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The Market Is Ready To Spring

Data released today by the Real Estate Institute of New Zealand (REINZ) shows there were 114 fewer farm sales (-31.1%) for the three months ended October 2021 than for the three months ended October 2020. Overall, there were 253 farm sales in the three months ended October 2021, compared to 270 farm sales for the three months ended September 2021 (-6.3%), and 367 farm sales for the three months ended October 2020.

1,623 farms were sold in the year to October 2021, more than were sold in the year to October 2020, with 130.3% more Dairy farms, 20.0% less Dairy Support, 14.7% more Grazing farms, 25.5% more Finishing farms and 43.2% less Arable farms sold over the same period.

The median price per hectare for all farms sold in the three months to October 2021 was $34,265 compared to $27,950 recorded for three months ended October 2020 (+22.6%). The median price per hectare increased 9.6% compared to September 2021.

The REINZ All Farm Price Index increased 0.1% in the three months to October 2021 compared to the three months to September 2021. Compared to the three months ending October 2020, the REINZ All Farm Price Index increased 18.2%. 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.

No regions recorded an increase in the number of farm sales for the three months ended October 2021 compared to the three months ended October 2020, with the most notable being Northland and Auckland (+0 sales). Waikato (-22 sales) and Gisborne/Hawkes Bay (-16 sales) recorded the biggest decreases in sales. Compared to the three months ended September 2021, four regions recorded an increase in sales, the most notable being Southland (+3 sales) and Wellington (+2 sales).

Brian Peacocke, Rural Spokesman, at REINZ says: “Sales volumes for the three-month period ending 31 October 2021 eased from the last quarter, was down dramatically from 12 months ago, and was slightly less than the equivalent period two years ago.

“These results were reflected in all categories apart from dairy, which was 30% higher than 12 months ago, and 300% greater than the equivalent period In October 2019.

“Other categories saw dairy support properties easing in numbers, finishing farms dropping from 119 to 69 in the last 12 months, a similar fate for grazing properties but reasonably steady in the horticultural sector.

“The overall rural sector, which has been grappling with issues related to the environment, water, labour, and like other sectors, the impact of COVID-19, received some welcome news recently with much improved access negotiated for the UK market.

“The impact of this is likely to have tremendous potential for our rural producers and may start to ease our dependence upon other markets, which currently claim dominance on the world stage.

“October has ushered in a great spring for much of rural New Zealand, and as the battering winds ease, increasing sunshine hours are allowing grass to respond to the beneficial rain which much of the country has been receiving.

“Product prices are currently continuing an upward trend, with increasing returns benefitting the dairy, sheep and beef and horticultural sectors alike.

“Spring of 2021 is notable also for the emerging trend of tangible support for the rural sector from the trading banks, much to the relief of many, although a careful eye is being kept on the upward trend with interest rates.

“In summary, the rural economy is in very good heart,” he concludes.

Points of Interest around the country include:

  • Northland/Auckland

Light sales activity on finishing and grazing blocks in the northern to central parts of Northland, but not dissimilar to the pattern over the last two years

Registrable activity on finishing and horticultural blocks south of Auckland City.

  • Waikato/King Country/Taupo

Very subdued on the dairy front but solid well-spread activity on finishing and grazing properties in the Hauraki region and districts to the north of Hamilton City; very quiet in the King Country and Taupo districts.

  • Bay Of Plenty/Rotorua

A smattering of sales of smaller avocado orchards in the Western Bay of Plenty but at long last, a surge of sales of finishing, dairy, dairy support and kiwifruit properties in the Rotorua and Whakatane districts.

  • Gisborne/Hawke’s Bay

Slumber time in Gisborne with zero results but a strong uplift of sales of horticulture blocks in Hawke’s Bay, ranging from kiwifruit blocks to vineyards to pip fruit orchards; quiet in CHB.

  • Taranaki

A flickering of activity in the dairy and dairy support sectors, but generally very quiet within the province during October.

  • Manawatu/Wanganui/Tararua

Uncharacteristically subdued throughout the region compared to the last two years with very light results in the Brunswick, Kai Iwi, Rangiotu and Pahiatua districts.

  • Wairarapa/Wellington

In keeping with the trend, light activity with sales of horticulture units in Otaki, grazing blocks on the fringes of Porirua and Karori, plus finishing properties in the Masterton district.

  • Nelson/Marlborough

Consistent sales results on finishing and grazing properties in the Tasman district with encouraging sales of sauvignon vineyards in the Marlborough region.

  • Canterbury/West Coast

Hurunui district registered well in the dairy, grazing and horticulture categories; light activity in the Selwyn district; very quiet around Ashburton, but good solid results on finishing properties in the Timaru district.

Very subdued on the West Coast.

  • Otago

Good activity on finishing units in the Waitaki district; Central Otago/Cromwell continues to feature in the horticulture sector with sales of two vineyards; Dunedin registered with a larger grazing property sale and the Clutha district chipped in with sales of grazing and dairy support properties.

  • Southland

Busy is ever during October; strong sales results on dairy units and grazing properties with sales of dairy support and grazing blocks adding weight to the scale.

In October 2021, Finishing farms accounted for a 27% share of all sales. Grazing farms accounted for 22% of all sales, Horticulture farms accounted for 18% of all sales and Dairy farms accounted for 13% of all sales. These four property types accounted for 80% of all sales during the three months ended October 2021.

Dairy Farms

For the three months ended October 2021, the median sales price per hectare for dairy farms was $45,430 (32 properties), compared to $44,300 (31 properties) for the three months ended September 2021, and $34,500 (22 properties) for the three months ended October 2020. The median price per hectare for dairy farms has increased 31.7% over the past 12 months. The median dairy farm size for the three months ended October 2021 was 86 hectares.

On a price per kilo of milk solids basis the median sales price was $37.59 per kg of milk solids for the three months ended October 2021, compared to $47.36 per kg of milk solids for the three months ended September 2021 (-20.6%), and $34.85 per kg of milk solids for the three months ended October 2020 (+7.9%).

The REINZ Dairy Farm Price Index decreased 2.9% in the three months to October 2021 compared to the three months to September 2021. Compared to October 2020, the REINZ Dairy Farm Price Index increased 9.9%. 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 October 2021, the median sale price per hectare for finishing farms was $34,560 (69 properties), compared to $31,300 (76 properties) for the three months ended September 2021, and $34,130 (119 properties) for the three months ended October 2020. The median price per hectare for finishing farms has increased 1.3% over the past 12 months. The median finishing farm size for the three months ended October 2021 was 37 hectares.

Grazing Farms

For the three months ended October 2021, the median sales price per hectare for grazing farms was $11,670 (56 properties), compared to $11,540 (64 properties) for the three months ended September 2021 and $11,145 (98 properties) for the three months ended October 2020. The median price per hectare for grazing farms has increased 4.7% over the past 12 months. The median grazing farm size for the three months ended October 2021 was 122 hectares.

Horticulture Farms

For the three months ended October 2021, the median sales price per hectare for horticulture farms was $313,970 (45 properties), compared to $304,940 (50 properties) for the three months ended September 2021 and $272,940 (49 properties) for the three months ended October 2020. The median price per hectare for horticulture farms has increased 15.0% over the past 12 months. The median horticulture farm size for the three months ended October 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 October 2021 refer to the period from 1 August 2021 to 31 October 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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