REINZ says a lot of farms have come on to the market for sale in the past month and the success of selling these will be a key test of the resilience, or otherwise, of the market.
In terms of lifestyle blocks, the past month has seen some signs of life.
REINZ rural spokesman Brian Peacocke said October had also been notable for the large number of farms that have come to the market throughout the country.
"...Which poses the question as to the likely uptake within the current market where in many regions, purchasers have unprecedented selection opportunities. Vendor expectations will be a key factor in this equation.
"With November being the concluding time for a number of the current marketing exercises, sales figures in the forthcoming months will reflect the resilience of the market, or otherwise."
Data released on Wednesday by REINZ showed there were two more farm sales (+0.8%) for the three months ended October 2018 than for the three months ended October 2017. Overall, there were 263 farm sales in the three months ended October 2018, compared to 250 farm sales for the three months ended September 2018 (+5.2%), and 261 farm sales for the three months ended October 2017. 1,475 farms were sold in the year to October 2018, 10.5% fewer than were sold in the year to October 2017, with 7.7% less dairy farms, 5.6% fewer grazing farms, 13.2% less finishing farms and 22.5% fewer arable farms sold over the same period.
The median price per hectare for all farms sold in the three months to October 2018 was $27,121 compared to $24,982 recorded for three months ended October 2017 (+8.6%). The median price per hectare rose 6.6% compared to September 2018.
The REINZ All Farm Price Index fell 5.8% in the three months to October 2018 compared to the three months to September 2018. Compared to October 2017 the REINZ All Farm Price Index rose 9.1%. 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.
Six of the 14 regions recorded increases in the number of farm sales for the three months ended October 2018 compared to the three months ended October 2017. Wellington (+14), Southland (+7) and Gisborne and Manawatu/Wanganui (+2) were the top regions to increase the number of farm sales compared to October 2017. Waikato recorded the most substantial decline in sales (-7 sales) followed by Northland (-5 sales). Compared to the three months ended September 2018, 7 regions recorded an increase in sales with the biggest increase being in Nelson (+6 sales).
Peacocke said to date, Spring 2018 has been one of the best for some time, with relatively mild conditions in most regions stimulating good growth and production in the pastoral, horticultural and vegetable growing sectors.
"As outlined in the data for the 3-month period ending October 2018, sales activity has been virtually non-existent in the dairy sector, but has lifted well in the finishing and grazing categories. Arable, horticulture and forestry record slight increases for the period, albeit a distinct easing in horticultural sales is evident for the month of October."
Lifestyle blocks
REINZ data shows there were 61 more lifestyle property sales (+3.8%) for the three months ended October 2018 than for the three months ended September 2018. Overall, there were 1,665 lifestyle property sales in the three months ended October 2018, compared to 1,725 lifestyle property sales for the three months ended October 2017 (-3.5%), and 1,604 lifestyle property sales for the three months ended September 2018.
7,190 lifestyle properties were sold in the year to October 2018, 624 (-8.0%) fewer than were sold in the year to October 2017. The value of lifestyle properties sold was $5.82 billion for the year to October 2018.
The median price for all lifestyle properties sold in the three months to October 2018 was $650,500 and was $34,500 higher compared to the three months ended October 2017 (+5.6%).
Peacocke said: “As indicated by the sales statistics for the period ending October 2018, spring conditions have stimulated the lifestyle market, and in most regions, has halted the decline in sales volumes reported last month.
“All districts, apart from Manawatu/Wanganui, Nelson and the West Coast, have experienced an upturn in volumes, which when coupled with the solid median price of $650,500 is reflective of a market in good health."
More detail on prices is here.
Farm sales
Select chart tabs
13 Comments
As outlined in the data for the 3-month period ending October 2018, sales activity has been virtually non-existent in the dairy sector.
Which is amazing considering the amount for sale. It's 50km each way for me to get to work across the Waikato, I alternate between two routes. There's atleast 9 dairy farms for sale directly on those roads, ie: not advertising down a side road which there are a few.
It's an even split 3 ways. New listings this spring, big ad campaign down the road frontage; old listing carried over from last year with the faded signs and ones that are still listed online but you wouldn't know it was for sale when you drive past.
Throw in a couple of decent sized support blocks and it's a busy piece of road.
Was talking to my neighbour, he's in his late 70's own 60ha ex Dairy, been beef for 20 years. Leased 1/3 for maize years back, 1/3 just went into maize under lease and he's making noises of retiring completely but staying on farm by leasing the remaining third.
Speaking to mate, fert rep told him a handful of dairy farms a month are being converted back to beef in his area. Old boys hanging up the cups, no family interested in taking over but want to remain on the farm.
These two points line up with some of the stories I have heard at the local pub. That land use is changing back to beef and I foresee an increasing number of farms coming up for sale over the next 5 years as those in their 70's + pass on
Hows it looking down your way Aj? We have plenty of grass but the soil is very dry. Our rainfall is about half of normal or less for the last three months.
I think a lot of older farmers would get out if they could. They are stuck. Multi million dollar debts on plunging values.
One has to question the banks role in those farms not making $50k Aj or is it due to livestock movements/valuations? Are there profits low but cashflows strong? If they couldn't make decent $ last year based on payouts, the question has to be asked if it was a one off or are they actually insolvent?
The average age of an NZ farmer is something like 63 so the generational selloff was going to happen eventually. The next generation can't get in so it leaves business or foreigners to buy these farms. As yields are so low the only way to make it pay is to own multiple farms and go industrial scale like in Australia and the US.
As to lifestyle blocks, as much as I want one it's such a dumb use of land. If we can't expand our towns and cities due to loss of valuable fertile land then why do they allow lifestyle blocks?
Some lifestyle blocks are fine - those that are on lower quality land, or have protected bush remnants on them, or even very small blocks (0.5 or 1 ha) cut off productive farms.
Surely councils have moved on from the days of allowing best quality land to be chopped into 10 acre blocks.
I recently spoke to a Swiss academic out here on an ag visit. In Switzerland all farm land has to remain exactly as that. You can't subdivide it up. That's a debate that perhaps NZ needs to have - though I would guess that the property rights groups would have quite a lot to say on it.
As it is Friday, an old Joke...some might find it true.
Farmer won on lotto big time. He was getting on in years. Been trying for years.
His accountant asked him what he was gonna do with the money.
He replied I am gonna buy another Farm after taking a World Trip.
Then I am going to work my self into an early grave. Then leave it all to the Kids. See how they like it.
We welcome your comments below. If you are not already registered, please register to comment.
Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.