A market quietly anticipating spring

 
Cows on farm in pasture

Data released by REINZ shows there were 58 less farm sales (-18.0%) for the three months ended August 2019 than for the three months ended August 2018. Overall, there were 265 farm sales in the three months ended August 2019, compared to 295 farm sales for the three months ended July 2019 (-10.2%), and 323 farm sales for the three months ended August 2018. 1,349 farms were sold in the year to August 2019, 7.9% fewer than were sold in the year to August 2018, with 38.2% less Dairy farms, 1.1% less Grazing farms, 8.6% less Finishing farms and 13.7% less Arable farms sold over the same period.

The median price per hectare for all farms sold in the three months to August 2019 was $25,346 compared to $19,792 recorded for three months ended August 2018 (+28.1%). The median price per hectare increased 8.2% compared to July 2019.

The REINZ All Farm Price Index fell 0.3% in the three months to August 2019 compared to the three months to July 2019. Compared to August 2018 the REINZ All Farm Price Index rose 4.4%. 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.

Two of the 14 regions recorded an increase in the number of farm sales for the three months ended August 2019 compared to the three months ended August 2018 with the most notable being Bay of Plenty (+8). Southland recorded the most substantial decline in sales (-22 sales) followed by Otago (-10 sales). Compared to the three months ended July 2019, three regions recorded an increase in sales with the biggest increase being in Auckland (+5 sales).

Brian Peacocke, Rural Spokesman, at REINZ says: “Sales volumes confirm the month of August is generally one of the quieter periods for the calendar year.

“Volumes are consistent with the previous year but generally weaker than 2 years ago.

Mild wet early spring conditions have favoured the pastoral sector and the lower south has finally benefitted from sufficient snow to keep the skiers reasonably happy.

“The nationwide emphasis on freshwater and swimmable rivers continues, with strong claims the residential sectors are as much to blame for pollution as the rural sector; evidence confirms banks are adopting a harder line; and the current spread of mycoplasma bovis suggests the Ministry of Primary Industries is struggling to contain the spread of infection across the country.

“In the face of the above, beef, lamb and venison prices continue at strong levels, albeit venison is easing currently; horticulture looks set for another bonanza and the dairy processors claim a solid level of pricing for the 2019/2020 season,” he concludes.

Points of Interest around New Zealand include the following:

  • Northland/Auckland - reasonable results for smaller finishing and grazing blocks in the upper north but constrained in the lower north; light horticulture activity and quiet in the dairy category

  • Waikato - acceptable activity on finishing properties, muted on dairy and grazing

  • Bay of Plenty/Rotorua - a good level of sales at strong prices on finishing units with activity pushing into the Opotiki district; a healthy uplift in horticulture sales, primarily north of Tauranga with a strong emphasis on smaller avocado orchards; one reasonable forestry sale

  • Gisborne - enough activity to register in the finishing, horticulture and forestry categories

  • Hawke’s Bay - constrained results apart from a significant sale of a larger supplier of organic vegetables and berry fruit within the Heretaunga Plains, one good finishing sale in the inland districts but very quiet in Central Hawke’s Bay

  • Taranaki - too early for the dairy market but light activity at very good prices in the finishing sector

  • Manawatu/Wanganui - a feature sale of the 1683 ha Otiwhiti Station where the cadet school is to be retained; strong results in the grazing arena, lighter in the finishing category albeit solid prices; another large drystock grazing station sale in the Tararua district and recognizable results in the arable and dairy sectors

  • Wairarapa/Wellington - dead quiet, still in hibernation

  • Nelson/Marlborough - steady enquiry and sales in the grazing market; an easing in the horticulture sector with one good vineyard sale; light activity in forestry

  • Canterbury - good steady activity throughout the region with pleasing prices in the grazing sector; a strong sale for a larger dairy unit in mid-Canterbury; registration of activity in the horticultural and forestry categories; very quiet on the West Coast

  • Otago - strong results at good prices in the Waitaki district; a simmering of vineyard activity in the Gibbston Valley of Central Otago and some arable sales closer to Dunedin City

  • Southland - minimal stirring within the sleeping giant at this stage with the build up to spring just getting underway; light results in the finishing and grazing sectors.

Grazing farms accounted for the largest number of sales with a 34% share of all sales over the three months to August 2019, Finishing farms accounted for 30%, Horticulture accounted for 17%, and Arable properties accounted for 6% of all sales. These four property types accounted for 86% of all sales during the three months ended August 2019.

Dairy Farms

For the three months ended August 2019, the median sales price per hectare for dairy farms was $29,470 (14 properties), compared to $32,701 (25 properties) for the three months ended July 2019, and $30,830 (24 properties) for the three months ended August 2018. The median price per hectare for dairy farms has decreased 4.4% over the past 12 months. The median dairy farm size for the three months ended August 2019 was 161 hectares.

On a price per kilo of milk solids basis the median sales price was $31.11 per kg of milk solids for the three months ended August 2019, compared to $33.51 per kg of milk solids for the three months ended July 2019 (-7.2%), and $31.76 per kg of milk solids for the three months ended August 2018 (-2.0%).

The REINZ Dairy Farm Price Index fell 2.8% in the three months to August 2019 compared to the three months to July 2019. Compared to August 2018, the REINZ Dairy Farm Price Index rose 8.0%. 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 2019, the median sale price per hectare for finishing farms was $31,660 (79 properties), compared to $32,423 (83 properties) for the three months ended July 2019, and $28,011 (89 properties) for the three months ended August 2018. The median price per hectare for finishing farms has risen 13.0% over the past 12 months. The median finishing farm size for the three months ended August 2019 was 33 hectares.

Grazing Farms

For the three months ended August 2019, the median sales price per hectare for grazing farms was $11,337 (89 properties), compared to $11,138 (108 properties) for the three months ended July 2019 and $10,168 (130 properties) for the three months ended August 2018. The median price per hectare for grazing farms has risen 11.5% over the past 12 months. The median grazing farm size for the three months ended August 2019 was 100 hectares.

Horticulture Farms

For the three months ended August 2019, the median sales price per hectare for horticulture farms was $212,509 (44 properties), compared to $210,458 (44 properties) for the three months ended July 2019 and $255,351 (39 properties) for the three months ended August 2018. The median price per hectare for horticulture farms has fallen 16.8% over the past 12 months. The median horticulture farm size for the three months ended August 2019 was 7 hectares.


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 refer to the period from 1 June 2019 to 31 August 2019. 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.