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Confidence Continues To Build In Rural Market

For immediate release

News Release 14 December 2009
Confidence Continues To Build In Rural Market

Confidence continues to return to the rural property market, says REINZ President Peter McDonald commenting on the rural sales figures released today by the Real Estate Institute of New Zealand (REINZ).

The latest REINZ Rural Market Report shows the total number of farms sold in the three months to November 2009 was 223, which was the highest number of sales for several months. This compares to 348 farms sold in the three months to November 2008 and 684 in the three months to November 2007. It was an 8.8 percent increase over the 205 reported sales in the three month period to October 2009.

“There appears to be building confidence in the rural property market,” Mr McDonald says. “However, despite a lot of interest and some attractive rural properties on the market, there haven’t been as many confirmed sales as we had anticipated during this period. The number of sales appears to have been affected by the tightening up of lending criteria in the current economy.”

The greatest number of farm sales was recorded in Canterbury (28) and Waikato (24). There were 23 farms sold in the Manawatu/ Wanganui region, 22 in Bay of Plenty, and 19 each in Northland and Auckland.

The value of farm prices in a three year comparison has dropped in the three months to November 2009 to a national median of $880,000 compared to $1,500,000 in the three months to November 2007 and $1,542,750 in the three months to November 2008. It is slightly up on the median price of $875,000 in the three months to October 2009.

“The drop in median price can be attributed to the fact there are a lot less properties on the market and no substantial dairy farms have changed hands. We haven’t seen any real drop in the actual price of land,” Mr McDonald says.

Around the country, there were nine regions that experienced rises in farm median sales prices and four regions where farm median sale prices remained static or fell. The biggest rises were in Taranaki, where the median price rose from $1,000,000 in the three months to October 2009 to $1,235,000 in the three months to November 2009; in Waikato (up from $1,462,500 to $1,612,500) and West Coast (up from $103,634 to $195,817).

Grazing accounted for the largest number of farms by type, with 114 sales recorded throughout the country in the three months to November 2009. There were 35 horticulture properties sold, 25 finishing farms and 19 dairy farms.

“The average size of the dairy farms sold was 105 hectares. The price per hectare for those farms was around $35,000, with an average of $40/kg of milk solids. The average milk solid production for these farms was 845kg/ha.”

Lifestyle properties have also continued to perform strongly, representing good 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 November 2009 was $455,000, up $10,000 on the three months to October 2009 at $445,000. This compares to $450,000 and $445,000 in the corresponding three month periods to November in 2007 and 2008.

Prices were highest in Auckland ($745,000) and Nelson ($515,000), with the most modest median for lifestyle properties to be found in Southland ($254,000) and on the West Coast ($225,000). Almost all regions experienced an increase in the median selling prices for a lifestyle property with the exception of Auckland, Gisborne and Manawatu/Wanganui.

A total of 1,413 lifestyle properties were sold in the three months to November 2009 compared with 1,378 in the three months to October 2009; well up on the 1,015 sold in the three months to November 2008 but down on the 1,798 sold in the corresponding period in 2007.


ENDS

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