Data released today by the Real Estate Institute of New Zealand (REINZ) shows there were 41 less farm sales (-11.1%) for the three months ended February 2020 than for the three months ended February 2019. Overall, there were 329 farm sales in the three months ended February 2020, compared to 363 farm sales for the three months ended January 2020 (-9.4%), and 370 farm sales for the three months ended February 2019. 1,253 farms were sold in the year to February 2020, 14.8% fewer than were sold in the year to February 2019, with 37.0% less Dairy farms, 10.0% less Grazing farms, 27.9% less Finishing farms and 9.9% less Arable farms sold over the same period.

The median price per hectare for all farms sold in the three months to February 2020 was $20,569 compared to $22,462 recorded for three months ended February 2019 (-8.4%). The median price per hectare decreased 3.1% compared to January 2020.

The REINZ All Farm Price Index fell 2.0% in the three months to February 2020 compared to the three months to January 2020. Compared to the three months ending February 2019 the REINZ All Farm Price Index fell 13.7%. 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.

Four of the 14 regions recorded an increase in the number of farm sales for the three months ended February 2020 compared to the three months ended February 2019 with the most notable being Northland (+10) and Manawatu/Wanganui and Wellington (+2 each). Taranaki recorded the most substantial decline in sales (-21) followed by Hawke’s Bay (-12 sales). Compared to the three months ended January 2020, four regions recorded an increase in sales with the biggest increase being in Southland (+3) and Northland (+2)

Brian Peacocke, Rural Spokesman, at REINZ says: “Sales data for the 3-month period ending February 2020 reflect a rural industry under pressure in terms of volumes and values, particularly as that relates to the dairy sector.

“The pressure is being exacerbated by two factors in particular:

• an extreme weather event, with severe drought conditions impacting all of the North Island and up to 50% of the South Island, the lower south being an exception
• an extreme financial event, with the total rural sector being impacted by the severe tightening of financial criteria being applied by the trading banks, with two being the exception to the rule

“The combination of those two events, quite apart from the threat of COVIS-19, is creating downward pressure on the ability of many soundly structured rural operations to grow their business as they would like in spite of the availability of some great opportunities and extremely low interest rates.

“The low interest rates are of no meaning if the banks will not lend the money.

“Reports from around the countryside indicate an increasing degree of frustration within the rural sector and an increasing erosion of confidence.

“In spite of the above, reports also indicate that if the current financial constraints were uplifted, the rural sector in its broadest context has the ability to dramatically increase its output and therefore its overall earnings, and in so doing, solve many of the financial dilemmas currently impacting the NZ economy,” he concludes.

Points of interest from around New Zealand include the following: -

• Northland/Auckland - a sprinkling of dairy sales at modest values in the upper North, light on sales of finishing properties but still achieving reasonable sales of grazing units; one interesting sale of an avocado block in the Awanui district; very light rural activity within the Auckland region
• Waikato – a solid increase in dairy farm sales with some good strong results in the Matamata and Waipa districts; a good sale of an equine property at Matamata and ongoing activity in the finishing and grazing sectors
• Bay of Plenty/Rotorua - several strong horticulture sales in the Western Bay of Plenty plus one out of the box at Edgecombe; finishing and grazing sales registered strongly, albeit smaller properties
• Gisborne/Hawke’s Bay - strong results on smaller finishing and horticulture properties, the latter including a vineyard and a persimmon orchard; steady activity with larger grazing and smaller finishing units in the Wairoa and Hastings districts plus a substantial citrus/cropping unit north of Napier; some forestry activity on marginal land; reports of buyers lacking commitment and banks being difficult
• Taranaki - a tough market albeit light results with one dairy farm sale and one dairy support transaction; limited listings attracting limited response with any offers pitched at the bottom end of the price scale; banks appear to have “shut up shop” and the TSB is reported to be withdrawing from the rural market
• Manawatu/Wanganui - light activity throughout the region where dry conditions dominate, arable being the variation with steady results within that sector; Tararua again proved the exception with reasonable activity in the dairy support, finishing and arable sectors
• Wairarapa/Wellington - limited activity with one good arable sale and light results in the grazing sector; reasonable enquiry for sheep and beef; some banks have “shut up shop”
• Nelson/Marlborough - drought conditions have dominated the market but such conditions are ideal for viticulture and hop growers; reports of the former sector expanding and dairy land being converted to hops; a reasonable mood throughout the region where strength is attributed to changes in land use
• Canterbury/West Coast - a tight market with the region experiencing a re-setting of values; solid sales of dairy support, finishing and grazing properties with activity spread throughout; reports of a shortage of listings with the tough stance from the banks impacting heavily on confidence; like other regions, the hardest market experienced over recent times with only one dairy farm sale in the last 9 months
• Otago - some activity on finishing and grazing properties with forestry enquiry underpinning lower end values; spasmodic changes in land use in Central Otago with cherries, apples and grapes being under consideration; banks being hard, particularly on dairy; a tighter market with deals harder to put together
• Southland – a brighter month in the deep south where an abundance of rain has created both flooding with attendant grief as well as better feed conditions in other parts of the province; good solid results on the dairy front with prices ranging from mid $30’s/hectare to mid $40’s/hectare; these being backed up with steady activity at good prices in the finishing and arable sectors.

Grazing farms accounted for the largest number of sales with a 34% share of all sales over the three months to February 2020, Finishing farms accounted for 24%, Dairy accounted for 15% and Horticulture accounted for 8% of all sales. These four property types accounted for 82% of all sales during the three months ended February 2020.

Dairy Farms

For the three months ended February 2020, the median sales price per hectare for dairy farms was $35,142 (50 properties), compared to $35,967 (43 properties) for the three months ended January 2020, and $35,807 (55 properties) for the three months ended February 2019. The median price per hectare for dairy farms has decreased 1.9% over the past 12 months. The median dairy farm size for the three months ended February 2020 was 100 hectares.

On a price per kilo of milk solids basis the median sales price was $35.29 per kg of milk solids for the three months ended February 2020, compared to $38.72 per kg of milk solids for the three months ended January 2020 (-8.8%), and $37.87 per kg of milk solids for the three months ended February 2019 (-6.8%).

The REINZ Dairy Farm Price Index fell 1.9% in the three months to February 2020 compared to the three months to January 2020. Compared to February 2019, the REINZ Dairy Farm Price Index fell 9.7%. 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 February 2020, the median sale price per hectare for finishing farms was $28,911 (80 properties), compared to $30,032 (98 properties) for the three months ended January 2020, and $28,872 (106 properties) for the three months ended February 2019. The median price per hectare for finishing farms has risen 0.1% over the past 12 months. The median finishing farm size for the three months ended February 2020 was 34 hectares.

Grazing Farms

For the three months ended February 2020, the median sales price per hectare for grazing farms was $10,090 (112 properties), compared to $9,910 (125 properties) for the three months ended January 2020 and $9,700 (124 properties) for the three months ended February 2019. The median price per hectare for grazing farms has risen 4.0% over the past 12 months. The median grazing farm size for the three months ended February 2020 was 153 hectares.

Horticulture Farms

For the three months ended February 2020, the median sales price per hectare for horticulture farms was $243,421 (27 properties), compared to $283,807 (24 properties) for the three months ended January 2020 and $164,176 (36 properties) for the three months ended February 2019. The median price per hectare for horticulture farms has risen 48.3% over the past 12 months. The median horticulture farm size for the three months ended February 2020 was 8 hectares.

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