Farm sales fall in October from year ago while prices rise, REINZ says; Eyes 'active market which should mean more sales in November'

A "very active" rural property market through October should see a jump in unconditional farm sales in November, the Real Estate Institute of New Zealand (REINZ) says. 

However, there were 30 fewer farm sales (-10.5%) for the three months ended October 2012 than for the three months ended October 2011.

There were 256 farm sales in the three months to the end of October 2012, compared with 269 farm sales in the three months to September 2012, a decrease of 13 sales (-4.8%), the REINZ said. 1,410 farms were sold in the year to October 2012, 28.6% more than were sold in the year to October 2011. 

The median price per hectare for all farms sold in the three months to October 2012 was NZ$19,872; a 10.1% increase on the NZ$18,041 recorded for three months ended September 2012.  The median price per hectare increased by 5.3% compared to October 2011, the REINZ said.

The REINZ All Farm Price Index rose by 5.3% in the three months to October compared to the three months to September, from 2,708.97 to 2,852.46. Compared to October 2011 the REINZ All Farm Price Index increased by 6.0%.

Five regions recorded increases in sales volumes for the three months ended October 2012 compared to the three months ended October 2011, the REINZ said.

"Auckland recorded the largest increase in sales (+14 sales), followed by Canterbury (+10 sales) and Nelson (+8 sales).  Wellington, Southland and Northland all recorded 11 fewer sales followed by Hawkes Bay and Bay Of Plenty with eight fewer sales each. Compared to the three months ended September 2012 only three regions recorded an increase in sales, lead by Nelson (+3 sales)," it said.

“The spring selling season is in full swing across the country with a considerable number of farms being marketed during October,” REINZ Rural Market Spokesman Brian Peacocke said. 

“The decrease in sales in October is more a reflection of the timing of sales at the start of spring rather than an indication of any particular trend. Based on the levels of activity in October we would expect a lift in sales in November as properties go unconditional," Peacocke said.

“Levels of listings are generally good, although several regions report insufficient stocks of good sheep and beef properties to meet buyer demand. In contrast, some areas report higher stocks of dairy farms than current demand requires," he said.

"Grazing properties accounted for the largest number of sales with 50.4% share of all sales over the three months. Finishing properties accounted for 16.0%, with Horticulture properties accounting for 13.7% and Special and Dairy properties 5.1% each of all sales. These five property types accounted for 90.2% of all sales during the three months ended October 2012."

Read the REINZ's comments below:

Dairy Farms

For the three months ended October the median sales price per hectare for dairy farms was $27,368 (13 properties), compared to $19,604 for the three months ended September 2012 (9 properties), and $29,668 (17 properties) for the three months ended October 2011.  The median dairy farm size for the three months ended October 2012 was 125 hectares.

Included in sales for the month of October were six dairy farms at a median sale value of $29,160 per hectare.  The median farm size was 82 hectares with a range of 44 hectares in Northland to 299 hectares in Canterbury.  The median production per hectare across all dairy farms sold in October 2012 was 848kgs of milk solids.

The REINZ Dairy Farm Price Index rose by 10.2% in the three months to October compared to the three months to September, from 1,645.63 to 1,813.43.  Compared to October 2011 the REINZ Dairy Farm Price Index fell by 11.2%.  Further details on the REINZ Dairy Farm Price Index are set out below.

Finishing Farms

For the three months ended October 2012 the median sales price per hectare for finishing farms was $20,402 (41 properties), compared to $22,468 for the three months ended September (45 properties), and $18,847 (43 properties) for the three months ended October 2011.  The median finishing farm size for the three months ended October 2012 was 82 hectares.

Grazing Farms

For the three months ended October 2012 the median sales price per hectare for grazing farms was $11,671 (129 properties) compared to $11,444 for the three months ended September (140 properties), and $16,013 (168 properties) for the three months ended October 2011.  The median grazing farm size for the three months ended October 2012 was 88 hectares.

Horticulture Farms

For the three months ended October 2012 the median sales price per hectare for horticulture farms was $157,838 (35 properties) compared to $141,968 (37 properties) for the three months ended September, and $84,960 (22 properties) for the three months ended October 2011.  The median horticulture farm size for the three months ended October 2012 was five hectares.

Lifestyle Properties

The lifestyle property market saw a 15.1% (+181 sales) increase in sales volume in the three months to October 2012 compared to October 2011.  1,378 sales were recorded in the three months to October 2012 compared to 1,197 sales in the three months to October 2011.  39 more sales were recorded compared to the three months to September 2012 (+2.9%).

Eight regions recorded increases in sales compared to September while six recorded decreases.  Auckland recorded the largest increase (+29 sales), followed by Manawatu/Wanganui (+9 sales) and Canterbury (+7 sales).  Waikato recorded the largest fall in sales (-8 sales), followed by Bay of Plenty (-6 sales) and Northland (-4 sales).  Compared to October 2011 nine regions recorded increases in sales with five regions recorded decreases.

The national median price for lifestyle blocks improved by $10,250 (+2.3%) from $450,000 for the three months to September 2012 to $460,250 for the three months to October 2012.  Compared to three months to October 2011 the median price rose by $25,250 (+5.8%). 

The number of days to sell for lifestyle properties improved by 10 days, from 81 days for the three months to the end of September to 71 days for the three months to the end of October. Compared to the three months ended October 2011 the number of days to sell improved by 28 days from 99 days to 71 days.  West Coast recorded the shortest number of days to sell in October at 44 days, followed by Canterbury at 50 days and Southland at 53 days.  Nelson recorded the longest number of days to sell at 140 days, followed by Bay of Plenty and Otago on 122 days each.

Commenting on the lifestyle property market Brian Peacocke said, “Sales volumes are showing a healthy increase overall, although there is some variation in levels of activity around the country.  Sales in the Auckland region are good with a healthy supply of listings; however, after a period of reasonable activity the Waikato market has become rather flat.  Activity in the Bay of Plenty is reasonable, although the region continues to be affected by the problems with the kiwifruit industry.”

“Activity is strong in Canterbury where payouts from EQC are now being received and there is a firm market for lifestyle properties in Southland.”