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Farm Prices Steady but Sales Volumes Falling

News Release 19 March 2015

Farm Prices Steady but Sales Volumes Falling

Summary

Data released today by the Real Estate Institute of NZ (“REINZ”) shows there were 70 fewer farm sales (-13.1%) for the three months ended February 2015 than for the three months ended February 2014. Overall, there were 464 farm sales in the three months to end of February 2015, compared to 455 farm sales for the three months ended January 2015 (+2.0%) and 534 farm sales for the three months to the end of February 2014. 1,809 farms were sold in the year to February 2015, 1.0% fewer than were sold in the year to February 2014.

The median price per hectare for all farms sold in the three months to February 2015 was $28,009 compared to $22,644 recorded for three months ended February 2014 (+23.7%). The median price per hectare rose less than 1% compared to January.

The REINZ All Farm Price Index fell 0.7% in the three months to February compared to the three months to January, moving from 3,278.5 to 3,256.6. Compared to February 2014 the REINZ All Farm Price Index rose by 2.5%. 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.

Five regions recorded increases in sales volume for the three months ended February 2015 compared to the three months ended February 2014. Canterbury recorded the largest increase in sales (+9 sales), followed by Auckland, Bay Of Plenty and Wellington with an increase of 6 sales each. Compared to the three months ended January 2015, eight regions recorded an increase in sales.

“Whilst the current 3 month period reflects a reduction in sales volumes, the tone of the market throughout the country is solid, albeit underpinned by a hint of cautious optimism”, says REINZ Rural Spokesman Brian Peacocke, “Demand in most regions remains strong, with prices experiencing upward pressure as a result of a shortage of listings.”

“The spin-off to the shortage has been a renewed focus on second-tier properties and those which for whatever reason have been on the market for some time, with sales being concluded for a number of these properties.”

Highlights Include:

• Strong activity across the full range of farms in Northland;

• A second half surge of activity in the Waikato, with a very strong level of sales in the dairy sector;

• A buoyant market for “top of the line” kiwifruit orchards in the Bay of Plenty, where the risk factor in that industry has been emphasised by the recent fruit fly incident in Auckland;

• Quieter but steady conditions in the central Plateau region;

• Busy localised activity in Taranaki with one particularly strong dairy farm sale reaching $77,000 per hectare, excluding shares;

• Solid confidence being exhibited in the Marlborough viticulture sector where emerging water supply issues are being offset by an excellent growing season and expanding markets;

• Drought conditions and a shortage of listings impacting on an otherwise steady market throughout Canterbury and Otago; and

• A restrained but confident market in Southland.

Grazing properties accounted for the largest number of sales with 43.8% share of all sales over the three months to February 2015, Dairy properties accounted for 20.9%, Finishing properties accounted for 13.6% and Horticulture properties accounted for 12.5% of all sales. These four property types accounted for 90.7% of all sales during the three months ended February 2015.

Dairy Farms

For the three months ended February 2015 the median sales price per hectare for dairy farms was $45,105 (97 properties), compared to $40,742 for the three months ended January 2015 (101 properties), and $34,499 (123 properties) for the three months ended February 2014. The median dairy farm size for the three months ended February 2015 was 114 hectares.

Included in sales for the month of February were 33 dairy farms at a median sale value of $51,418 per hectare. The median farm size was 100 hectares with a range of 29 hectares in Taranaki to 531 hectares in Canterbury. The median production per hectare across all dairy farms sold in February 2015 was 1,010 kgs of milk solids.

The REINZ Dairy Farm Price Index rose by 4.5% in the three months to February compared to the three months to January, from 1,971.0 to 2060.2. Compared to February 2014, the REINZ Dairy Farm Price Index rose by 15.1%. 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 2015 the median sale price per hectare for finishing farms was $22,186 (63 properties), compared to $23,506 for the three months ended January 2015 (60 properties), and $20,720 (117 properties) for the three months ended February 2014. The median finishing farm size for the three months ended February 2015 was 57 hectares.

Grazing Farms

For the three months ended February 2015 the median sales price per hectare for grazing farms was $16,161 (203 properties) compared to $15,640 for the three months ended January 2015 (201 properties), and $14,444 (213 properties) for the three months ended February 2014. The median grazing farm size for the three months ended February 2015 was 69 hectares.

Horticulture Farms

For the three months ended February 2015 the median sales price per hectare for horticulture farms was $264,745 (58 properties) compared to $205,634 (51 properties) for the three months ended January 2015, and $133,125 (36 properties) for the three months ended February 2014. The median horticulture farm size for the three months ended February 2015 was five hectares.

Lifestyle Properties

The lifestyle property market saw a 7.7% lift (+116 sales) in sales volume in the three months to February 2015 compared to February 2014. 1,620 sales were recorded in the three months to February 2015 compared to 1,504 sales in the three months to February 2014. Three fewer sales were recorded compared to the three months to January 2015. For the 12 months to February 2015 there were 6,454 unconditional sales of lifestyle properties, a decrease of 3.4% (-227 sales) over the 12 months to February 2014.

Six regions recorded an increase in sales compared to February 2014 while six recorded decreases in sales, and two remained the same. Compared to January 2015, six regions recorded an increase in sales with seven regions recording decreases, and one remained the same.

The national median price for lifestyle blocks rose by $14,000 (+2.7%) from $516,000 for the three months to February 2014 to $530,000 for the three months to February 2015. The median price for lifestyle blocks in Auckland rose by $138,750 (+16.1%) from $861,250 for the three months to February 2014 to $1,000,000 for the three months to February 2015, a new record median price for the region. Over the same time period, the median price fell by 6.6% in Waikato to $460,000 and rose by 6.7% in Canterbury to $634,750, a new record median for the region. Compared to January 2015, the national median sales price rose by $1,000 (+0.2%).

The median number of days to sell for lifestyle properties eased by 10 days, from 58 days for the three months to the end of January to 68 days for the three months to the end of February. Compared to the three months ended February 2014 the median number of days to sell improved by one day from 69 days to 68 days. Gisborne recorded the shortest number of days to sell in February 2015 at 46 days, followed by Taranaki at 47 days and Auckland at 48 days. West Coast recorded the longest number of days to sell at 135 days, followed by Hawkes Bay at 118 days, and Northland at 99 days.

Commenting on the lifestyle property market Brian Peacocke said, “The lifestyle market during the last quarter, apart from a drop in volumes for January 2015, has been remarkably consistent, with February sales reflecting steady gains in all regions.”

Highlights Include:

• A very strong market north of Auckland City at values up to $1m, with a discernible increase in movement to areas further north as purchasers, having benefitted from the exceptional residential market in Auckland, seek improved “out-of-city” lifestyles, and greater value for money;

• An ongoing drift from Auckland to areas south of Bombay including Tauranga and Hamilton;

• In contrast to the residential sector, reasonably hard conditions in the Waikato lifestyle market with purchasers responding more favourably to recently improved properties or where there is the opportunity to build new;

• Steady conditions in the lower North Island with Manawatu / Wanganui experiencing a good lift in volumes;

• A trend in movement north from Wellington to the Wairarapa and Horowhenua regions; and

• Solid activity through the South Island with Christchurch continuing to be the standout area from a sales volume perspective, given the constraints imposed by traffic issues to the north of the City


REINZ_Rural_Market_Report__February_2015.pdf


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