REINZ Rural Market Report
For immediate release
14 November 2009
The Fonterra payout announcement was great news for farmers, but whether or not it will have a flow on effect in rural real estate sales and land values depends on banks’ lending policies, says REINZ President Peter McDonald commenting on rural figures released today by the Real Estate Institute of New Zealand (REINZ).
“The new payout is extremely welcome news,” Mr McDonald says, “and it will change a lot of people’s budgets, encouraging greater confidence, but to date banks have been reluctant to show their hand and as a result, a lot fewer farms have been sold this year than you would usually expect at this time of the year.”
The latest REINZ Rural Market Report shows the total number of farms sold in the three months to October 2009 was 205 compared with 390 in the three months to October 2008 and 582 in the three months to October 2007. There was, however, an increase over the 178 reported sales in the three month period to September 2009.
The greatest number of sales were recorded in Canterbury (31) and Bay of Plenty (28). Twenty farms were sold in Northland, 18 in Waikato and 17 in Auckland.
The value of farm prices in a three year comparison has dropped in the three months to October 2009 to a national median of $875,000 compared with $1,305,000 in the three months to October 2007 and $1,500,000 in the three months to October 2008 at the peak of the Fonterra payouts. It is slightly down on the median price of $877,500 in the three months to September 2009.
Around the country, there were six falls, four rises and four regions where farm median sale prices remained static. The biggest rises were in Auckland, where the median price rose from $824,500 in the three months to September 2009 to $903,000 in the three months to October 2009; in Taranaki (up from $666,250 to $1,000,000) and Manawatu / Wanganui (up from $1,080,000 to $1,190,000).
Grazing accounted for the largest number of farms by type, with 111 sales recorded throughout the country in the three months to October 2009. There were 35 horticulture properties sold and 25 finishing farms with just nine dairy.
However Mr McDonald says market sources suggest there is a strong interest in dairy farms, “although it is still early in the season,” he says.
While farm prices were unimpressive in the period covered by the latest rural report, lifestyle properties have performed strongly, demonstrating investment value, with turnover and prices up on the previous period.
The national median selling price for a lifestyle property in the three months to October 2009 was $445,000, well up on the three months to September 2009 at $430,000. This compares to $428,000 and $425,278 in the corresponding periods in 2007 and 2008.
Prices were highest in Auckland ($750,000) and Nelson ($507,500), with the median for the most modest lifestyle properties to be found in Southland ($235,000) and on the West Coast ($220,000).
A total of 1378 lifestyle properties were sold in the three months to October 2009 compared with 1365 in the three months to September 2009; well up on the 1,054 sold in the three months to October 2008 but down on the 1,672 sold in the corresponding period in 2007.
Mr McDonald says the next few months on the rural real estate market will be interesting to observe.
“Until we know what the banks’ policies are going to be, it’s a matter of ‘wait and see’. “