Farm sales drop but prices up
While farms sales nationwide are down, the average price per hectare is still on the up.
Manawatu¯ Whanganui recorded the most substantial drop in farm sales across the country for the three months ended July 2019 compared to the three months ended July 2018, according to the Real Estate Institute of New Zealand (REINZ).
Sales dropped 25.7 per cent, while the median price per hectare for all farms sold in the three months rose 10 per cent to $23,435 compared to $21,302 recorded for 2018. Median price per hectare increased 6.3 per cent compared to June 2019.
Feilding-based NZR Real Estate owner Peter Barnett considers the numbers in context to local market conditions where he says demand is outstripping supply.
‘‘Winter is generally some of the lowest selling months of the year for farm properties, due to the seasonal nature of the industry, so a handful of sales different from one year to the next can sound like a lot expressed as a percentage, when really it’s not much in total. As an example, in the Manawatu¯ Rangitı¯kei region there were only six farms over 20ha sold over the past three months, while last year only 12 happened over the same period. Neither number is huge, but 50 per cent less sales sounds a bit more dramatic than six less sales.’’
He says the fewer farm sales in Manawatu¯ Rangitı¯kei over the past year has been largely driven by fewer on the market, particularly in the sheep and beef sector. Of those six sales, only one was over 100ha; the rest were in the 25-50ha bracket. ‘‘These smaller blocks are selling well with strong demand, with the number of sales dictated more by lack of supply than lack of buyers.’’
Understanding seasonal demand also helps give a clearer picture of the current market. Sales predominantly of these sized blocks at this time of year is quite common; larger farm block sales typically fall more between October and April, due to larger blocks requiring more organisation around capital livestock which needs to be sorted well before the winter.
Land use changes are also starting to have impact. ‘‘The local market has been short of 200-500ha breedingfinishing units for a few years. There has been significant land-use change in the dairy property sector in Tararua over the past two years, with sheep and beef demand stronger than dairy. I expect we will see more of that across the country where the soil types and/or irrigation provide strong alternative uses. Diversity of buyer types is a healthy thing.’’
The volumes of farm sales nationwide for the three months ending July 2019 reflect the easing trend evident over recent months: 295 total sales is a 25 per cent drop from the same period in 2017 and 2018, says REINZ rural spokesman Brian Peacocke. ‘‘Acknowledging winter when activity is generally lowest, grazing properties have held reasonably well, dairy farms eased by a quarter but finishing properties dropped by 45 per cent compared to two years ago, influenced to quite a degree by the lack of availability in spite of good demand.’’
From a farming perspective, much of New Zealand has enjoyed a softer winter. ‘‘Such conditions have bolstered morale, but an overlay of caution remains, driven by frosty bank conditions and ice-shattering announcements from Fonterra, albeit dairy pay-out predictions remain solid, as do returns in particular from lamb, beef and horticultural products. It would appear we are heading towards a good productive spring.’’