Farm prices rise with dairy taking the lead albeit with some 'financier instigated' sales activity, and the lifestyle block market quietens down a bit

Farm prices are up compared to a year ago with dairy farms leading the way, according to the latest Real Estate Institute of New Zealand data.

The REINZ All Farm Price Index covering all farm types in the three months to May, was up 4.6% compared to the same period last year, but down 2.4% compared to the three months to April. The number of farms sold was up 5.1% compared to the three months to May last year.

The REINZ Dairy Farm Price Index was up 6.8% compared to the same period of last year, while the number of dairy farm sales was up a whopping 20%.

However some of the dairy farm sales activity appears to be the result of the need for some farmers to reduce debt.

"Financier instigated activity, particularly in the north-eastern Waikato, confirms recent comments from the Reserve Bank that some farmers may struggle to cope with the debt levels built up over recent seasons, with selling being the only option in such cases," the REINZ said in its rural report for May.

Nine regions recorded an increase in the number of farms sold in the three months to May compared to a year earlier with the biggest increases occurring in Waikato, followed by Otago and Southland.

"Sales figures for the three month period ending May 2017 reflect a steady tone in the rural market as the productive portion of the season tapers off, albeit sales prices are giving mixed signals," REINZ rural spokesman Brian Peacocke said.

"In spite of the oversupply of rain and resulting crop and pasture management difficulties in some areas, most regions have benefited from favourable autumn conditions.

"As early frosts and snowfalls signal the approach of winter, confidence within the rural sector continues to build in anticipation of improving incomes during the forthcoming season.

"Demand for quality properties and the shortage of supply remains constant," he said.

Lifestyle block market not as buoyant

However the lifestyle block market does not appear to be as buoyant as the farm market.

According to the REINZ, 2304 lifestyle blocks were sold in the three months to May, down 214, or 8.5%, from 2518 in the same period of last year, and median prices also showed some weakness especially in Auckland.

The national median price of lifestyle blocks sold in the three months to May was $626,500, compared to $635,000 for the three months to April, but still well up on the median of $575,500 for the three months to May last year.

Of the 14 regions around the country, the median price of lifestyle blocks in May was down in seven compared to April, up in four and unchanged in three.

In Auckland the median price of $1.2 million was unchanged form April but down compared to the median of $1.23 million in May last year, suggesting the lifestyle block market in the region has flattened along with the housing market.

For even more detail, especially for regional prices/ha, see here.