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REINZ Rural: An Easing in the Late Summer Market

An Easing in the Late Summer Market

Data released today by the Real Estate Institute of NZ (REINZ) shows there were 52 fewer farm sales (-11.9%) for the three months ended February 2018 than for the three months ended February 2017. Overall, there were 384 farm sales in the three months ended February 2018, compared to 396 farm sales for the three months ended January 2018 (-3.0%), and 436 farm sales for the three months ended February 2017.1,524 farms were sold in the year to February 2018, 13.5% fewer than were sold in the year to February 2017, with 20.3% more finishing farms, 19.0% more dairy farms and 32.4% fewer grazing and 36.2% fewer arable farms sold over the same period.

The median price per hectare for all farms sold in the three months to February 2018 was $27,523 compared to $27,395 recorded for three months ended February 2017 (+0.5%). The median price per hectare fell 2.6% compared to January.

The REINZ All Farm Price Index fell 4.7% in the three months to February 2018 compared to the three months to January 2018. Compared to February 2017 the REINZ All Farm Price Index rose 0.2%. 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.

Nine of 14 regions recorded decreases in the number of farm sales for the three months ended February 2018 compared to the three months ended February 2017. Otago recorded the most substantial decline in sales (-12 sales) followed by Northland and Taranaki (-11 sales). Manawatu-Wanganui (+6), Gisborne (+5) and Nelson (+4) were the three regions to increase the number of farm sales compared to February 2017. Compared to the three months ended January 2018, eight regions recorded a decrease in sales with the biggest drop being in Waikato (-8 sales).
Brian Peacocke, Rural Spokesman, at REINZ says: “Sales data for the 3 month period ending February 2018 indicates an easing in volumes over the last 12 months for all categories apart from finishing, which showed a small gain.

Of note however, is the 9.9% reduction in the Dairy Farm Price Index over the last 12 months, a likely consequence of the relatively cautious tone in the marketplace where vigorous due diligence is the norm.

“Such due diligence is being tested by the spread of mycoplasma bovis, a notifiable disease currently impacting the dairy industry, predominantly in the South Island at this stage.

“Partly as a result of this disease, there is a noticeable increase in dairy farmers seeking to buy dairy support properties, the logic being the ability to contain replacement heifers in a controlled environment rather than exposing such cattle to the risk of cross-infection which can occur on specialist grazing farms which cater for multiple-sourced grazing animals.

“The offset to the above is the favourable growing conditions experienced by many regions throughout the country, enabling producers to recover production lost earlier in the season, or to take advantage of the strong prices being paid currently for lamb and beef,” he concludes.

Points of Interest around New Zealand include:
Northland – quieter on the dairy market but good sales activity on finishing and grazing properties; sufficient rain to be having a negative impact on farms with clay soils; stimulated by new incentive payments, emerging enquiry for lower quality sheep & beef farms to change to forestry; an increasing focus on quality land suitable for kiwifruit and/or avocados, water consents being a constraint for the latter
Auckland – reduced activity in the dairy, finishing, grazing and arable sectors
Waikato – a strong upturn in sales of dairy farms where listings are solid in the eastern Waikato but slower to the south, slower results for finishing and grazing properties
Bay of Plenty – a good solid month of sales for horticultural units and steady on finishing and grazing farms in the eastern to southern areas
Gisborne/Hawke’s Bay – generally quiet across the board with sufficient activity to register in the finishing and grazing categories; good growing conditions are benefitting all farm categories
Taranaki – light on dairy sales but solid sales in the drystock sector
Manawatu/Wanganui – difficult to get any response or interest in dairy farms but strong sales of finishing units; a solid tone on grazing properties, with increasing interest in dairy support blocks due to the threat of disease in the dairy industry; good feed supplies are creating a strong livestock market
Wellington/Wairarapa – suppressed conditions with no runs on the board in any category
Nelson/Marlborough – steady activity on finishing farms and forestry blocks
Canterbury/West Coast – strong sales of finishing properties, steady on grazing and arable blocks, relatively sparse results on dairy
Otago – more interest in farms with price gap between vendors and purchasers making transactions more difficult to conclude; indications of banks adopting firmer criteria, particularly where cashflow is constrained; limited impact form mycoplasma bovis but increased enquiry on dairy support farms is anticipated
Southland – slower activity on dairy farms with considerable stocks on hand; an initial trend for dairy support farms to return to sheep; localised activity on quality drystock farms being stimulated by good feed conditions; increasing enquiry from forestry interests for land of lesser quality and in the more remote-located areas
Finishing farms accounted for the largest number of sales with a 29% share of all sales over the three months to February 2018, Grazing farms accounted for 26%, Dairy properties accounted for 23%, and Horticulture properties accounted for 11% of all sales. These four property types accounted for 90% of all sales during the three months ended February 2018.
Dairy Farms
For the three months ended February 2018, the median sales price per hectare for dairy farms was $34,238 (89 properties), compared to $37,235 for the three months ended January 2018 (96 properties), and $39,642 (91 properties) for the three months ended February 2017. The median price per hectare for dairy farms has decreased 13.6% over the past 12 months. The median dairy farm size for the three months ended February 2018 was 103 hectares.
On a price per kilo of milk solids basis the median sales price was $37.45 per kg of milk solids for the three months ended February 2018, compared to $36.91 per kg of milk solids for the three months ended January 2018 (+1.5%), and $35.45 per kg of milk solids for the three months ended February 2017 (+5.6%).
The REINZ Dairy Farm Price Index fell 6.9% in the three months to February 2018 compared to the three months to January 2018. Compared to February 2017, the REINZ Dairy Farm Price Index fell 9.9%. 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 February 2018, the median sale price per hectare for finishing farms was $30,656 (113 properties), compared to $30,328 for the three months ended January 2018 (100 properties), and $27,595 (107 properties) for the three months ended February 2017. The median price per hectare for finishing farms has risen 11.1% over the past 12 months. The median finishing farm size for the three months ended February 2018 was 40 hectares.
Grazing Farms
For the three months ended February 2018, the median sales price per hectare for grazing farms was $10,827 (101 properties) compared to $11,828 for the three months ended January 2018 (113 properties) and $12,183 (139 properties) for the three months ended February 2017. The median price per hectare for grazing farms has fallen 11.1% over the past 12 months. The median grazing farm size for the three months ended February 2018 was 131 hectares.
Horticulture Farms
For the three months ended February 2018, the median sales price per hectare for horticulture farms was $254,722 (41 properties) compared to $205,807 (47 properties) for the three months ended January 2018 and $269,034 (44 properties) for the three months ended February 2017. The median price per hectare for horticulture farms has fallen 5.3% over the past 12 months. The median horticulture farm size for the three months ended February 2018 was eight hectares.
ENDS


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