"Strong demand" for dairy farms in September, but farmers not putting farms on market, REINZ says

There was "strong demand" for dairy farms in September as milk powder prices rose again over the month, Real Estate Institute of New Zealand (REINZ) President Peter McDonald said today. However, McDonald said farmers appeared to be sitting out unseasonal wet weather before putting properties on the market. The REINZ released farm sales figures for the three months to September, showing 178 farm sales over the period. This was down from 183 sales in the three months to August and 430 in the three months to September 2008. "Muddy paddocks don't make for the most attractive rural real estate propositions and farmers appear to be sitting out the unseasonal wet weather before putting their properties on the market resulting in a slow September for rural sales," McDonald said. "There's a strong demand for dairy, helped along by the recent further increase in the auction price of milk powder adding 5.7% to the 50% increase over the previous two months," he said. At interest.co.nz we also divide out the figures to show monthly farm sales. There were 75 farm sales nationwide in September, up from 51 in August but down on the 130 in September 2008. Sales were down 50% from the average September month over the last four years, although this was better than the 70% drops seen in both August and July. There were 5 dairy farm sales recorded in September, up from zero in August and compared to 13 in September 2008. The bulk of the 75 sales during the month were grazing farms, with 42 sales in September up from 29 in August, but down on 75 a year ago. The median farm sale price in the three months to September was NZ$877,500. This was down from NZ$1 million in August and NZ$1.67 million in September last year. The median price becomes more volatile when there are low numbers of sales, with a fall in dairy farm sales (which generally have had a median sale price between NZ$3 million NZ$4 million) contributing to the fall in the overall median price over recent months. "Typically we would expect to see a pick up in the number of sales by October/November. It may be that this year we'll be running a few weeks behind that pattern," McDonald said. Meanwhile, there were 1,365 lifestyle property sales in the three months to September. This was up from 1,342 in the August period and 1,071 in the September 2008 period. It was down from 1,645 in the September 2007 period. The median sale price for lifestyle properties in the three months to September 2009 was NZ$430,000. This was the same as in August, but down slightly from the NZ$435,000 in both September 2007 and 2008. "Once again, lifestyle properties have demonstrated their investment strength, with turnover and value continuing to hold firm," McDonald said.