The rural property slump continued in February with sales of farms and lifestyle blocks both substantially down compared to previous years.
According to the latest rural sales data from the Real Estate Institute of New Zealand (REINZ),1023 lifestyle blocks were sold in the three months ending February this year, down 42% compared to the same period a year earlier.
The decline in sales was nationwide with all regions recording a decline in sales compared to a year earlier.
Prices were also weaker, with the median selling price for the three months to February this year coming in at $949,000, down 7.9% (-$81,000) compared to a year earlier.
The median price for lifestyle blocks was also $91,000 lower (-8.7%) than for the three months to the end of January this year.
The median price for bare land lifestyle blocks was $400,000, down by $50,000 (-11%) compared to three months ended January, and down by $80,000 (-17%) compared to 12 months earlier.
The median price for farmlet blocks over the three months to February this year was $1.1m, down by $75,000 (-6%) compared to the three months to January, and down by $190,000 (-15%) compared to the three months to February last year.
"The increase in interest rates has undoubtedly impacted buyer decisions and the reported slowing of the residential market could limit the buyer pool for lifestyle properties across New Zealand," REINZ rural spokesman Shane O'Brien said.
Farm sales have also been significantly affected by the slump.
The REINZ recorded 305 farms sales of all types over the three months to the end of February this year, down 15% compared to the three months ended January, and down 34% comparted to a year earlier.
The slump in sales affected all farm types with dairy farm sales down 35% compared to a year earlier, finishing farm sales down 44%, grazing properties -17% and horticultural property sales down 61%.
The REINZ All Farm Price Index was down 2.5% at the end of February compared to a year earlier, while the REINZ Dairy Farm Price Index was up 12.3% over the same period.
"Buyers are being very mindful of market conditions as we head into an election year," O'Brien said.
"The gloomy outlook for farm product prices this season and inflation affecting farm operating costs are squeezing profitability margins and debt servicing ability for farmers."
"While buyers are still present in all markets, they are being very considered in their buying decisions," he said.
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33 Comments
Greg : you were magnanimous to PM Hipkins in not mentioning the possibility of disillusionment with an anti farming government who for 6 years have repeatedly kicked farmers from pillar to post ...
... perhaps a change to a Gnats led government on October 14 will lift the gloom a little ....
For the Gnats to have a chance Luxon will have to change from sitting on the sideline watching Labour implode to actually doing something constructive.
Not sure I agree, unfortunately. All National has to do this election is not be Labour.
Thankfully there are other parties which are also not Labour, however their success depends on the ability of voters to see through the "wasted vote" fallacy.
I live in hope, one-day voters will see that they are labour and labour are national. One day.
Nah. Luxon couldnt sell free lollies to kids.
Nobody i know has any interest in national.. chippy at least is reading the room and trying .. and is a decent guy.
National
- no intelligent policies. Just a bunch of populist dated ones.. the world moved on
- leader comes across as a wealthy mid aged big business ceo... not kiwi or trustworthy with limited empathy skills.
- they want to cut taxes and encourage property investment and increase property prices when most kiwis want the opposite
- dont seem to believe in climate change. Most kiwis increasingly want change
- they knock policies like 3 waters and health centralisation but have no credible alternatives. We need improved infrastru cture so at least try pls.. and 1 hour of english for primary skool kids is not trying much.. need a comprehensive education strategy.
The list of nonsense from nats is endless. They have zero chance to get in this year. We are far better off with a labour led weak coalition (that i dont think would be great at all) but is preferable to the grumpy elite climatedenying nats.
Relying on the others to fail isnt a strategy.. as we will see.
Ps i am a business person .. mid class.. entrepeneurial.. historically always voted nats and tories in the uk.. so if i am going ti vote labour or winston for the first time i dont give much for 7houseluxons chances.
Yet another person from the "home country" telling Kiwis how to run their lives! It's never ending! You actually sound far more like oldschoollabourite than an entrepeneurial business person.
Don't believe in climate change like they don't believe in Santa Claus.
You'll like this little blog then.. https://thedailyblog.co.nz/2023/03/25/new-zealand-is-falling-to-pieces-…
Is there actually any reason to vote for the Gnats at the moment?
I can't think of a single new policy worth mentioning. They haven't got a single thing for anyone who isn't an owner of capital to buy into their bullshit on. Labour is going to give you benefit raises, minimium wage raises and maybe some lollie scramble goodies. There is no reason not to vote Labour in these conditions.
That's been a major problem with Labour over the past 2 terms. They're gunners: gunner do this, gunner do that, but they never do. No point voting for them based on empty promises.
This is true,
I am not a fan of Labour myself, but the Gnats have nothing to drive me to vote for them. There is just nothing there.
Probably because he's more inclined to stay with facts.
The trust I work for is trying really hard to buy another dairy farm locally. There's quite a few for sale but realistically they are asking a price close to 20% above what they would remotely consider paying. Infact as they are smaller farms I'd even suggest they would struggled to turn a profit at that sale price.
Not all doom and gloom. Dairy farm prices UP 12%.
Sophisticated buyers have entered the market looking at the relative return compared to other investment options. And they are buying location, soils and infrastructure.
The free fall in prices will be in the second and third class country if forestry loses their current momentum.
.
Dairy farming is a high capital form of farming. It is increasingly only for aristocratic geriatrics with existing dairy farms to buy or agrobusiness firms which can acquire the capital to buy in. Who the hell can get a loan for 5m as a normal farmer?
Even if you were a farm manager by profession, with an undergraduate in agriculture and an MBA, would a bank give you the funds to buy one of these farms at a reasonable rate? 5m at business loan rates (~12%) requires ~600k NZD per year just to service. Find me a Dairy farm yielding that.
Hear hear. Couldn’t agree more. Economies of scale in operation here. Love the ‘aristocratic geriatrics’ quip. Any young prospective buyer needs substantial capital backing to get a foot in the door. Has been like this for decades in Taranaki.
Even if you were a farm manager by profession, with an undergraduate in agriculture and an MBA, would a bank give you the funds to buy one of these farms at a reasonable rate?
If you're demonstrably capable of running a highly profitable farming operation, that'd trump just having paper credentials.
Agree Wilco, dairying is still the best game on the right land. Many hill farming areas are in their death throws.
And yet there's still whinging and moaning from fed farmer underlings, the share farming division (?), about not wanting to pay decent wages. Really am sick of hearing from them and seeing contract milking jobs that literally don't pay minimum wage. The business plan that many use that requires large numbers of cows and to many non thinking workers with no hope of farm ownership is really the problem. As stated elsewhere unless you have some form of family ownership to rely on the chances of farm ownership in the future is relatively nil, sharemilking is probably on a par with house buying in the last couple of years, possible but difficult.
Exactly how it is in Europe. Unless you are born in to land ownership there is very little chance of owning a productive farm.
What makes it hard in NZ is there is only a limited amount of good productive land.
Buying hill country is not a good prospect as the affordable land is mostly not worth farming.
I totally agree with your last sentence. Land that is affordable is often not worth having. Over years traded my way up to a large marginal breeding unit. My dream goal. Then spent years hardly covering costs. Thank goodness for Shane Jones and his Billion trees. Allowed me to get out and move to easier country.
Exactly how it is in Europe. Unless you are born in to land ownership there is very little chance of owning a productive farm.
Depends on the farm. Dairy maybe not, but you can still acquire land for a reasonable price and develop it into a farm, especially if you can grow a more productive crop.
You're just not going from 0 to millions in revenue immediately, as you probably shouldn't because good farming really needs a decade or two of experience to do properly. Kinda like most businesses.
what!!
Thats a good way to go broke for most and is why over 50% of hill country farms make no real profit and are declining fast
Are we just talking about hill country farms?
You can only make so much money by grazing animals.
After over paying to flee from the city during covid, people are waking up to the reality of lifestyle blocks.
Lots. Of. Work.
It's definitely not for lazy people.
You don't want a job that's too much like hard work.
Always lots to do on a LSB, either pay for others to help or structure the property in such a way it reduces your maintenance tasks....
Or adjust your lifestyle to suit . Can't really see the point of having a LSB and paying others to do all the work .
Depends what the work is.
Trimming a huge macrocarpa hedge requires either lots of labour, or machinery too expensive to buy.
Agree there are some things easier to get the right kit in. I can spray, fertilise, do fencing, drainage etc etc, but serious mulching , hay making etc i just get the contractors..... looking at some hedging and considering getting a pole saw
I said all the work , agree it is far better and safer to get contractors to do heavy , dangerous work .
But a lot that move form the city expect city amentities. unlimited water and power are the ones i deal with . They don't get that you can't just throw unlimited amounts of money at these things , and it will be unlimited , its got to come from somewhere. Far easier to adjust your water and power consumption.
Horse seem to be part of the lsb dream , probably the highest maintenance animal there is. apart from humans that is .
Everyone skips over the "feminine hygiene product" consideration too.
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