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Reassuring late spring improvement - REINZ

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Fuseworks Media
Fuseworks Media

Data released today by the Real Estate Institute of New Zealand (REINZ) shows there were 95 less farm sales (-21.6%) for the three months ended December 2019 than for the three months ended December 2018. Overall, there were 345 farm sales in the three months ended December 2019, compared to 282 farm sales for the three months ended November 2019 (+22.3%), and 440 farm sales for the three months ended December 2018. 1,266 farms were sold in the year to December 2019, 15.8% fewer than were sold in the year to December 2018, with 41.6% less Dairy farms, 2.8% less Grazing farms, 31.4% less Finishing farms and 10.8% less Arable farms sold over the same period.

The median price per hectare for all farms sold in the three months to December 2019 was $38,152 compared to $40,589 recorded for three months ended December 2018 (-6.0%). The median price per hectare decreased 3.8% compared to November 2019.

The REINZ All Farm Price Index fell 0.3% in the three months to December 2019 compared to the three months to November 2019. Compared to the three months ending December 2018 the REINZ All Farm Price Index fell 1.7%. 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.

Five of the 14 regions recorded an increase in the number of farm sales for the three months ended December 2019 compared to the three months ended December 2018 with the most notable being Auckland (+12) and West Coast and Otago (both +5). Waikato recorded the most substantial decline in sales (-32 sales) followed by Northland and Southland (both -16 sales). Compared to the three months ended November 2019, nine regions recorded an increase in sales with the biggest increase being in Manawatu/Wanganui (+23), Waikato (+19) and Taranaki (+7 sales). Brian Peacocke, Rural Spokesman, at REINZ says: "Whilst sales volumes for the 3 month period ending December 2019 were down significantly on the equivalent period 12 months ago, there was nevertheless a distinct improvement on the previous 3 month period ending November 2019.

"Of particular significance was the lift in dairy farm sales in the Waikato, from 2 per month for October and November to 11 for December 2019.

"Modest gains were also recorded in the finishing and horticulture sectors, with a strong lift in volume in the grazing sector during the month of December.

"Product prices remained strong leading into the Christmas/New Year holiday period, with increasingly optimistic forecasts emerging for the milk payout in the dairy sector.

"There is little evidence of change in the market-suppressing stance from the majority of the trading banks where it would appear one bank in particular is enjoying the benefit of leaving the shop door open.

"Whilst rural morale is generally good, a mood of caution exists relating to the forthcoming summer dry period, and huge sympathy is evident as New Zealand farmers empathize with their fire-ravaged Australian counterparts," he concludes.

Points of Interest around New Zealand include:

Northland/Auckland - minimal activity on dairy, moderate sales at solid prices for finishing units but strong sales in the grazing sector, albeit modest prices

Waikato/King Country - a strong rebound in sales of smaller to medium sized dairy units with healthy prices being recorded; steady activity on dairy support, finishing and grazing properties; quieter in the Taupo district

Bay of Plenty/Rotorua - a lift in horticultural sales from last month, with steady interest being fuelled by forecasts of increasing prices for kiwifruit; slower results in the other categories

Taranaki - surprisingly quiet in this region with light activity in the dairy and dairy support categories, with reasonable prices being achieved for those finishing and grazing properties that did sell

Gisborne/Hawke’s Bay - relatively subdued in the Gisborne district with light activity in the grazing sector, whilst Hawke’s Bay maintained par with last month with modest volumes albeit steady prices in the finishing and grazing sectors, with one stand-out sale of a very good larger scale beef unit in the Central Hawke’s Bay district of Ongaonga

Manawatu/Wanganui - quiet on dairy, a good lift on finishing and dairy support properties at good prices but first-class results with a big lift in volumes of grazing units spread throughout the region from Ruapehu to Tararua; 14 sales for December vs 7 sales for November

Wairarapa/Wellington - generally light volumes with some activity being recorded in the dairy, finishing, grazing and arable categories, most of which occurred in the Wairarapa region

Nelson/Marlborough - steady sales of finishing and grazing properties with two very strong sales in the Tasman district; horticulture performed well in Marlborough with two particularly strong sales of vineyards featuring sauvignon blanc plantings

Canterbury/West Coast - zero on dairy in Canterbury but two on the coast; reasonable dry stock activity in the Hurunui district in North Canterbury with a scattering of smaller finishing, grazing and arable sales throughout the balance of the province

Otago - good solid results at steady prices throughout the region for both finishing and grazing properties; one dairy unit sale at a good price in the Waitaki district

Southland - increased sales activity at steady prices on the dairy front, but modest results within the finishing and grazing sectors.

Grazing farms accounted for the largest number of sales with a 34% share of all sales over the three months to December 2019, Finishing farms accounted for 26%, Dairy accounted for 10% and Horticulture accounted for 9% of all sales. These four property types accounted for 79% of all sales during the three months ended December 2019.

Dairy Farms

For the three months ended December 2019, the median sales price per hectare for dairy farms was $38,152 (35 properties), compared to $39,678 (16 properties) for the three months ended November 2019, and $40,589 (58 properties) for the three months ended December 2018. The median price per hectare for dairy farms has decreased 6.0% over the past 12 months. The median dairy farm size for the three months ended December 2019 was 100 hectares.

On a price per kilo of milk solids basis the median sales price was $41.40 per kg of milk solids for the three months ended December 2019, compared to $51.18 per kg of milk solids for the three months ended November 2019 (-19.1%), and $40.56 per kg of milk solids for the three months ended December 2018 (+2.1%).

The REINZ Dairy Farm Price Index fell 4.9% in the three months to December 2019 compared to the three months to November 2019. Compared to December 2018, the REINZ Dairy Farm Price Index rose 11.7%. The REINZ Dairy Farm Price Index adjusts for differences in farm size and location compared to the median price per hectare, which does not adjust for these factors.

Finishing Farms

For the three months ended December 2019, the median sale price per hectare for finishing farms was $31,008 (90 properties), compared to $33,178 (72 properties) for the three months ended November 2019, and $31,169 (152 properties) for the three months ended December 2018. The median price per hectare for finishing farms has fallen 0.5% over the past 12 months. The median finishing farm size for the three months ended December 2019 was 39 hectares.

Grazing Farms For the three months ended December 2019, the median sales price per hectare for grazing farms was $10,177 (119 properties), compared to $10,410 (86 properties) for the three months ended November 2019 and $10,192 (128 properties) for the three months ended December 2018. The median price per hectare for grazing farms has fallen 0.1% over the past 12 months. The median grazing farm size for the three months ended December 2019 was 147 hectares.

Horticulture Farms

For the three months ended December 2019, the median sales price per hectare for horticulture farms was $261,131 (31 properties), compared to $213,890 (35 properties) for the three months ended November 2019 and $164,143 (44 properties) for the three months ended December 2018. The median price per hectare for horticulture farms has risen 59.1% over the past 12 months. The median horticulture farm size for the three months ended December 2019 was 7 hectares.

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