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Current Market Reflects Traditional Winter Slowdown

18 August 2014

Current Market Reflects Traditional Winter Slowdown

Summary
Data released today by the Real Estate Institute of NZ (“REINZ”) shows there were 74 more farm sales (+16.9%) for the three months ended July 2014 than for the three months ended July 2013. Overall, there were 512 farm sales in the three months to end of July 2014, compared to 544 farm sales for the three months ended June 2014 (-5.9%). 1,923 farms were sold in the year to July 2014, 25.2% more than were sold in the year to July 2013.

The median price per hectare for all farms sold in the three months to July 2014 was $26,680 compared to $20,667 recorded for three months ended July 2013 (+29.1%). The median price per hectare rose 2.6% compared to June.

The REINZ All Farm Price Index fell 5.7% in the three months to July compared to the three months to June, moving from 3,405.7 to 3,212.9. Compared to July 2013 the REINZ All Farm Price Index rose by 8.8%. 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.

10 regions recorded increases in sales volume for the three months ended July 2014 compared to the three months ended July 2013. Canterbury recorded the largest increase in sales (+18 sales), followed by Nelson (+16 sales) and Northland, Auckland and Bay of Plenty all with an increase of 11 sales each. Compared to the three months ended June 2014, four regions recorded an increase in sales.

“While annual statistics confirm a solid increase in volumes and prices over the past 12 months, three monthly figures to the end of July indicate an easing in both volumes and prices”, says REINZ Rural Spokesman Brian Peacocke, “Apart from a small burst of activity in Westland, and as expected at this time of year when peak workloads dominate all other activity, dairy farm sales have virtually come to a standstill.”

“By contrast, sales of finishing and grazing properties have maintained some momentum, with reasonable enquiry for beef farms in the north, for dairy support properties through the centre of the country, and for sheep, beef properties and diary support farms in the lower south. Sales in the horticultural sector have been steady during the three months to July.”

Grazing properties accounted for the largest number of sales with 43.9% share of all sales over the three months to July, Finishing properties accounted for 20.5%, Dairy properties accounted for 9.2% and Horticulture properties accounted for 10.9% of all sales. These four property types accounted for 84.6% of all sales during the three months ended July 2014.

Dairy Farms
For the three months ended July 2014 the median sales price per hectare for dairy farms was $36,673 (47 properties), compared to $33,543, for the three months ended June (69 properties), and $34,882 (47 properties) for the three months ended July 2013. The median dairy farm size for the three months ended July 2014 was 111 hectares.

Included in sales for the month of July were six dairy farms at a median sale value of $27,491 per hectare. The median farm size was 89 hectares with a range of 41 hectares in the Waikato region to 636 hectares in Westland. The median production per hectare across all dairy farms sold in July 2014 was 650 kgs of milk solids.

The REINZ Dairy Farm Price Index fell by 1.2% in the three months to July compared to the three months to June, from 1,956.4 to 1,932.0. Compared to July 2013, the REINZ Dairy Farm Price Index rose by 8.7%. 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 2014 the median sale price per hectare for finishing farms was $27,907 (105 properties), compared to $26,694 for the three months ended June (115 properties), and $22,500 (109 properties) for the three months ended July 2013. The median finishing farm size for the three months ended July 2014 was 44 hectares.

Grazing Farms
For the three months ended July 2014 the median sales price per hectare for grazing farms was $15,500 (225 properties) compared to $15,833 for the three months ended June (236 properties), and $15,367 (193 properties) for the three months ended July 2013. The median grazing farm size for the three months ended July 2014 was 65 hectares.

Horticulture Farms
For the three months ended July 2014 the median sales price per hectare for horticulture farms was $134,640 (56 properties) compared to $193,745 (57 properties) for the three months ended June, and $100,667 (39 properties) for the three months ended July 2013. The median horticulture farm size for the three months ended July 2014 was eight hectares.

Lifestyle Properties
The lifestyle property market saw a 13.5% fall (-242 sales) in sales volume in the three months to July 2014 compared to July 2013. 1,548 sales were recorded in the three months to July 2014 compared to 1,790 sales in the three months to July 2013. 24 fewer sales were recorded compared to the three months to June 2014 (-1.5%). For the 12 months to July 2014 there were 6,400 unconditional sales of lifestyle properties, an increase of 0.5% (+32 sales) over the 12 months to July 2013.

Just one region recorded an increase in sales compared to July 2013 while 12 recorded decreases in sales. Compared to June, six regions recorded an increase in sales with seven regions recording decreases.

The national median price for lifestyle blocks rose by $36,000 (+7.5%) from $488,500 for the three months to July 2013 to $525,000 for the three months to July 2014. The median price for lifestyle blocks in Auckland rose by $67,500 (+8.1%) from $830,000 for the three months to July 2013 to $897,500 for the three months to July 2014. Over the same time period for the three months ending July, the median price rose by 2.4% in Waikato to $486,500, and fell by 12.3% in Canterbury to $527,500. Compared to June 2014, the National median sales price rose by $10,000 (+1.9%) to $525,000.

The number of days to sell for lifestyle properties eased by six days, from 74 days for the three months to the end of June to 80 days for the three months to the end of July. Compared to the three months ended July 2013 the number of days to sell eased by eight days from 72 days to 80 days. Gisborne recorded the shortest number of days to sell in July at 44 days, followed by Canterbury at 57 days and Auckland at 58 days. West Coast recorded the longest number of days to sell at 224 days, followed by Nelson at 150 days and Hawkes Bay at 111 days.

Commenting on the lifestyle property market Brian Peacocke said, “Reports from around the country indicate a mixed bag in the lifestyle sector, depending on the severity of winter being experienced. Overall, sales volumes and prices have been reasonably consistent, with a slight increased in prices and a modest decline in volumes.”

Points to note:
• Northland, Auckland, Waikato, Taranaki, Manawatu/Wanganui and Wellington have all experienced slightly increased volumes.
• Canterbury has also seen a slight lift in volumes, although the latest feedback from the mid to lower South Island indicates a tightening in the market.
• Parts of the better performing northern regions report increased caution amongst buyers with an increased focus on due diligence investigations underpinned by a clear focus on schooling options.

REINZ All Farm Price Index – Additional Data
The table below sets out the returns for the REINZ All Farm Price Index for the three months ending July 2014.

The graph below shows the trends in the REINZ All Farm Price Index compared to an index of movements in the $/hectare measure of farm prices.

REINZ Dairy Farm Price Index – Additional Data
The table below sets out the returns for the REINZ Dairy Farm Price Index for the three months ending July 2014.

The graph below shows the trends in the REINZ Dairy Farm Price Index compared to an index of movements in the $/hectare measure of farm prices.


Click for big version.

Click here for the REINZ rural market report.

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 February refer to the period from 1 May 2014 to 31 July 2014.

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.

ENDS

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