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Winter closes quietly – stronger spring anticipated

Data released today by the Real Estate Institute of New Zealand (REINZ) shows there were -51 less farm sales (-14.3%) for the three months ended August 2021 than for the three months ended August 2020. Overall, there were 306 farm sales in the three months ended August 2021, compared to 364 farm sales for the three months ended July 2021 (-15.9%), and 357 farm sales for the three months ended August 2020.

1,680 farms were sold in the year to August 2021, 37.3% more than were sold in the year to August 2020, with 153.8% more Dairy farms, 1% more Dairy Support, 24.4% more Grazing farms, 50.8% more Finishing farms and 46.4% less Arable farms sold over the same period.

The median price per hectare for all farms sold in the three months to August 2021 was $27,250 compared to $25,460 recorded for three months ended August 2020 (+7%). The median price per hectare increased0.3% compared to July 2021.

The REINZ All Farm Price Index increased 0.9% in the three months to August 2021 compared to the three months to July 2021. Compared to the three months ending August 2020 the REINZ All Farm Price Index increased 14.6%. 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.

Four regions recorded an increase in the number of farm sales for the three months ended August 2021 compared to the three months ended August 2020, with the most notable being Nelson/Marlborough (+11 sales) and Southland (+6 sales). Manawatu-Wanganui ( -22 sales) and Wellington ( -15 sales) recorded the biggest decreases in sales. Compared to the three months ended July 2021, no regions recorded an increase in sales.

Brian Peacocke, Rural Spokesman at REINZ says: “Sales figures for the most recent three month period reflect both the time of the year, when the rural sector is busy with calving and lambing, and the impact of the COVID-19 influenced lockdown, with both factors impacting on sluggish sales results.

“From a national perspective for the period, arable sales were down 66% from the same time last year; finishing sales eased 13%; grazing sales dropped 20% and horticulture sales eased 15%. The dairy sector was the bright spot with 29 sales for the three month period, an increase of 262% from the eight sales recorded in the period ending August 2020.

“Given the eventual freeing up of the lockdown however, prospects for the rural sector look bright: -

  • The dairy payout is close to the peak experienced in recent years
  • Beef prices reflect the mix of strong market conditions and a shortage of supply
  • Lamb returns are strong with record prices being paid at saleyards
  • Horticulture income is healthy across the broad spectrum of the kiwifruit, avocado, pip-fruit, stone-fruit, and viticulture sectors
  • Fine wool returns continue to dominate the strong wool sector, where a carpet-induced lifeline is tantalizingly close to the latter
  • The financial sector is portraying an encouraging stance despite a predicted increase in the official cash rate which, if and when it occurs, will impact on the retail market for interest rates
  • Regretfully however, labour, compliance and environmental issues continue to lurk and frustrate,” he concludes.

Points of Interest around New Zealand include:

Upper North

  • Northland recorded results in all categories, with sales of finishing, grazing and horticulture properties registering comfortably for this time of year
  • Auckland by comparison dropped into the minimum sales zone with light results in the main categories.

Central Regions

  • Dairy farm sales in the Waikato, King Country and Taupo regions were steady and more solid than in the previous two seasons, with finishing and grazing sales just getting on the register
  • Bay of Plenty remained solid in the horticulture sector where smaller avocado orchards dominated; activity in the Rotorua district remained modest
  • Gisborne recorded a single grazing unit sale with the mirror image in Hawke’s Bay bolstered by the sale of a versatile pip-fruit/stone fruit orchard
  • Taranaki scored light runs in 3 of the 7 categories.

Lower North Island

  • Sales in the Manawatu, Wanganui, Tararua regions were uncharacteristically light with minimal results recorded
  • This trend was exacerbated with zero results in the Wairarapa and Wellington districts.

Upper South Island

  • Light results for the Nelson, Tasman, Marlborough province with minimal sales in each category
  • Constrained activity within the arable, finishing, grazing and forestry sectors throughout Canterbury, where promising activity is building up in the dairy sector
  • West Coast scored two runs on the grazing scoreboard.

Lower South Island

  • Otago achieved steady outcomes for finishing and grazing properties, albeit considerably down on results from 12 months ago
  • Southland maintained par with their northern neighbors with steady sales of finishing and grazing properties.

In August 2021, Finishing farms accounted for a 31% share of all sales. Grazing farms accounted for 29% of all sales, Horticulture farms accounted for 15% of all sales and Dairy farms accounted for 9% of all sales. These four property types accounted for 84% of all sales during the three months ended August 2021.

Dairy Farms

For the three months ended August 2021, the median sales price per hectare for dairy farms was $41,830 (29 properties), compared to $35,740 (36 properties) for the three months ended July 2021, and $32,885 (8 properties) for the three months ended August 2020. The median price per hectare for dairy farms has increased 27.2% over the past 12 months. The median dairy farm size for the three months ended August 2021 was 122 hectares.

On a price per kilo of milk solids basis the median sales price was $40.93 per kg of milk solids for the three months ended August 2021, compared to $33.30 per kg of milk solids for the three months ended July 2021 (+22.9%), and $ 31.60 per kg of milk solids for the three months ended August 2020 (+29.5%).

The REINZ Dairy Farm Price Index increased 6.9% in the three months to August 2021 compared to the three months to July 2021. Compared to August 2020, the REINZ Dairy Farm Price Index increased 15.7%. 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 August 2021, the median sale price per hectare for finishing farms was $31,010 (95 properties), compared to $33,380 (120 properties) for the three months ended July 2021, and $32,670 (109 properties) for the three months ended August 2020. The median price per hectare for finishing farms has decreased -5.1% over the past 12 months. The median finishing farm size for the three months ended August 2021 was 36 hectares.

Grazing Farms

For the three months ended August 2021, the median sales price per hectare for grazing farms was $11,670 (89 properties), compared to $11,905 (112 properties) for the three months ended July 2021 and $11,155 (112 properties) for the three months ended August 2020. The median price per hectare for grazing farms has increased 4.6% over the past 12 months. The median grazing farm size for the three months ended August 2021 was 119 hectares.

Horticulture Farms

For the three months ended August 2021, the median sales price per hectare for horticulture farms was $291,640 (45 properties), compared to $247,250 (47 properties) for the three months ended July 2021 and $270,400 (53 properties) for the three months ended August 2020. The median price per hectare for horticulture farms has increased 7.9% over the past 12 months. The median horticulture farm size for the three months ended August 2021 was 8 hectares.

ENDS

Real Estate Institute of New Zealand

For more real estate information and market trends data, visit www.reinz.co.nz. For New Zealand's most comprehensive range of listings for residential, lifestyle, rural, commercial, investment and rental properties, visit www.realestate.co.nz - REINZ's official property directory website.

Editor’s Note:

The information provided by REINZ in relation to the rural real estate market covers the most recently completed three-month period; thus, references to August 2021 refer to the period from 1 June 2021 to 31 August 2021.

The REINZ Farm Price Indices have been developed in conjunction with the Reserve Bank of New Zealand. It adjusts sale prices for property specific factors such as location, size and farm type which can affect the median $/hectare calculations and provides a more accurate measure of farm price movements. The REINZ Farm Price Indices has been calculated with a base of 1,000 for the three months ended March 1996. The REINZ Farm Price Indices is best utilised in assessing percentage changes over various time periods rather than trying to apply changes in the REINZ Farm Price Index to specific property transactions.

From March 2021 there has been a change in the methodology for calculating rural statistics. To date, the rural statistics have referred to a Return Period which is the month in which a sale record was submitted to REINZ. Going forward, the rural statistics will refer to an Unconditional Month i.e., the month in which the sale went unconditional. This change in methodology ensures that sales that took place in April, for instance, are recorded against April even if they were submitted to REINZ late. The change also brings Rural statistics calculation into line with the Residential statistics calculation, where the Unconditional Month approach has been used successfully to calculate Residential Statistics for several years now. The Unconditional Month methodology also ensures that the most up-to-date state of the REINZ database is reported at the time the data is released with revision of prior months statistics often occurring to reflect the submission of late data or sale amendments that took place after the prior statistics release.

In addition to the calculation period change there are two additional changes to the data worth noting:

1. 12 Districts have been replaced by 13 Regions. These are consistent with the parts of the residential press release and it has been done to be consistent with regional definitions outside REINZ e.g., Statistics NZ

2. Dairy Support is a new farm category and we now have the ability to separate Lifestyle Blocks into Bareland and Farmlets.

If you have any questions regarding this change in methodology, please email statistics@reinz.co.nz.

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