Selective Activity in November Rural Property Market

News Release 12 December 2014

Selective Activity in November Rural Property Market

Summary

Data released today by the Real Estate Institute of NZ (“REINZ”) shows there were 40 fewer farm sales (-9.7%) for the three months ended November 2014 than for the three months ended November 2013. Overall, there were 374 farm sales in the three months to end of November 2014, compared to 346 farm sales for the three months ended October 2014 (+8.1%) and 414 farm sales for the three months to the end of November 2013. 1,879 farms were sold in the year to November 2014, 12.3% more than were sold in the year to November 2013.

The median price per hectare for all farms sold in the three months to November 2014 was $29,834 compared to $24,056 recorded for three months ended November 2013 (+24.0%). The median price per hectare rose 8.3% compared to October.

The REINZ All Farm Price Index rose 5.0% in the three months to November compared to the three months to October, moving from 3,123.2 to 3,278.1. Compared to November 2013 the REINZ All Farm Price Index rose by 1.9%. 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.

Six regions recorded increases in sales volume for the three months ended November 2014 compared to the three months ended November 2013. Nelson recorded the largest increase in sales (+14 sales), followed by Northland (+6 sales). Compared to the three months ended October 2014, eight regions recorded an increase in sales.

“Regional reports again confirm strong activity on quality well located farms with purchasers being particularly diligent in their selections”, says REINZ Rural Spokesman Brian Peacocke, “The consistent pattern around the country is that 2nd tier properties are struggling to attract meaningful attention.”

“While sales volumes for the three month period ending November are down marginally, most areas report prices holding reasonably well in comparison to the same period 12 months ago. The exception, however, is the Waikato region which has witnessed some extraordinary sales.”

Highlights Include:
• Strong sharemilker enquiry for first farm purchases in Northland, although uncertainty regarding the payout for next season is a constraining factor;
• Some exceptionally strong dairy farm sales in the Waikato where record prices have been paid for Tatua supply properties and selected Fonterra farms in the Morrinsville / Matamata catchment. Central to southern Waikato and northern King Country have experienced good solid activity on dairy units, but cautious responses to sheep, beef and dairy support units. Second-tier properties are currently being overlooked even though they remain viable investment opportunities;
• Healthy enquiry in the horticultural sector in the Bay of Plenty with strong support for gold kiwifruit orchards. The evidence of P.S.A., albeit reduced, is maintaining a healthy focus on the more resistant green kiwifruit orchards where good levels of production are ensuring those blocks remain competitive investment options;
• Strong buyer enquiry in Taranaki is maintaining a solid dairy market. Sheep and beef properties are experiencing limited interest;
• A very selective market in the Wairarapa with buyers focussing strongly on the few quality properties available. Second-tier farms are difficult;
• Nelson / Marlborough reports a good November market with strong activity in the viticulture sector. Adverse weather has caused damage in some areas and impending dry conditions are impacting on buyer enthusiasm;
• Values remain steady on the West Coast where cautious first farm purchasers are basing decisions around the economic outlook;
• The November market in Canterbury is strong for dairy, with solid activity surrounding sheep, beef and non-dairy properties with good soils, either with or without irrigation.
• A slow market in Otago with a lack of dairy influence on finishing and grazing country, and limited enquiry generally; and
• A solid market in Southland with quality dairy farms peaking at $46,000 per hectare and good sheep and beef units making up to $1,000 per stock unit. Purchasers are reported as being increasingly cautious with their decision making.

Grazing properties accounted for the largest number of sales with 41.4% share of all sales over the three months to November 2014, Horticulture properties accounted for 16.3%, Finishing properties accounted for 15.2% and Dairy properties accounted for 14.7% of all sales. These four property types accounted for 87.7% of all sales during the three months ended November 2014.

Dairy Farms
For the three months ended November 2014 the median sales price per hectare for dairy farms was $36,825 (55 properties), compared to $43,299 for the three months ended October 2014 (23 properties), and $40,023 (69 properties) for the three months ended November 2013. The median dairy farm size for the three months ended November 2014 was 102 hectares.

Included in sales for the month of November were 37 dairy farms at a median sale value of $36,174 per hectare. The median farm size was 108 hectares with a range of 35 hectares in Taranaki to 561 hectares in Waikato. The median production per hectare across all dairy farms sold in November 2014 was 1,004 kgs of milk solids.

The REINZ Dairy Farm Price Index fell by 6.4% in the three months to November compared to the three months to October, from 2,381.0 to 2,229.4. Compared to November 2013, the REINZ Dairy Farm Price Index rose by 20.8%. 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 November 2014 the median sale price per hectare for finishing farms was $26,545 (57 properties), compared to $31,878 for the three months ended October 2014 (45 properties), and $19,696 (82 properties) for the three months ended November 2013. The median finishing farm size for the three months ended November 2014 was 47 hectares.

Grazing Farms
For the three months ended November 2014 the median sales price per hectare for grazing farms was $14,811 (155 properties) compared to $14,290 for the three months ended October 2014 (166 properties), and $17,364 (180 properties) for the three months ended November 2013. The median grazing farm size for the three months ended November 2014 was 62 hectares.

Horticulture Farms
For the three months ended November 2014 the median sales price per hectare for horticulture farms was $188,615 (61 properties) compared to $179,894 (59 properties) for the three months ended October 2014, and $142,341 (39 properties) for the three months ended November 2013. The median horticulture farm size for the three months ended November 2014 was seven hectares.

Lifestyle Properties
The lifestyle property market saw a 1.4% fall (-23 sales) in sales volume in the three months to November 2014 compared to November 2013. 1,632 sales were recorded in the three months to November 2014 compared to 1,655 sales in the three months to November 2013. 93 more sales were recorded compared to the three months to October 2014 (+6.0%). For the 12 months to November 2014 there were 6,338 unconditional sales of lifestyle properties, an decrease of 3.7% (-242 sales) over the 12 months to November 2013.

Nine regions recorded an increase in sales compared to November 2013 while five recorded decreases in sales. Compared to October 2014, 10 regions recorded an increase in sales with three regions recording decreases.

The national median price for lifestyle blocks rose by $15,000 (+3.0%) from $500,000 for the three months to November 2013 to $515,000 for the three months to November 2014. The median price for lifestyle blocks in Auckland rose by $80,000 (+10.1%) from $795,000 for the three months to November 2013 to $875,000 for the three months to November 2014. Over the same time period, the median price rose by 8.6% in Waikato to $499,500, and fell by 1.0% in Canterbury to $560,000. Compared to October 2014, the national median sales price rose by $10,000.

The median number of days to sell for lifestyle properties improved by 10 days, from 82 days for the three months to the end of October to 72 days for the three months to the end of November. Compared to the three months ended November 2013 the median number of days to sell eased by 10 days from 62 days to 72 days. Taranaki recorded the shortest number of days to sell in November 2014 at 38 days, followed by Canterbury at 49 days and Southland at 57 days. West Coast recorded the longest number of days to sell at 183 days, followed by Wellington at 135 days, with Manawatu/Wanganui and Nelson at 118 days.

Commenting on the lifestyle property market Brian Peacocke said, “Sales volumes of lifestyle properties in the 3 month period ending November 2014 reflect a healthy increase on recent 3 month periods, although they remain slightly behind volumes recorded 12 months ago.”

“Highlights Include:
• Auckland remains the dominant region with strong activity across the board, and particularly strong focus on bare land with sub-divisional potential in the southern fringe areas;
• The Waikato market is quite selective with less enquiry from Auckland than has previously been the case;
• Bay of Plenty remains steady with good interest in the $800,000 to $1m price range and a healthy number of purchasers from outside the region;
• Figures in the lower North Island indicate a tightening in the market, but across Cook Straight in the Nelson / Marlborough region, sales have been strong, assisted by the stable interest rate environment;
• Canterbury activity is steady around the $620,000 to $850,000 range, but tapers off above $1m;
• Sales in Otago have increased 100 % in the last month with most activity in the $500,000 to $900,000 range. Strong enquiry exists for good quality, well located property although the market remains very sensitive to the strength of the wider rural market; and
• The Southland market currently is quite subdued.

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 November 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 November 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.

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REINZ_Rural_Market_Report_November_2014.pdf

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.
Editors 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 September refer to the period from 1 September 2014 to 30 november 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.

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