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Late Autumn Easing

Late Autumn Easing

Data released today by the Real Estate Institute of New Zealand (REINZ) shows there were 63 less farm sales (-14.2%) for the three months ended May 2019 than for the three months ended May 2018. Overall, there were 380 farm sales in the three months ended May 2019, compared to 362 farm sales for the three months ended April 2019 (+5.0%), and 443 farm sales for the three months ended May 2018. 1,409 farms were sold in the year to May 2019, 3.1% fewer than were sold in the year to May 2018, with 34.2% less Dairy farms, 26.3% more Grazing farms, 13.8% less Finishing farms and 6.7% less Arable farms sold over the same period.

The median price per hectare for all farms sold in the three months to May 2019 was $22,244 compared to $26,219 recorded for three months ended May 2018 (-15.2%). The median price per hectare decreased 1.7% compared to April 2019.

The REINZ All Farm Price Index fell 4.0% in the three months to May 2019 compared to the three months to April 2019. Compared to May 2018 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.

Five of the 14 regions recorded increases in the number of farm sales for the three months ended May 2019 compared to the three months ended May 2018. Gisborne (+9), Northland (+2) and Hawke’s Bay (+1), Taranaki (+1) and Nelson (+1) were the top regions to increase the number of farm sales compared to May 2018. Waikato recorded the most substantial decline in sales (-21 sales) followed by Bay of Plenty (-13 sales). Compared to the three months ended April 2019, eight regions recorded an increase in sales with the biggest increase being in Canterbury (+14 sales).

Brian Peacocke, Rural Spokesman, at REINZ says: “Nationwide sales data for the 3 month period ending 31 May 2019 confirms the general easing in sales activity currently being experienced around the country compared to the equivalent period 12 months ago.

“In spite of that trend, however, sales activity for the month of May 2019 alone has continued surprisingly well in most land use categories compared to mid-autumn figures, the exception being a solid lift in sales numbers for grazing properties.

“On the rural front, discontent smoulders strongly in a number of regions, fanned particularly by the ongoing emergence of evidence of sales of good pastoral land to forestry interests, this activity being aided and abetted by the Overseas Investment Office providing an environment conducive to investment from off-shore interests.

“This factor, coupled with the inexorable grind of the full range of compliance issues and an evident hardening of lending criteria from within the banking sector is adding to a mood of widespread concern and caution within the rural sector.

“Product prices continue on a solid note, albeit volatility in prices being paid under the Global Dairy Trade auction system, plus the diminishing values of Fonterra shares, is causing farmers and financiers alike to gauge and re-assess budgets and equity situations within the dairy industry,” he concludes.

Points of Interest around New Zealand include:
Northland - minimal activity on dairy, light on finishing properties but strong sales of grazing units, for similar reasons to those reported previously
Waikato - dairy farm sales remain comparable to the last 6 months but are 50% less than 12 months ago; solid activity on finishing properties with some very strong prices paid; a lower level of activity for grazing units in the Northern King Country and Taupo districts
Bay of Plenty/Rotorua - no dairy farm sales, minimal activity on finishing and grazing units but consistently strong on the horticultural front with 12 sales recorded for the month of May

Gisborne/Hawke’s Bay - lighter sales volumes of grazing properties, zero on finishing; reasonable sales of horticultural properties including a larger citrus producing unit in the Gisborne district

Taranaki - solid sales of finishing properties at strong prices; reasonable activity on grazing blocks and lighter on dairy with only one sale recorded for May

Manawatu/Wanganui - a boomer month for sales of grazing units at good prices with the Tararua district in particular featuring strongly; some sales of finishing blocks have kept the records intact throughout the province
Wairarapa/Wellington - a tough month of May for the region with zero sales of pastoral properties, and one cropping unit

Nelson/Marlborough - good morale throughout the region which reflects a healthy level of sales of both finishing and grazing units with some very good prices paid; one solid dairy farm sale and acceptable results within the horticultural sector
Canterbury - a much needed improvement within the region with steady activity on dairy farms; a good level of sales of finishing properties at solid prices but a big uplift in sales of grazing units at steady prices, including a surge of sales within the MacKenzie and Waimate districts

Otago - a continuation of the recent steady level of sales of both grazing and finishing units sprinkled evenly throughout the region
Southland - an upturn in dairy farm sales with 5 for the month of May, backed up by consistent activity and sales of finishing and grazing properties and as is the case in a number of other regions, some frustration being voiced regarding the banking sector.

Grazing farms accounted for the largest number of sales with a 37% share of all sales over the three months to May 2019, Finishing farms accounted for 25%, Horticulture accounted for 16%, and Dairy properties accounted for 10% of all sales. These four property types accounted for 88% of all sales during the three months ended May 2019.
Dairy Farms
For the three months ended May 2019, the median sales price per hectare for dairy farms was $31,248 (39 properties), compared to $30,243 (41 properties) for the three months ended April 2019, and $35,901 (74 properties) for the three months ended May 2018. The median price per hectare for dairy farms has decreased 13.0% over the past 12 months. The median dairy farm size for the three months ended May 2019 was 143 hectares.
On a price per kilo of milk solids basis the median sales price was $32.17 per kg of milk solids for the three months ended May 2019, compared to $31.78 per kg of milk solids for the three months ended April 2019 (+1.2%), and $36.45 per kg of milk solids for the three months ended May 2018 (-11.7%).
The REINZ Dairy Farm Price Index increased 4.9% in the three months to May 2019 compared to the three months to April 2019. Compared to May 2018, the REINZ Dairy Farm Price Index fell 3.7%. 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 May 2019, the median sale price per hectare for finishing farms was $30,908 (95 properties), compared to $30,878 (94 properties) for the three months ended April 2019, and $29,093 (145 properties) for the three months ended May 2018. The median price per hectare for finishing farms has risen 6.2% over the past 12 months. The median finishing farm size for the three months ended May 2019 was 32 hectares.
Grazing Farms
For the three months ended May 2019, the median sales price per hectare for grazing farms was $10,572 (139 properties) compared to $10,640 (127 properties) for the three months ended April 2019 and $10,687 (120 properties) for the three months ended May 2018. The median price per hectare for grazing farms has fallen 1.1% over the past 12 months. The median grazing farm size for the three months ended May 2019 was 143 hectares.
Horticulture Farms
For the three months ended May 2019, the median sales price per hectare for horticulture farms was $281,384 (62 properties) compared to $282,586 (54 properties) for the three months ended April 2019 and $277,842 (60 properties) for the three months ended May 2018. The median price per hectare for horticulture farms has risen 1.3% over the past 12 months. The median horticulture farm size for the three months ended May 2019 was 7 hectares.
ENDS


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