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August Provides Strong Platform For Spring Market



News Release 13 September 2012


August Provides Strong Platform For Spring Market

Summary

Sales up 20 per cent year on year
Median $/ha price steady compared to July, up 18.5 per cent year on year
New Dairy Farm Price Index launched
Horticulture sales increasing in Auckland and Nelson regions

Data released today by the Real Estate Institute of NZ (“REINZ”) shows there were 53 more farm sales (+20.0%) for the three months ended August 2012 than for the three months ended August 2011. Overall, there were 318 farm sales in the three months to end of August 2012, compared with 356 farm sales in the three months to July 2012, a decrease of 38 sales (-10.7%).

1,451 farms were sold in the year to August 2012, 44.7% more than were sold in the year to August 2011. The number of farms sold on an annual basis is now the highest since April 2009.

The median price per hectare for all farms sold in the three months to August 2012 was $17,955; an 18.5% increase on the $15,148 recorded for three months ended August 2011. The median price per hectare was steady compared to July 2012.

The REINZ All Farm Price Index eased by 4.3% in the three months to August compared to the three months to July, from 2,824.1 to 2,702.8. Compared to August 2011 the REINZ All Farm Price Index has eased by 1.5%. Further details on the REINZ All Farm Price Index are set out below.

Half the regions recorded increases in sales volumes for the three months ended August 2012 compared to the three months ended August 2011. Canterbury recorded the largest increase in sales (+21 sales), followed by Auckland (+17 sales) and Nelson (+14 sales). Southland recorded nine fewer sales followed by Otago (-8 sales) and Taranaki (-4 sales) in the three months to August 2012 compared to the three months to August 2011. Compared to the three months ended July 2012 five regions recorded an increase in sales, lead by Nelson (+6 sales).

“The early spring, with strong pasture growth and good early production is providing a platform for farm sales during spring,” says REINZ Rural Market Spokesman Brian Peacocke. “Despite the reduction in the dairy payout the market is seeing solid enquiry for dairy farms, and continued interest in sheep and beef properties driven by expectations of a recovery in commodity prices.”

“While there is still uncertainty in the rural sector generally, driven by offshore factors and exchange rates the good growing conditions and continued low interest rates auger well for a good farm sales market during the next quarter.”

Grazing properties accounted for the largest number of sales with 50.0% share of all sales over the three months. Finishing properties accounted for 17.6%, with Horticulture properties accounting for 12.9% and Dairy properties 6.6% of all sales. These four property types accounted for 87.1% of all sales during the three months ended August 2012.

Dairy Farms
For the three months ended August the median sales price per hectare for dairy farms was $24,492 (21 properties), compared to $22,679 for the three months ended July 2012 (29 properties), and $31,050 (28 properties) for the three months ended August 2011. The median dairy farm size for the three months ended August 2012 was 134 hectares.

Included in sales for the month of August were five dairy farms at a median sale value of $21,408 per hectare. The median farm size was 324 hectares with a range of 125 hectares on the West Coast to 445 hectares, also on the West Coast. The median production per hectare across all dairy farms sold in July 2012 was 716kgs of milk solids.

REINZ is today introducing an additional farm price index to complement the All Farm Price Index launched at the end of July. The new Dairy Farm Price index is based on the same methodology as the All Farm Price Index and is focused only on sales of dairy farms. This new Index will give farmers and investors in the dairy sector a more accurate guide to the direction of dairy farm prices excluding the impacts of location and farm size.

Commenting on the Dairy Farm Price Index Brian Peacocke said, “The REINZ Dairy Farm Price Index extends coverage of our rural information to cover this important part of the farming sector. The All Farm Price Index has been well received and this new additional tool will provide additional insight into the trends and direction of dairy farm sales.” Details on the REINZ Dairy Farm Index are set out below.


Finishing Farms
For the three months ended August 2012 the median sales price per hectare for finishing farms was $20,941 (56 properties), compared to $23,028 for the three months ended July 2012 (71 properties), and $14,557 (44 properties) for the three months ended August 2011. The median finishing farm size for the three months ended August 2012 was 52 hectares.

Grazing Farms
For the three months ended August 2012 the median sales price per hectare for grazing farms was $11,297 (159 properties) compared to $13,023 for the three months ended July 2012 (190 properties), and $10,294 (140 properties) for the three months ended August 2011. The median grazing farm size for the three months ended August 2012 was 77 hectares.

Horticulture Farms
For the three months ended August 2012 the median sales price per hectare for horticulture farms was $130,000 (41 properties) compared to $130,000 (29 properties) for the three months ended July 2012, and $82,000 (15 properties) for the three months ended August 2011. The median horticulture farm size for the three months ended August 2012 was five hectares.

Lifestyle Properties

The lifestyle property market saw a 6.4% increase in sales volume in the three months to August 2012 compared to August 2011. 1,387 sales were recorded in the three months to August 2012 compared to 1,304 sales in the three months to August 2011. 127 fewer sales were recorded compared to the three months to July 2012 (-8.4%); on a seasonally adjusted basis lifestyle sales fell by 3.8%.

Just two regions recorded increases in sales compared to July while twelve recorded decreases. Gisborne recorded the largest increase (+3 sales), followed by West Coast (+1 sale). Canterbury recorded the largest fall in sales (-30 sales), followed by Northland (-25 sales) and Auckland (-24 sales).

The national median price for lifestyle blocks eased by $20,000 (-4.2%) from $475,000 for the three months to July 2012 to $455,000 for the three months to August 2012. Compared to three months to August 2011 the median price also rose by $11000 (+2.5%).

The number of days to sell for lifestyle properties eased by four days, from 84 days for the three months to the end of July to 88 days for the three months to the end of August. Compared to the three months ended August 2011 the number of days to sell improved by 12 days from 100 days to 88 days. Gisborne recorded the shortest number of days to sell in August at 52 days, followed by Canterbury at 56 days and West Coast at 66 days. Otago recorded the longest number of days to sell at 150 days, followed by Wellington at 128 days and Manawatu/Wanganui at 118 days.

Commenting on the lifestyle property market statistics Brian Peacocke said, “Activity in the lifestyle market remains steady with little change over the past three months. There is good activity in the $600,000 - $1m price range in the Rodney and Kaipara districts in the Auckland region and increasing enquiry in the $1m - $2m price range in the Franklin and Hunua districts south of Auckland city. Buyers from Auckland and Christchurch are boosting enquiry in the central Waikato region, particularly in the $600,000 - $800,000 price range. The lifestyle market in the Bay of Plenty is still suffering from the fallout from the PSA devastation in the kiwifruit sector whilst activity across the rest of New Zealand is relatively consistent for this time of the year. Most regions are anticipating increasing activity as we progress further into the spring.”

REINZ All Farm Price Index – Additional Data
The table below sets out the returns for the REINZ All Farm Price Index for the three months ending August 2012.

The graph below shows the trends in the REINZ All Farm Price Index compared to an index of movements in the $/hectare measure of farm prices.

REINZ Dairy Farm Price Index – Additional Data
The table below sets out the returns for the REINZ Dairy Farm Price Index for the three months ending August 2012.

The graph below shows the trends in the REINZ Dairy Farm Price Index compared to an index of movements in the $/hectare measure of farm prices.

ends

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