINZ Dairy Farm Price Index decreased 3.7% in the three months to May 2022 compared to the three months to April 2022. Compared to May 2021, the REINZ Dairy Farm Price Index increased 7.9%. 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 May 2022, the median sale price per hectare for finishing farms was $35,860 (133 properties), compared to $35,450 (135 properties) for the three months ended April 2022, and $37,180 (118 properties) for the three months ended May 2021. The median price per hectare for finishing farms has decreased 3.6% over the past 12 months. The median finishing farm size for the three months ended May 2022 was 43 hectares.

Grazing Farms

For the three months ended May 2022, the median sales price per hectare for grazing farms was $13,630 (108 properties), compared to $13,820 (123 properties) for the three months ended April 2022 and $10,980 (125 properties) for the three months ended May 2021. The median price per hectare for grazing farms has increased 24.1% over the past 12 months. The median grazing farm size for the three months ended May 2022 was 175 hectares.

Horticulture Farms

For the three months ended May 2022, the median sales price per hectare for horticulture farms was $599,760 (29 properties), compared to $697,820 (37 properties) for the three months ended April 2022 and $376,160 (49 properties) for the three months ended May 2021. The median price per hectare for horticulture farms has increased 59.4% over the past 12 months. The median horticulture farm size for the three months ended May 2022 was 5 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.

The information provided by REINZ in relation to the rural real estate market covers the most recently completed three-month period; thus, references to May 2022 refer to the period from 1 March 2022 to 31 May 2022.

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.

If you have any questions regarding this change in methodology, please email statistics@reinz.co.nz.

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