Farm sales collapse in January to 46, lowest in at least 7 years; Only 7 dairy farms sold (Update 3)

Total farm sales in New Zealand slumped more than a third to 46 in the month of January from the same month a year ago, Real Estate Institute (REINZ) figures show. REINZ President Peter McDonald said it was "most alarming" that only 7 dairy farms were sold in the 'prime' month of January and he cited weak bank lending rather than a lack of demand from buyers. (Update 3 with Rabobank comments) "There is confidence amongst buyers in the rural sector and a lot of interest in farms, but there appears to be a distinct lack of confidence from lenders," he says. Reserve Bank figures show bank lending to farms dropped NZ$315 million to NZ$46.916 billion between the end of September and the end of December. This was the first fall in agriculture lending in 9 years. See the interactive chart of agriculture lending growth here. The Reserve Bank warned banks last year about lending too much to the farming sector and many of the rural banks have tightened their lending criteria in the last six months, partly because the banks are more exposed to farming debt and because of an international push for banks to hold more capital and be less leveraged. The Reserve Bank is also increasing the risk weightings that banks must use when they calculate their capital requirements, which effectively increases the cost of funds and is likely to discourage a repeat of the very strong lending growth seen through 2005 to 2008. This is the end result of the need internationally to de-leverage economies, including New Zealand's.

Interest.co.nz understands that National Bank and Rabobank, the largest rural lender, is reducing its agriculture lending. Only Westpac, BNZ, and to a lesser extent ASB, are still growing rural lending. Responding to an earlier update of this article that said Rabobank was reducing lending, Rabobank said it had "significantly increased" lending in 2009 and aimed to continue growing in 2010. "We have experienced strong business growth in recent years, and retain an ambition to continue building our lending to quality New Zealand farming businesses," Rabobank New Zealand General Manager Ben Russell said in an emailed statement. Responding to our earlier report that Westpac had stopped lending growth, Westpac Public Relations Manager Liz MacIntyre said Westpac was still growing its rural lending. "We're very clear that we see the industry as a focal point for the New Zealand economy, and we have recruited an extra 20 agribusiness managers over the last year. Our message over the last year has consistently been that we're open for business, and we've communicated that constantly to the rural sector," MacIntyre said in emailed comments. Westpac's Head of Agribusiness Dave Jones said Westpac's lending was growing consistently faster than other banks across all major rural areas and one lending experience would not determine the bank's lending policies across the sector. "We've grown 2.25 times national system growth in rural lending in the last 4-5 months," Jones told interest.co.nz, adding the growth had been 1.5 times the system's growth over the last year or so. The total farm sales of 46 in the month were the lowest since 2003 when interest.co.nz started recording the REINZ sales data. They were down from 73 in January 2009 and 195 in January 2008. Dairy farm sales were down from 12 in January 2009 and 48 in January 2008. Here is the regional breakdown below given in the REINZ release. An interactive chart is here.

Northland The information provided by the Real Estate Institute in relation to the rural and lifestyle real estate market covers a three month period. Therefore references to January results refer to the period from 1 November "“ 31 January 2010 and references to December refer to the period from 1 October - 31 December 2009. The median farm price in Northland increased to $561,000 in January (December 2009: $491,000; January 2009: $700,000). 16 farms sold (December 2009: 18; January 2009: 22). The 16 farms sold consisted of six grazing, four horticulture, and two each dairy, finishing and forestry. The median price for a lifestyle block increased to 307,500 in January, from $280,000 in December (January 2009: $351,500). 112 lifestyle blocks sold during the period (December 2009: 109; January 2009: 83). Auckland The median farm price in Auckland decreased to $1,085,000 in January (December 2009: $1,110,000; January 2009: $1,315,000). 21 farms sold (14 grazing, seven horticulture). (December 2009: 25; January 2009: 20). The number of lifestyle blocks sold decreased to 227 in January (December 2009: 263; January 2009: 136). The median price eased slightly to $737,000 in January (December 2009: $738,000; January 2009: $750,000). Waikato 26 farms (14 grazing, 11 dairy, and one special) sold in January, down on the 28 sold in December (January 2009: 42). The median price was up at $1,600,000 in January (December 2009: $1,550,000; January 2009: $3,450,000). 132 lifestyle blocks sold in January, down from the 149 sold in December. The median price increased to $410,000 (December 2009: $405,000). In January 2009, 113 lifestyle blocks sold with a median price of $429,000. Bay of Plenty The median price for a farm was up at $1,175,000 in January (December 2009: $997,500; January 2009: $1,525,000). 23 farms (15 horticulture, and four each dairy and grazing) sold in January, easing slightly from the 24 sold in December (January 2009: 19). 77 lifestyle blocks sold in January (December 2009: 85; January 2009: 67). The median price remained unchanged at $535,000 (December 2009: $535,000; January 2009: $500,000). Gisborne Six farms (three grazing, two horticulture, and one arable) sold in January (December 2009: 12; January 2009: eight). The median price decreased to $665,148 in January, from $712,500 in December (January 2009: $1,565,000). Lifestyle block sales volume was eased down with 21 sold (December 2009: 24; January 2009: 15). The median price fell to $257,000 from December's $277,500 (January 2009: $260,000). Hawkes Bay The median farm price increased to $1,175,000 in January, from $1,122,500 in December (January 2009: $750,000). 17 farms sold (December 2009: 18; January 2009: 13) consisting of nine grazing, three finishing, two each arable and forestry, and one horticulture. 47 lifestyle blocks sold in January, down from the 51 sold in December. The median price increased to $483,000 from December's $410,000. In January 2009, 35 lifestyle blocks sold with a median sale price of $480,000. Taranaki The median farm price in Taranaki was up at $2,800,000 in January, from $2,125,000 in December (January 2009: $1,560,000). Seven farms (six dairy, and one finishing) sold in January (December 2009: 10; January 2009: 36). 36 lifestyle blocks sold in January (December 2009: 41; January 2009: 29). The median price increased to $432,000 in January (December 2009: $410,000; January 2009: $380,000). Manawatu/Wanganui 24 farms (12 grazing, eight finishing, and one each arable, dairy, forestry and special) sold in January (December 2009: 22; January 2009: 21). The median price decreased to $612,500 from December's $812,500 (January 2009: $1,400,000). The median price for a lifestyle block remained unchanged at $320,000 in January (December 2009: $320,000; January 2009: $350,000). In total 81 lifestyle blocks sold, down slightly from the 84 sold in December (January 2009: 77). Wellington The median farm price in Wellington increased to $650,000 in January, from $575,500 in December (January 2009: $2,512,500). Nine farms (December 2009: 10; January 2009: eight) consisting of four grazing, two each finishing and forestry, and one horticulture. 80 lifestyle blocks sold in January (December 2009: 90; January 2009: 49). The median price decreased to $445,000 from $472,500 in December (January 2009: $410,000). Nelson/Marlborough The median farm price increased to $907,269 in January (December 2009: $817,269; January 2009: $900,000). The number of farm sales decreased to six (two each grazing and horticulture, and one each dairy and special). (December 2009: 10; January 2009: 12). 72 lifestyle blocks sold in January, up on the 76 sold in December 2009 (January 2009: 38). The median price remained unchanged at $550,000 (December 2009: $550,000; January 2009: $502,500). West Coast The median price for a lifestyle block dropped to $185,000 (December $225,000; January 2009: $402,500). 16 lifestyle blocks sold in January (December 2009: 13; January 2009: 12). Canterbury 23 farms (13 grazing, four each arable and special, and one each dairy and forestry) sold in January, down on the 30 sold in December (January 2009: 48). The median price increased to $1,555,000 (December 2009: $1,200,000; January 2009: $1,825,000). 206 lifestyle blocks sold, compared with 245 sold in December. The median price decreased to $424,000 from $438,000 in December. In January 2009, 149 lifestyle blocks sold with a median price of $472,500. Otago The median farm price increased to $730,000 in January, from $630,000 in December (January 2009: $1,070,200). 12 farms sold (December 2009: 15; January 2009: 32). The farms sold consisted of four grazing, three each dairy and finishing, and two forestry. 67 lifestyle blocks sold in January (December 2009: 81; January 2009: 49). The median price decreased to $450,000 in January from $475,000 in December (January 2009: $342,500). Southland Farm sales decreased with 16 farms (five grazing, four each dairy and special, two finishing, and one forestry) sold in January (December 2009: 18; January 2009: 23). The median price decreased to $875,000 in January (December 2009: $916,594; January 2009: $2,925,000). 39 lifestyle blocks sold in January, compared with 48 sold in December. The median price was up at $325,000 (December 2009: $305,000). In January 2009, 24 lifestyle blocks sold with a median price of $300,000.