The rural property market continued its steady decline over the three months to February with the volume of farm sales dropping by more than half over the last three years.
The Real Estate Institute of NZ recorded just 218 farm sales over the three months to the end of February, down almost a third (-32%) compared to the three months ended February last year, and down 54% from the three months ended February 2021 (see graph below).
In the 12 months to February, 942 farms of all types were sold throughout the country, down 32% compared to the previous 12 months.
The decline in sales was particularly pronounced for dairy farms, with dairy sales down 40% in the 12 months to February compared to the previous 12 months.
REINZ rural spokesperson Shane O'Brien said buyers were taking a cautious approach to buying land in all sectors of the country.
"The lower volume of sales was anticipated as buyers reacted to higher interest costs, environmental compliance and poor farm product prices," O'Brien said.
"The very dry conditions across much of the upper South Island are also impacting buyers and sellers as they focus on on-farm activities during these months.
"Although the market is sound, sellers need to realise that there isn't the depth of buyers or buyer confidence of the preceding two years. Sellers will need to position their properties in the market accordingly with that in mind," he said.
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7 Comments
I reckon there's some interesting not-yet-revealed information within that data.
for example, in specific geographic locations (say Tararua DC) what change in farm numbers has occurred as a result of whole farm sales to forestry? I assume that once planted, status changes from farm to forest. So what may be reported as a slump in farm sales, may be misleading, if, through land use change, there has been a slump in the actual numbers of farms.
Is information available that documents land use change on a Territorial Local Authority basis?
Yep. We made from 3 farms 1 bigger farm.
The forestry folk left the market a year ago.
So the latest decline looks real.
Yes, total farm numbers are steadily declining
KeithW
There’s lots of farms for sale but not on market.
Banks are wanting many people to sell portions of land to retire debt, but there are no buyers as everyone’s in the same spot. Forestry gone.
A lot of holding breath on all sides hoping for higher meat prices, lower interest rates and cost increases stopping for next season.
That breath holding will result in an almighty cough. I am hearing very little fertiliser gone on now for three years. Production will really tip over this year. There is a lot of talk about lambs not doing this year. I have heard lots of reasons but not the biggy....they need good tucker. No fert...no grow...we are looking at a 1980s implosion coming.
Could be a problem for banks and the wider NZ economy.
Highly leveraged farmers, those carrying substantial debt relative to their assets and future revenue prospects, might find themselves in a precarious position, struggling to fulfill their mortgage obligations.
If it leads to a rise in loan defaults, impacting banks and financial institutions by increasing their non-performing assets and potentially necessitating financial write-offs. Such developments could not only affect the profitability and stability of these institutions but also undermine investor confidence in the agricultural sector and rural lending markets. Given agriculture's critical role in New Zealand's economy, contributing significantly to both GDP and exports, a downturn in this sector could have widespread economic implications. 1980's again
All that rain in Australia wont help either and they tend to have much lower debt levels. I see we maybe in for a La Nina next year - lets hope not like the last one or else some places will be washed away completely.
We are going to have to re think the whole debt model in NZ for drystock farming - it will be messy and nasty for many.
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