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Rural: Prices and Sales Volume Lifting in Strong May Market


News Release 19 June 2014


Prices and Sales Volume Lifting in Strong May Market

Summary

Data released today by the Real Estate Institute of NZ (“REINZ”) shows there were 52 more farm sales (+10.2%) for the three months ended May 2014 than for the three months ended May 2013. Overall, there were 564 farm sales in the three months to end of May 2014, compared to 498 farm sales for the three months ended April 2014 (+13.3%). 1,881 farms were sold in the year to May 2014, 26.2% more than were sold in the year to May 2013.

The median price per hectare for all farms sold in the three months to May 2014 was $25,018 compared to $20,499 recorded for three months ended May 2013 (+22.0%). The median price per hectare rose 1.8% compared to April.

The REINZ All Farm Price Index fell 0.1% in the three months to May compared to the three months to April, moving from 3,378.6.7 to 3,374.0. Compared to May 2013 the REINZ All Farm Price Index rose by 13.7%. The REINZ All Farm Price Index adjusts for differences in farm size, location and farming type compared to the median price per hectare, which does not adjust for these factors.

Eight regions recorded increases in sales volume for the three months ended May 2014 compared to the three months ended May 2013. Bay of Plenty recorded the largest increase in sales (+24 sales), followed by Northland (+17 sales) and Otago and Southland with seven sales each. Compared to the three months ended April 2014, 10 regions recorded an increase in sales.

“The market for the 3 months ending May 2014 reflects the healthy state of the rural sector with a lift in volumes and prices as compared to the same period 12 months ago”, says REINZ Rural Spokesman Brian Peacocke, “However, acknowledging the approach of winter and the seasonal slowdown in activity, the tail-end of the season is experiencing a shortage of stock and a hint of caution as the mix of an easing in the dairy payout, increasing interest rates and compliance issues cause purchasers to be more thorough with their due diligence investigations.”

Noteworthy points include: -

• Steady activity in Northland for dairy, finishing and grazing properties
• Solid sales numbers for grazing units in the Waikato
• Very strong activity with kiwifruit orchards in the Bay of Plenty over the last 3 months
• Solid activity from South Island buyers in the Hawkes Bay sheep and beef market, albeit compliance issues resulting from the Regional Council Plan 6 is having a cautioning impact on the market
• Local and offshore interests competing for available property in Canterbury where again, environmental issues are a developing issue causing a degree of caution and concern
• Due in part to the sales of Solid Energy properties, a strong market and increased numbers for finishing and dairy support units in Southland where local buyers continue to dominate a market described as “fully firm”
Grazing properties accounted for the largest number of sales with 40.4% share of all sales over the three months to May, Finishing properties accounted for 21.6%, Dairy properties accounted for 16.8% and Horticulture properties accounted for 9.8% of all sales. These four property types accounted for 88.7% of all sales during the three months ended May 2014.

Dairy Farms
For the three months ended May 2014 the median sales price per hectare for dairy farms was $33,543 (95 properties), compared to $34,615, for the three months ended April (105 properties), and $34,850 (90 properties) for the three months ended May 2013. The median dairy farm size for the three months ended May 2014 was 121 hectares.

Included in sales for the month of May were 26 dairy farms at a median sale value of $33,059 per hectare. The median farm size was 147 hectares with a range of 41 hectares in the Waikato region to 494 hectares in Canterbury. The median production per hectare across all dairy farms sold in May 2014 was 964 kgs of milk solids.

The REINZ Dairy Farm Price Index fell by 0.5% in the three months to May compared to the three months to April, from 1,869.0 to 1,859.7. Compared to May 2013, the REINZ Dairy Farm Price Index rose by 5.1%. 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 2014 the median sale price per hectare for finishing farms was $22,692 (122 properties), compared to $22,108 for the three months ended April (107 properties), and $17,903 (106 properties) for the three months ended May 2013. The median finishing farm size for the three months ended May 2014 was 58 hectares.

Grazing Farms
For the three months ended May 2014 the median sales price per hectare for grazing farms was $15,833 (228 properties) compared to $15,324 for the three months ended April (185 properties), and $13,443 (235 properties) for the three months ended May 2013. The median grazing farm size for the three months ended May 2014 was 66 hectares.

Horticulture Farms
For the three months ended May 2014 the median sales price per hectare for horticulture farms was $186,250 (55 properties) compared to $175,462 (48 properties) for the three months ended April, and $128,248 (36 properties) for the three months ended May 2013. The median horticulture farm size for the three months ended May 2014 was seven hectares.

Lifestyle Properties
The lifestyle property market saw a 4.7% fall (-87 sales) in sales volume in the three months to May 2014 compared to May 2013. 1,757 sales were recorded in the three months to May 2014 compared to 1,844 sales in the three months to May 2013. 50 more sales were recorded compared to the three months to April 2014 (+2.9%). For the 12 months to May 2014 there were 6,594 unconditional sales of lifestyle properties, an increase of 7.2% (+444 sales) over the 12 months to May 2013.

Six regions recorded increases in sales compared to May 2013 while six recorded decreases in sales. Otago recorded the largest increase (+35 sales), followed by Northland (+14 sales) and Taranaki (+13 sales). West Coast and Southland were unchanged. Compared to April, nine regions recorded an increase in sales with five regions recording decreases.

The national median price for lifestyle blocks rose by $18,000 (+3.5%) from $509,500 for the three months to May 2013 to $527,500 for the three months to May 2014. The median price for lifestyle blocks in Auckland rose by $100,000 (+12.5%) from $802,500 for the three months to May 2013 to $902,500 for the three months to May 2014 to reach a new record high. Over the same time period for the three months ending May, the median price rose by 6.5% in Waikato to $495,000, and by 0.1% in Canterbury to $545,000. Compared to April 2014, the National median sales price rose $17,500 (+3.4%) to $527,500.

The number of days to sell for lifestyle properties improved by four days, from 75 days for the three months to the end of April to 71 days for the three months to the end of May. Compared to the three months ended May 2013 the number of days to sell eased by four days from 67 days to 71 days. Gisborne recorded the shortest number of days to sell in April at 47 days, followed by Taranaki at 50 days and Canterbury at 52 days. West Coast recorded the longest number of days to sell at 164 days, followed by Hawkes Bay at 113 days and Northland at 98 days.

Commenting on the lifestyle property market Brian Peacocke said, “Whilst volumes of sales have eased from the equivalent period last year, prices have remained at solid levels over recent months and across the country, the market is generally described as being steady..”

Noteworthy points include: -
• A good lifestyle market in the mid to southern sector against Auckland City, particularly in the price range up to $3m. Demand for quality blocks with good homes on 1 – 2 hectares is outstripping supply, and there is increasing demand for bare land in the 1 - 4 hectare range.
• Good demand and sales activity in central Waikato for properties in the $1.3m plus range where Auckland purchasers have been particularly active
• Steady sales volumes in the lower North Island
• A slowdown in the Canterbury region with a noticeable change of emphasis from north of Christchurch to areas south of the city where traffic congestion is not such an issue. Sales have been reasonable at the mid range level but slower over $1m. The shortage of listings is a contributing factor to the slightly lackluster market
• Solid sales activity and reasonably consistent numbers in the Otago region

Full release with charts: REINZ_Rural_Press_Release__May_2014.doc
Tables: REINZ_Rural_Market_Report_May_2014.pdf

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