Median farm prices collapse 40% in two years; dairy farm sales crash 78%

Watch on our video page here Watch on YouTube here Farm prices and sales volumes have collapsed in the last two years as the withdrawal of easy bank lending has dried up farmers' appetites for capital gains, fresh figures show. The slump in the number of transactions is expected to ripple out through the rural and provincial economies, given the surge in lending and activity through 2006 to 2008 helped drive spending on coastal and provincial residential property. The national median farm sale price was NZ$1.045 million in the three months to February, down 40% from the NZ$1.75 million seen in the three months to February 2008, Real Estate Institute of New Zealand figures show. There were 11 dairy farm sales in February and 34 in the three months to February, which is down 78% from the 158 seen in the three months to February 2008, which was seen as the peak of the dairy boom. A sharp drop in the forecast Fonterra payout and a much more rigorous approach to farm lending by banks has triggered the collapse. REINZ President Peter McDonald said there were "still reasonable levels of inquiries for all types of farms, but they do not seem to be resulting in completed transactions." Here is more detail below from REINZ's release:

The total number of farms sold in the three months to February was 205, down from 276 a year earlier and 713 farms two years earlier. Average price per hectare for the eleven dairy farms sold in February was $43,970 and the average size was 87.85ha, with an average of $47/kg of milk solids. The average milk solid production for these farms was 903kg/ha. On a regional basis the greatest number of farm sales during the three months to February was 29 in the Waikato followed by 28 in Canterbury. Grazing properties accounted for the largest number of farms by type, with 89 sales recorded throughout the country in the three months to February 2010. But while farm sales are down, Mr McDonald says lifestyle properties continue to be standout performers, with turnover and prices bucking the trends in the residential dwelling and other rural markets. The national median selling price for lifestyle properties in the three months to February 2010 was $438,000, down $17,000 on the median price for the three months to January 2010 of $455,000. This compares with $445,000 and $455,000 in the three months to February 2009 and 2008 respectively. Median prices were highest in Auckland at $700,000, with the most modest prices for lifestyle properties to be found on the West Coast ($150,000). Five regions experienced an increase in the median selling price for a lifestyle property, while eight districts recorded decreases, and the median remained the same in the Hawkes Bay. A total of 1,105 lifestyle properties were sold in the three months to February 2010 compared with 1,213 in the three months to January 2010; well up on the 877 sold in the three months to February 2009.