Uncertainty behind restrained early spring rural real estate sales

"A definable mood of caution remains within the rural sector," said REINZ.
"A definable mood of caution remains within the rural sector," said REINZ. Photo credit: Getty

A mood of caution in the rural sector has seen restrained spring real estate sales says a national industry group.

Real Estate Institute of New Zealand (REINZ)  data shows there were 20 more farm sales (+8.0 percent) for the three months ended September 2019 than for the three months ended September 2018. 

Overall, there were 270 farm sales in the three months ended September 2019, compared to 265 farm sales for the three months ended August 2019 (+1.9 percent), and 250 farm sales for the three months ended September 2018. 

REINZ rural spokesperson, Brian Peacocke said while sales volumes reflected a small lift compared to 12 months ago, they were consistent with both last month and the equivalent period two years ago.

"The outlook remains good in terms of income for sheep, beef, horticulture and dairy, well supported by low-interest rates and a benevolent exchange rate," he said.

Uncertainty behind restrained early spring rural real estate sales
Photo credit: Supplied/REINZ

However uncertainty in the rural sector was having an impact.

As a result of the overwhelming raft of compliance and water quality issues, coupled with the continuing reports of a restrictive lending environment within the banking sector, a definable mood of caution remains within the rural sector."

Peacocke said the cautious mood would be tested in the coming months as more properties come to the market.

"Spring conditions throughout the country are conducive to good levels of production, and blustery, unpleasant, equinox type conditions aside, rainfall to date should ensure a continuation of benevolent conditions for the mid-spring period ahead."

The median price per hectare for all farms sold in the three months to September 2019 was $25,754 compared to $25,447 recorded for three months ended September 2018 (+1.2 percent). 

The median price per hectare increased by 1.6 percent compared to August 2019.  

Points of Interest around New Zealand include:

Upper North - a solid level of sales of finishing and grazing properties in Northland with good prices being paid for quality units, very quiet in the Auckland region and no activity in the dairy sector

Central Regions - Unsurprisingly, given farmers have been emerging from peak workload periods, no dairy farm sales in the Waikato and minimal activity within the other categories;  a better level of activity in the Bay of Plenty/Rotorua area albeit the two dairy farm sales reflect an intended conversion to kiwifruit, some good prices achieved on finishing units and a cross-section of smaller horticulture property sales

Western North Island - zero activity on dairy units throughout; very light activity on drystock properties in Taranaki, Wanganui, Manawatu and Horowhenua but a stirring of bones with several sales in the arable sector

Eastern North Island - sufficient activity to just register with a scattering of finishing and grazing property sales, most of which occurred in Central Hawke's Bay; a cross-section of activity in the Wairarapa with a good sale of a versatile intensive arable/finishing unit and a strong price on a bare land block in the wine-growing region of Martinborough

Upper South Island - solid prices paid on smaller finishing and grazing units in the Marlborough and Tasman districts, with a very strong result for a smaller horticulture block southwest of Blenheim

Central South Island - no activity in the dairy sector but some good strong results in the drystock arena, particularly with finishing units in the Selwyn district, and a good sale of arable land in the Ashburton district; the buds of the spring market are still waiting to burst on the West Coast

Lower South Island - light activity in North and Central Otago but a strong run of sales of grazing properties in the Dunedin to Clutha districts, with prices remaining on par with recent levels;  a brighter patch in Southland with a string of good sales at good prices for smaller finishing units backed up by sales of several grazing blocks and a dairy unit, all at good solid prices.

Newshub.

Contact Newshub with your story tips:
news@newshub.co.nz