Sale activity down at the farm has continued the buoyant pattern of recent months.
Overall prices were down a little compared with a year ago - due to slightly lower grazing farm prices - but dairy farm prices were up.
Data released by the Real Estate Institute of NZ (“REINZ”) shows there were 66 more farm sales (+16.2%) for the three months ended April 2017 than for the three months ended April 2016.
Overall, there were 473 farm sales in the three months ended April 2017, compared to 438 farm sales for the three months ended March 2017 (+8.0%), and 407 farm sales for the three months ended April 2016. 1,815 farms were sold in the year to April 2017, 5.0% more than were sold in the year to April 2016, with 20% more dairy farms and 11% fewer grazing farms sold over the same period.
The median price per hectare for all farms sold in the three months to April 2017 was $28,368 compared to $30,000 recorded for three months ended April 2016 (-5.4%). The median price per hectare rose 3.1% compared to March.
The REINZ All Farm Price Index rose 1.1% in the three months to April 2017 compared to the three months to March 2017. Compared to April 2016 the REINZ All Farm Price Index rose 5.9%. The REINZ All Farm Price Index adjusts for differences in farm size, location and farming type, unlike the median price per hectare, which does not adjust for these factors.
10 regions recorded increases in sales volume for the three months ended April 2017 compared to the three months ended April 2016. Waikato recorded the largest increase in sales (+29 sales), followed by Otago (+17 sales) and Taranaki (+13 sales). Compared to the three months ended March 2017, eight regions recorded an increase in sales.
“Sales figures for the three month period ending 30 April 2017 confirm confidence in the rural sector, with a significant lift in volumes from 12 months ago”, says REINZ Rural Spokesman Brian Peacocke, “The continuation of high rainfall during April has been a major boost for farmers in many regions around the country but has proved to be a problem in other areas with considerable flooding and interruption of seasonal harvesting.”
“Dairy sector morale moves in tandem with the strengthening milk price, albeit volatility remains an issue, and beef farmers are experiencing strong results, particularly those selling weaner beef cattle in sale-yards around the country. The moist autumn has frustrated some in the arable sector as ground conditions for harvesting maize crops, in particular, has been an issue, with heavy rain washing out some recently re-grassed areas. Such conditions have also been an impediment for parts of the horticulture and viniculture sectors.”
Lifestyle blocks
In contrast to farm sales, the sales of lifestyle blocks were down on those of a year ago.
The REINZ data on these shows there were 220 fewer lifestyle property sales (-9.3%) for the three months ended April 2017 than for the three months ended April 2016. Overall, there were 2,156 lifestyle property sales in the three months ended April 2017, compared to 2,011 lifestyle property sales for the three months ended March 2017 (+7.2%), and 2,376 lifestyle property sales for the three months ended April 2016.
8,745 lifestyle properties were sold in the year to April 2017, 26 (+0.3%) more than were sold in the year to April 2016. The value of lifestyle properties sold was $6.84 billion for the year to April 2017.
The median price for all lifestyle properties sold in the three months to April 2017 reached a new record high of $635,000 and was $72,500 higher compared to the three months ended April 2016 (+12.9%).
“Sales data for the three month period ending 30 April 2017 confirms that values have reached another peak, but the market has experienced a considerable reduction in volumes during April 2017 of approximately 35 % from the figures recorded during the previous month. All regions apart from Gisborne and the West Coast have experienced such reductions”, says Peacocke.
Farm sales
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21 Comments
It would be nice to know if they ever paid tax. These guys are ruining the roads with logging trucks around here and I often wonder whats in it for the country, I would decline them and make the vendor take the next offer down.
http://www.linz.govt.nz/regulatory/overseas-investment/decision-summari…
It was revealed yesterday that Silver Fern Farms has proposed shutting its Fairton sheep meat processing plant near Ashburton with the loss of 370 jobs in a small community.
The Overseas Investment Office told the National Party that the Shanghai Maling buy-in should be approved, because it would result in increased investment, and substantially benefit the country.
http://www.nzherald.co.nz/the-country/news/article.cfm?c_id=16&objectid…
Silver Fern Farms has denied its Fairton freezing works will be turned into a water-bottling plant.
Silver Fern Farms were granted consent in 2015 to extract billions of litres of water a year up until 2033.
But the Overseas Investment Office released a statement late on Monday, saying: "Water bottling and shipping water offshore were not included in the economic benefits/increased exports identified."
http://www.newshub.co.nz/home/money/2017/05/ashburton-freezing-works-st…
Actually the farming, processing and rendering on the plant and surrounds has made the water extremely high in nitrates & from memory this particular plant had to, more than most, resort to heavy chlorination of its water to comply with MAF regs. Take a long time before any water could be exported from there especially as the pelts operation is ongoing. True they could tanker water in from elsewhere but the cost of that, and by the time you convert this very old plant to do the job, it would be far more economical to build a state of the art plant at the source, if there is one that is.
A good friend told me 4 dairy farms in the greater South Auckland have sold in the last 12 months for $100K - $150k per hectare to a chinese-kiwi buyer with deep pocketed backers. They've been leased out for next to nothing and continue to be run as dairy farms. There's one going through presently, 100 odd hectare for ~$120k/ha but it seems to have stalled, word has it funding might not get out of country of origin.
Another farming family in the area who's property wasn't on the market had a drive-in recently and were asked to name their price, transaction went through and they continue to run the place like it's their own.
Also got chatting to a dairy farm sitter last week, due to the wet some Waikato dairy farmers on peat are resorting to helicopters to regrass
Just to alter the focus away from big Corp. farming for a tick, recently I was browsing through a dairy industry publication featuring new generation farmers and their moves toward farm ownership. It had case studies of a range of folk of varying ages, circumstances, degrees of experience and prior roles.To my casual observation an overwhelming number turned out to be entering into equity partnerships, mostly with their parents. So basically hire purchase, few were doing it otherwise.
It left me with a couple of take-aways. Bank finance seemed to be a no go as there is little hope of earning enough to cover interest, it seems to me ROI in farms is so low that you have to get the land for almost free to be able to earn a wage of it. So this only works when the farm was bought some decades ago. Many retiring farmers would, romantically, like to see the land passed down. But in light of my first revelation, how much actual demand is there for farmland beyond those already in the game rearranging the deckchairs?
Consultants and Bankers. Both look at the 50% of income heading elsewhere and turn green and explode. Then mutter on about how they can get a manager for much cheaper. Ignoring things like risk. At the moment dairy stock are worth about works price so most sharemilkers if forced to sell would have lost everything.
Bloomberg: China Spins a Global Food Web From Mozambique to Missouri
https://www.bloomberg.com/news/features/2017-05-22/china-spins-a-global…
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