The average land price per hectare for all types of farm sales has tumbled by two thirds in just a year, and the number of farms sold in August was the second lowest since Real Estate Institute of New Zealand (REINZ) records began in 2003.
REINZ said today that from a peak of NZ$90,125 in August 2009, the average price per hectare of all types of farms fell to just NZ$29,739 in August this year. That's a drop of NZ$60,386, or 67%.
Just 48 farms were sold during August, including just three dairy farms, compared to the average sales level for August over the previous four years of 140 per month. In terms of total farm sales, the only month to record lower sales was January this year with 46.
The three dairy farms sold was the second lowest monthly figure, behind only August last year when none sold. The 27 grazing properties sold was also the second lowest, after 18 sales in January 2010.
The average August price of the three dairy farm sales was NZ$2,543,333, and the average price per hectare dropped to NZ$31,598 from NZ$36,435 in July. The average price per kilogram of milk solids has fallen to NZ$33 from NZ$37 in July, NZ$40 in June and NZ$45 in May.
In the three months to August, 17 dairy farms were sold. That was one less than in the same period last year and well down on the 67 in the three months to August 2008. A total of 192 farms sold in the three months to the end of August, up from 183 in the same period last year, but well down on the 516 in the three months to August 2008.
REINZ said the national median farm sale price rose to NZ$1,127,754 for the three months to August from NZ$1,118,500 for the three months to July . However, it remains well below the NZ$1,742,500 median for the equivalent period of 2008, but is slightly higher than the median for all farms of NZ$1,000,000 recorded in the same period of 2009.
"With the low number of sales currently occurring, price fluctuations, both upwards and downwards, can be impacted by the range of prices of the mix of properties being sold," REINZ said.
"On a regional basis the largest number of farm sales during the three months to August was 31 in Canterbury, 24 of them grazing properties, and 27 in Southland, 11 of them grazing properties."
During the past year median farm prices have fallen in eight out of the 14 districts.
In the three months to August compared to the same period in 2009, farm sale prices fell in Waikato from NZ$1,663,655 to NZ$1,187,500, Bay of Plenty from NZ$1,000,000 to NZ$920,000, Hawkes Bay from NZ$1,800,000 to NZ$945,000, Manawatu/Wanganui from NZ$1,275,000 to NZ$1,200,000, Wellington from NZ$3,005,000 to NZ$1,935,000, Canterbury from NZ$1,300,000 to NZ$1,200,000, Otago from NZ$937,500 to NZ$712,000, and Southland from NZ$1,200,000 to NZ$1,125,000. See all REINZ's August statistics here.
Sales of lifestyle properties dropped to 1066 in the three months to August from 1088 in the three months to July, with the national median selling price slipping to NZ$436,750 from NZ$447,500.
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48 Comments
First class statistics...Marlborough does not even exist other than as a bit tacked onto Nelson for the graph titles.....what more needs to be said!.....how much bloody longer must we put up with this crap...Marlborough is not effing Nelson...will some bugger get the bloody message.
Hey, c'mon now Wolly! I live in W(h)anganui. For all our stats we get thrown in with Palmerston North! I mean, for Christs sake!
Which would you rather be thrown in with? Nelson or Palmerston North? I think I'd rather have Invercargill than Palmerston North.
Well, that might be exaggerating slightly......
Oh yes, very true. Wanganui stats are woeful - average income, people on benefits, age, education, you name it.
But, at the end of the day, its still not a crap hole like Palmerston North. What did John Cleese say about it? "If you wish to kill yourself but lack the courage to, I think a visit to Palmerston North will do the trick".
Tell you wot, we'll get StatsNZ & everyone else to lump Marlborough in with P.Nth, and Wanganui in with Nelson. Then everyone would be happy.
I think.
At $33kg/ms farms are still over priced for anyone but those who are cashed up and there are a few cashed up farm buyers out there. A farm was put up for tender and the tender was won by another farmer who was willing to pay over the odds - subject to the sale of their farm. How dumb can you be when there were cashed up tender offers at not a lot less. Greed by some is still alive and well out there.
Has anyone heard what cows are being signed up for next season? I have heard some crazy asking prices but then there will be a few more conversions coming on, in the Sth Island next season and an asking price is not necessarily a selling price.
Why is it that you have to make such extravagant headlines. The price of land has not tumbled. Just more cheap land has been sold in the period you are measuring. Later in your article you show that the average price of dairy land has dropped just $4000 per hectare or 13%, but you don't quote that figure The average price of land means absolutely nothing. Dairy land costs more than grazing or bare land and only three dairy farms were sold in this period so of course the average is down. Its the same with other types of property when averages are quoted. Of course the average will be down if the mix has changed and only one $1m house has sold. Read Tony Alexander's comments on the BNZ website last week and stop sensationalising with selective figures.
Tony Alexanders own Bank won't lend (under normal circumstances) on Dairy farm sales over $35/KG. There is no doubt farms were selling in the $55/KG range at the peak. $55 to $33 is a 40% decline, never mind average land prices or the mix of dairy to dry stock farms sold.
Tony will always try to twist things to suit his own desperate arguments. Sad really.
Its..................Friday...Yay...and its time for your cheer.
Here's a one question IQ Test to help you decide how > you should spend > the rest of your day...... > > There is a mute who wants to buy a toothbrush. By > imitating the action > of brushing one's teeth, he successfully expresses > himself to the > shopkeeper and the purchase is done. > > Now if there is a blind man who wishes to buy a pair of > sunglasses, how > should he express himself? > > Think about it first before scrolling down for the answer... > He opens his mouth and says. "I would like to buy a > pair of sunglasses" > If you got this wrong - please turn off your computer > and call it a day. > > I've got mine shutting down right now. >
Yes that worked out for me well.....eh PowderD....?..you done banging the head in the Wall with PhillB yet.....? his response to me thanked me for encouragement......that about says it all.......I'll respect his commitment to his belief and think I'll leave it at that.......the trick is to get to the hearts n brains afore they harden.........luck to you..!
Nah, I'm just warming up!
Actually, I used to debate this stuff, but back in the '70's and '80's, when there was still time.
I've watched really big minds come to it - Peter Blake turned his back on everything,and dedicated his remaining life to spreading the word. That he's dead doesn't change the rightness of his thinking.
So I don't mind pointing folk in the direction of knowledge these days, but I have limited tolerance when they don't 'get it'. Folk like me simply think we've run out of time.
I must away, my Gentle Annie is supplying 15 volts, which is a bit much. Gotta get her under control before nightfall. As you do.
go youtube.com. then: powerdownkiwi then: mark 4
All water under the bridge.........
So acccording to the Herald this morning Natural Dairys bid for Crafarms will not go ahead. Fingers crossed. I drove past the Benneydale farm a couple of days ago, fat cows, calves frolicking in the paddock. Such a difference to last year. You did that Bernard and crew, you made a difference. Thanks.
A great article in this weeks Straight Furrow by Don Fraser, encouraging those farmers in a delicate position, to face reality and move on while you still have some equity left. And comments on the banks still taking it gently gently at this stage.
I know in my area some severe pain, the big conversions struggle to get the returns they thought they would.
A great article in this weeks Straight Furrow by Don Fraser, encouraging those farmers in a delicate position, to face reality and move on while you still have some equity left. And comments on the banks still taking it gently gently at this stage.
But farmers do not walk away, because they do not have to, and they know it better than anyone. For clarification on why that is, I suggest you contact the following person at any of the addresses listed below:
Balclutha Office
68 Clyde Street,
P O Box 103
Balclutha 9240
ddi +64 3 418 4288
balclutha.eo@parliament.govt.nz
Gore Office
15 Main Street,
P O Box 266,
Gore 9740
ddi +64 3 203 3000
gore.eo@parliament.govt.nz
Queenstown Office
1085 Frankton Road,
P O Box 2192,
Queenstown 9349
ddi +64 3 441 4093
queenstown.eo@parliament.govt.nz
I know in my area some pathetic whinging, the big conversions struggle to get the returns they feel entitled to.
Fixed that for ya.
Gingerbreadman, ' if you owe the bank a million you have a problem , if you owe the bank a 100 million the bank has a problem' I suppose when there are 1000 dairy farms out there all in the same boat, the banks have a problem. Not sure what you are on about with the addresses, you might have to be a bit more obvious.
There's probably 1000 sheep and beef farms out there in significant poo also. Not to mention the vineyards.
Banks are starting to realise that the price paid for a farm has to relate in some way to its productive capacity and not on capital gains. Hence farm prices need to fall back in line to what they can return, Of course farmers pay a premium for wanting to work 100 hours a week so they will always pay over the odds. This from Stuff:
One night, about four years ago, Tim Aitken lay in bed unable to sleep, his farm's debt preying on his mind.
"I lay there," he says, "working out in my head how much interest I was paying.
"I got it down to the minute and was working it out to the second when I realised what I was doing. I had to do something about it before I went crazy."
At $500 a day and 35 cents a minute, the interest on his debt was crippling. "I had to make that much money each day before I could start to earn a living, and that was proving impossible."
That year, he suffered a loss of $120,000. He and wife Lucy Robertshawe farm deer on attractive, totara-clad, rolling hills at Tikokino, Central Hawke's Bay.
http://www.stuff.co.nz/business/farming/4134417/Awards-cap-exciting-three-years-for-couple
That is not an unusual situation. Too much easy credit in the past and there will be a few bank managers lying awake at night too.
Here come the bastards!
http://www.marketoracle.co.uk/Article22773.html
"In the sphere of trade, countries need to rebuild their self-sufficiency in food grains and other basic needs. In the financial sphere, the ability of banks to create credit (loans) at almost no cost on their computer keyboards has led North America and Europe to become debt ridden, and now seeks to move into Brazil and other BRIC countries by financing buyouts or lending against their natural resources, real estate, basic infrastructure and industry. Speculators, arbitrageurs and financial institutions using “free money” see these economies as easy pickings. But by obliging countries to defend themselves financially, their predatory credit creation is ending the era of free capital movements."
....Now seek to move into...... New Zealand !!!! Bollard's Core Funny Rate has to be moved higher....65% is not enough.
But he also has to pull finger to protect against the flow of "free money" through the private purchase of property. Selling residential and farmland property in Beijing to the Triads is just a teeny wee part of a stinking corruption. He cannot rely on the weak OIO to do that job. And Govt is almost useless!
What a scam what a rort...in floods the "free money" from Tokyo and aymereeka...sell sell yell the RE liars...here a farm there a farm everywhere a bloody farm...old MacDonald had some debts and with those debts he bought lots of stuff...ee eye eee eye oh...
Now we have version two of the great property finance company ripoff...put your munny in the Hartbreak Bank and you too can get rich...RICH do you hear...dividends sooooo friggin large and think of all the shiney bums you will be feeding...hell's teeth they have to suck on a tit somewhere...might as well be yours...think of it as being a patriotic if slightly daft Kiwi...
Primary produce: the route to a permanently low-wage economy.
Brazil getting involved now, eh? How much further can terms of trade go against poor ol' NZ? Imagine if Africa sorted its shite out and started producing like it did when it was colonialised.
The fact that the disparity in raw land prices, between agricultural land and urban land, is in the order of tens if not hundreds, is evidence number one that humanity has not remotely scratched the surface of the "running out of land" paradigm. As is the fact that terms of trade have moved against primary producing nations by a factor in the tens.
It is a blessing in disguise for a nation like Japan, that they have had to import their own commodities, probably at below cost from all the countries that subsidize their production of commodities either directly or indirectly; PLUS Japan has had to learn to export "added value" and "intellectual property" which, surprise surprise, it turns out is where all the wealth creation is.
The biggest lunacy in all this, is making ALL NON agricultural users of land pay tens of times (or more) too much for it thanks to urban growth restrictions. This on top of ten years of "get the employer" legislation. No wonder our productive sector shrank 12% while Clark and Cullen were claiming an economic boom - which was based on debt-based spending, not production. NZ is stuffed until we have the guts and intelligence to reverse this nonsense.
Take a look around. Try Canterbury.
See any unused land between the sea and the foothills?
Bugger all.
You live in a society which has geared food production to be mass-produced, mass processed, and delivered just-in-time. So it's cheaper in relative-to-income terms. The displaced income has been diverted to purchasing a range of 'products', and for a while that worked.
The problem is that 'bugger all'. If you build further out on the land used for production, production falls. Globally, we are there now. Sure, nz can feed 4 million internally. The planet can't feed 9 billion though, certainly not 40 years after peak oil.
So to deny the existence of a land-supply constraint, you have to deny an energy constraint. Indeed, you end up in a self-woven web which has to try and proclaim that there are no limits to anything at all.
At which point the folk who argue so look:
stupid.
PhilBest " Imagine if Africa sorted its shite out and started producing like it did when it was colonised."
Well Africa is being colonised Phil, our "friends" from Beijing again.
Farmland, Timber, precious metals, oil, copper and minerals of every kind - a bit of a hand out to the local head man, round up and "silence" any dissent and they're all yours. And, a big bonus, cheap labour and bugger all in the way of safe workplaces or protection for the environment.
So where does that leave us (and Australia)? Competing against even lower cost producers that's what. But that's the direction that capitalism will always take Phil - Marx's "Crisis of Capitalism" and the inevitability of declining profitability.
Not sure that a country or business can find respite through "intellectual property"for long either as todays "must have" new product is tomorrows commodity. Look at the home computer, now developed and manufactured by the lowest cost asian producer, Silicon Valley has been outsourced.
For all that though ( I know you're going to hate this) I'd far rather be in a country with a small population and abundant resources than in the position of Japan or the UK. With increasing population and resource scarcity of all kinds these places will have real problems having to import their most basic needs - food, fuel and hard commodities. They are already digging themselves into a deep hole with debt, with increasingly uncompetitive industry and resource poverty she's not looking good.
colonised? read: pre-raped.
Seems to me there's a fair bit of desertification, thereabouts, man-assisted if not man-made. Seems to me, Nigeria is us already demanding their resources cheap - check out why they had to hang Ken Sarowiri. And they'll have exponential deforestation, depletion and pollution, alle same everywhere.
At the end of the day, this is another tacit admission of limits.
Africa is defined, and therefore finite.
This grasping at wild straws is reminiscent of a conversation I had this week, with a chap who said "they've found a 3 billion barrel field". "So"? I replied. "So we won't have to worry about peak oil for ages", he said.
This is the 1000 million billion, we're talking about. We use oil at 85 mbpd, so a billion is less than 12 days supply, 3 is a month, give or take. Guess it depends on your definition of 'ages'.
Ah Yes Bay Of Plenty Farms being cheap.
I had a client who was looking at a farm around the Whakatane area.
Gosh he said to the real estate agent,this farm seems unbelievably cheap compared to where I come from.And the farmer is only using the front half of it.If I bought it,I would clean all the gorse and scrub off the back half so I could use the whole area.
Well said the agent,I would not advise that.One local gang has their dope patch at one end of that farm,and the other local gang at the other end.
So if you did that there might be adverse affects for you.
It's not just bankers and farmers pathetically whining because they aren't getting the returns to which they feel they are divinely entitled:
http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=106…
The start of the IRD next lot of ' negative gearing' changes? "The taxman is proposing to make the PAYE deducted from each pay packet final for most taxpayers, eliminating the assessments – and the refunds – many receive as the result of lodging tax returns.
http://www.stuff.co.nz/sunday-star-times/business/latest-business/4142974/Anger-at-IRD-refunds-plan
Funny how the NZ Herald doesn't seem to know which way to run nowadays when it comes to property.
Here are some more of their recent articles...
http://www.nzherald.co.nz/property/news/article.cfm?c_id=8&objectid=10674488
http://www.nzherald.co.nz/property/news/article.cfm?c_id=8&objectid=106…
http://www.nzherald.co.nz/property/news/article.cfm?c_id=8&objectid=106…
PIs and speccers can always count on some support from granny Herald, but they're all having a tougher time spinning and hyping the market the way they used to.
For the past few months the paper's in-house spruikers must have been constantly battling it out with their "negative" colleagues! :-)
Anyone who takes financial advice or guidance from the mainstream media ( and yes Bernard , that includes you ) , will be parted from their monies in short order .
If Jim Rogers / Warren Buffet / Ken Fisher / Bill Gross / & their ilk utter summitt , call me Dumbo , 'cos I'm all ears .
Actually if you look at the WSJ and its advice over the last 2~3 years and generally followed it...you would apparantly be down a hansome amount.....if on the other hand you didnt let greed or right wing blinkers blind you to the general bad state of things you could be up...or at least not down as much.
regards
No bias, of course !
"New Zealand Herald journalist, Anne Gibson, has scooped the top prize in the 2005 Real Estate Institute of New Zealand Property Media Awards. This is the third time Mrs Gibson has won the supreme award, Best Property Portfolio, since the competition began in 1989."
Parky you old codger, still pushing that public social credit pile up that hill...I note you managed not to go read that extensive rubbishing of infrastructural govt splurging Keynesian porking in Japan...that has managed to build bridges to nowhere and roads that will never be needed...bout the same as your public social credit infrastructural investment for the future fluff.....
So who you got down on your short list to manage your public social credit bank....manage to find any upstanding honest and trustworth candidates...how about Stephen "Walter Mitty" Wilce?
You paid that mighty mortgage off yet....all that interest earning created credit that you caused into existence! Shame on you.
FYI, the OIO issued this statement on the Crafar farm sales following the recent Herald story - http://www.linz.govt.nz/overseas-investment/about-oio/news/2010/0917-oi…
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