Rural Sales Volumes Ease Back After Strong Run

News Release 12 August 2011

Rural Sales Volumes Ease Back After Strong Run

Data released today by the Real Estate Institute of NZ (“REINZ”) shows there was a pull back in the of number rural sales across New Zealand in three months to July 2011. Overall, there were 301 farm sales in the three months to end of July 2011 compared with 393 sales in the three months to June 2011 and 262 sales in the three months to July 2010.

The median price per hectare for all farms sold in the three months to July 2011 was $14,649 compared to $15,568 in the three months to June 2011 and $17,901 for the three months to July 2010. The median price per hectare is now at its lowest point since September 2003 and continues the downward trend in median prices evident since early 2009.

The drop in the number of sales reverses the trend of the past four months, which has seen sales increase from 190 in the three months ended March 2011 to 393 in the three months ended June 2011. All regions bar one recorded a fall on sales for the three months ended July, with Southland, Canterbury and Otago recording the largest number of falls. However, the number of sales for the three months ended July 2011 was 39 greater than for the three months ended July 2010.

The number of farm sales for the year ended July 2011 was 957, 3 less than the number of farm sales for the year ended June 2011, and up from 942 sales recorded for the year ended July 2010.

“The drop in farm sales for the three months to July reflects the time of year and the focus of famers on seasonal workloads,” says REINZ Rural Market Spokesman Brian Peacocke. “Famers are keenly watching events in financial markets and the trend in the New Zealand dollar. The high dollar over the past few weeks is causing some concern, however, the outlook for the currency is difficult to predict and the situation, particularly in respect of the United States remains volatile. Nevertheless, forward enquiry for quality properties remains positive.”

“As we have seen in the past few months most of the sales activity was in the grazing, finishing and dairy support properties, with the Canterbury, Otago and Southland once again the most active regions. Prices for farms sold in July are consistent with values achieved over the past few months. The decline in the median price per hectare reflects the lower number of dairy farms sold over the winter period,” said Mr Peacocke.

The easing of farm prices, as shown by the median price data, continues with the quarterly median price below the 12 month moving average (red line on the chart below).. Included in sales for the month of July were 7 dairy farms at an average sale value of $27,151 per hectare and $25 per kg of milk solids (MS). The average farm size was 251 hectares with a range of 50 hectares in Northland to 709 hectares in Otago. The average production per hectare across all dairy farms sold in July 2011 was 1,096 kgs of milk solids.

Grazing properties accounted for the largest number of sales with 51.8% share of all sales over the three months. Dairy properties accounted for 13.6%, Finishing properties 15.9% and Horticulture properties 6.0%. These four property types accounted for 87.3% of all sales during the three months ended July 2011.

For the three months ended July 2011 the median sales price per hectare for dairy farms was up just over $2,000 per hectare $32,854 (41 properties) compared to the three months ended June 2011 (58 properties), and $36,667 (27 properties) for the three months ended July 2010. The median dairy farm size for the three months ended July 2011 was 134 hectares.

For the three months ended July 2011 the median sales price per hectare for finishing farms was $12,050 (48 properties) compared to $10,377 for the three months ended June 2011 (59 properties), $ $5,000 $10,000 $15,000 $20,000 $25,000 $30,000 $35,000 Jul01 Jan0 2 Ju l 02 Jan 0 3 Ju l 03 Jan0 4 Jul0 4 Jan 05 Jul05 Jan06 Jul06 Jan07 Jul07 Jan08 Jul08 Jan09 Jul09 Jan10 Jul10 Jan11 Jul11 Qu a rterl y M e di an $/h a All Farm Sales New Zealand Sour c e: R E I N Z and $8,429 (39 properties) for the three months ended July 2010. The median finishing farm size for the three months ended July 2011 was 155 hectares.

For the three months ended July 2011 the median sales price per hectare for grazing farms was $10,935 (156 properties) compared to $12,892 for the three months ended June 2011 (209 properties), and $13,333 (129 properties) for the three months ended July 2010. The median grazing farm size for the three months ended July 2011 was 101 hectares.

For the three months ended July 2011 the median sales price per hectare for horticulture farms was $114,794 (18 properties) compared to $132,401 for the three months ended June 2011 (24 properties), and $160,268 (42 properties) for the three months ended July 2010. The median horticulture farm size for the three months ended July 2011 was 5 hectares.

The lifestyle property market also saw an easing in the number of sales in the three months to July 2011 compared to the three months to June 2011. 1,367 sales were recorded in the three months to July, down 19 (1.4%) on the three months to June 2011, but up a strong 279 (+25.6%) compared to the three months to July 2010. Manawatu/Wanganui and Northland saw the largest falls in volumes, with Bay of Plenty and West Coast recording the strongest increases.

The national median price eased $7,000 from $460,000 for the three months to June 2011 to $453,000 for the three months to July. Compared to three months to July 2010 the median price increased by $5,500.

Commenting on the lifestyle property market statistics Brian Peacocke said, “The lifestyle property market also saw a reduction in volumes albeit quite modest in July compared to June, and the number of sales is up strongly compared to July last year. The median price for lifestyle blocks also pulled back in July compared to June, but is also ahead of the median price compared to July last year.”

ENDS

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