Farm sale numbers finally moving upward
Annual farm sales have topped 1600 for the first time in more than 41⁄ years, though the $24,590 median hectare price remains significantly below its peak.
Real Estate Institute of New Zealand figures showed 93 more farms sold in the three months ended October this year than in the same period in 2012.
The 349 farms sold was an increase of 36.3 per cent on a year ago, of which grazing properties accounted for about half of all farms sold.
For the year ended October, 1629 farms were sold, the first time annual sales have surpassed 1600 since April, 2009.
REINZ rural spokesman Brian Peacocke said the New Zealand market was still variable, ranging from active and strong to patchy and quirky.
Bay of Plenty had the largest increase in farm sales, with 24 more sold, while Nelson recorded the largest fall, dropping 19.
‘‘Early spring sales reflect a healthy trend but it will be November before significant sales evidence emerges.’’
The median hectare price in the October quarter was $24,950, up from $19,872 for the same period a year ago.
A Taranaki dairy farm had sold for $74,000 a hectare, while a kiwifruit orchard in Te Puke fetched between $230,000 and $260,000 a canopy hectare.
The REINZ adjusted price index fell from September to October, however, dropping 4.1 per cent.
This index adjusted pricing for differences in farm sizes, location and farming type.
Peacocke said good properties were selling well but there was a hint of buyer resistance emerging because of higher price expectations from vendors.
‘‘Whilst current farm prices are improving, it is of interest to note the levels are significantly below the peak of farm prices recorded mid-October 2008.’’
The median price for dairy farms fell slightly, though total sales represented 10.6 per cent of all farms sold for the three months ended October.
Dairy farmers were warned last week they could be in for the same big-stick treatment from the Reserve Bank governor as homebuyers if they were not responsible about their debt levels.
Federated Farmers president Bruce Wills said there was an increasingly stern tone from the Reserve Bank about the dairy sector’s high debt, and the economic risk it presented if current payout prospects led to another borrowing and spending bonanza.
Farmers should remember the Reserve Bank governor had a toolbox as he had proved by recently imposing borrowing restriction speed limits or loan ratio values (LVRs) on homebuyers, Wills said.
His warning followed the Reserve Bank highlighting dairy sector debt in its latest Financial Stability Report saying loans by registered banks to dairy farmers this year totalled $32.37 billion, agriculture on-farm loans were $49.2b and agriculture owed banks $50.5b.