June 2024 Rural Data: REINZ Reports Decreased Activity Alongside Economic And Seasonal Factors

The Real Estate Institute of New Zealand (REINZ) has released its latest data on farm sales, revealing trends and shifts in the agricultural property market across New Zealand.

There were 215 farm sales in the three months ended June 2024, marking a decrease of 14 sales (-6.1%) compared to the same period in 2023, where 229 sales were recorded. This also reflects a decline of 13.3% from the 248 sales reported for the three months ended May 2024.

Shane O’Brien, Rural Spokesperson at REINZ commented on the regional dynamics. “The results for June 2024 have continued the trend of much of 2024 with sales back on preceding years, although it is encouraging to note a lift in sales in the traditionally active Waikato and Southland markets when compared to last year and similar sales volume in Canterbury when compared to other areas.”

In the year to June 2024, 928 farms were sold, which was a decrease of 219 sales compared to the previous year. Notably, there were 25.8% fewer Dairy farms, 21.8% fewer Dairy Support farms, 31.2% fewer Grazing farms, 18.3% fewer Finishing farms, and 8.9% more Arable farms sold over the same period.

The median price per hectare for all farms sold in the three months to June 2024 was $25,880, representing a 3.9% decrease from $26,930 recorded for the same period in 2023. Additionally, the median price per hectare decreased by 3.8% compared to May 2024.

O’Brien commented on the current state of the farm real estate market, noting that interest from potential buyers is lower than expected.

“Buyer enquiry on most farm listings is lower than desired as farmers across all sectors grapple with the change in weather, lower-than-needed farm product prices and higher farm working expenses. Rural interest rates at circa 8% are also causing buyers to hold off as they wait for the expected drop in interest rates being mooted by the central government and the Reserve Bank,” added O’Brien.

The REINZ All Farm Price Index, which adjusts for differences in farm size, location, and farming type, decreased by 3.2% in the three months to June 2024 compared to the preceding quarter and by 12.4% compared to the same period last year.

Regional sales performance varied, with 5 regions experiencing increased farm sales for the three months ending June 2024 compared to the same period in 2023. Waikato (+13 sales) and Southland (+7 sales) saw the most notable increases, while Manawatu-Wanganui (-13 sales) and West Coast (-10 sales) reported the largest decreases. Compared to the three months ended May 2024, Otago (+4 sales) and Bay of Plenty (+1 sale) were the only regions to record increases in farm sales.

“Amidst this cautious sentiment, it is encouraging to note that those recorded sales are still at good levels when analysed on a per hectare or per stock unit rate, suggesting sound underlying market fundamentals,” said O’Brien.

During the three months ended June 2024, Grazing farms accounted for 30% of all farm sales, while Finishing farms comprised 22%. Dairy farms represented 14% of all sales, and Other Farms comprised 9% of the total, collectively accounting for 76% of all farm sales.

Dairy Farms

For the three months ended June 2024, the median sales price per hectare for dairy farms was $35,530 across 31 properties. This compares to $35,135 recorded in May 2024 (34 properties) and $37,470 in June 2023 (30 properties), reflecting a 5.2% decrease over the past year. The median dairy farm size for June 2024 was 133 hectares.

On a price per kilo of milk solids basis, the median sales price was $30.00 for the three months ended June 2024, compared to $30.45 in May 2024 (-1.5%) and $36.67 in June 2023 (-18.2%).

The REINZ Dairy Farm Price Index, which adjusts for farm size and location, increased by 5.3% in the three months to June 2024 compared to the preceding quarter. However, compared to June 2023, the index decreased by 11.6%.

Finishing Farms

In the same period, the median sale price per hectare for finishing farms was $35,225 across 48 properties. This compares to $33,350 in May 2024 (64 properties) and $36,410 in June 2023 (66 properties), indicating a 3.3% decrease over the past 12 months. The median size of finishing farms for June 2024 was 34 hectares.

Grazing Farms

For grazing farms, the median sales price per hectare was $14,705 across 65 properties for the three months ended June 2024. This compares to $13,880 in May

2024 (69 properties) and $14,070 in June 2023 (64 properties), marking a 4.5% increase over the past year. The median size of grazing farms sold in June 2024 was 81 hectares.

Horticulture Farms

Horticulture farms recorded a median sales price per hectare of $363,300 across 12 properties in June 2024. This compares to $300,000 in May 2024 (21 properties) and $331,970 in June 2023 (17 properties), demonstrating a 9.4% increase over the past 12 months. The median size of horticulture farms sold in June 2024 was 7 hectares.

O’Brien finished by stating that June is a quieter month for sales, and agents are hopeful the market will pick up in spring.

“June is traditionally a quiet market as winter sets in, with fewer farm listings. Many agents across New Zealand are reporting on an expected busy spring with good numbers of farm listings potentially coming to the market,” said O’Brien.

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 2024 refer to the period from 1 April 2024 to 30 June 2024.

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 have 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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