Farm sales continue to drop, down 25 percent

Banking pressures and the financial position of dairy giant Fonterra have been cited as the main factors for a continued drop in farm sales. 

Real Estate Institute of New Zealand (REINZ) data shows there were 102 fewer farm sales (-25.7 percent) for the three months ended July 2019 than for the three months ended July 2018. 

Overall, there were 295 farm sales in the three months ended July 2019, compared to 397 farm sales for the three months ended June 2019 (-8.4 percent), and 397 farm sales for the three months ended July 2018. 

REINZ Rural Spokesman, Brian Peacocke, said the drop reflected the easing trend evident over recent months.

"From a farming perspective, much of New Zealand has enjoyed one of the kindest winters to date for many years, with sufficient rain and temperatures conducive to continuity of grass growth in the North Island, and a reduction of snow and frosts compared to other years in the South," he said.

Farm sales continue to drop, down 25 percent
Photo credit: Supplied/REINZ

"Such conditions have bolstered morale but an overlay of caution remains, driven by frosty bank conditions and ice-shattering announcements from Fonterra, albeit dairy payout predictions remain solid, as do returns in particular from lamb, beef and horticultural products," said Peacocke.

He said the major "burr under the saddle" remained the heavy intrusion of pine trees into the pastoral sector in eastern districts already at risk from rural depopulation and the collapse of log prices in the China market.

"The balancing factors currently are the recent drop in the Official Cash Rate (OCR) which should peg interest rates, and at this stage, it would appear we are heading towards a good productive spring."

While there were fewer sales, the median price per hectare for all farms sold in the three months to July 2019 was $23,435, up 10 percent on the three months ended July 2018. 

The REINZ All Farm Price Index rose 1.4 percent in the three months to July 2019 compared to the three months to June 2019. 

The index adjusts for differences in farm size, location and farming type, unlike the median price per hectare, which does not adjust for these factors.

Three of the 14 regions recorded an increase in the number of farm sales for the three months ended July 2019 compared to the three months ended July 2018 with the most notable being Nelson (+7). 

Manawatu-Wanganui recorded the most substantial decline in sales (-22 sales) followed by Waikato and Otago (-16 sales). 

REINZ's 'Points of Interest' around New Zealand include:

 

Upper North - strong activity at solid prices in the grazing category where, apart from one larger unit in the far north, smaller properties were dominant; minor results in the finishing sector and zero on dairy

Waikato/King Country/Taupo - a good solid level of sales of finishing and grazing properties, again with a predominance of smaller units and two dairy farm sales, one in particular in the higher price category

Bay of Plenty - again, steady sales of finishing and grazing blocks with some strong prices in the Te Puke and Rotorua districts; a marked drop-off in horticultural sales which is as expected for this time of the year

Gisborne/Hawke's Bay - relatively quiet in Gisborne and modest volumes in the pastoral sector in Hawke's Bay, notably one larger dairy farm sale in the Patoka district and some strong prices for finishing units in Central Hawke's Bay

Taranaki - like the mountain, a quiet sleepy period before the spring eruption

Manawatu/Wanganui - a steady level of dry stock sales throughout the region, slower in Tararua, with a particularly strong price for a good, albeit smaller, finishing unit in Horowhenua 

Wairarapa/Wellington - quiet in the Wairarapa but a spurt of solid prices for smaller finishing properties on the Kapiti Coast

Nelson - a burst of activity and spectacular prices for viticulture properties in Marlborough, underpinned by solid prices for finishing units in the adjoining Tasman district

Canterbury/West Coast - a stirring of the grazing bones in the Hurunui district but strongly dominated by some great sales of finishing properties at very good prices across the Selwyn, Ashburton and Timaru regions; quiet on the West Coast where West Coast Co-op suppliers are assessing their future options

Otago - consistent sales activity at steady prices on finishing and grazing properties throughout the Waitaki, Central Otago, Dunedin and Clutha districts

Southland - solid prices for good finishing units in the central part of the province; incubation time in the dairy sector.

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