Rural Market Reflects External Volatility

Data released by the Real Estate Institute of New Zealand (REINZ) shows there were 57 less farm sales (-13.6%) for the three months ended January 2020 than the three months ended January 2019. Overall, there were 363 farm sales in the three months ended January 2020, compared to 345 farm sales for the three months ended December 2019 (+5.2%) and 420 farm sales for the three months ended January 2019. 1,277 farms were sold in the year to January 2020, 14.7% fewer than were sold in the year January 2019, with 40.3% less Dairy farms, 3.9% less Grazing farms, 28.4% less Finishing farms and 9.8% less Arable farms sold over the same period.

The median price per hectare for all farms sold in the three months to January 2020 was $21,221 compared to $27,087 recorded for the three months ended January 2019 (-21.7%). The median price per hectare decreased 7.7% compared to December 2019.

The REINZ All Farm Price Index fell 3.2% in three months to January 2020 compared to the three months to December 2019. Compared to the three months ending January 2019 the REINZ All Farm Price Index fell 10.5%. 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 January 2020 compared to the three months ended January 2019 with the most notable being Auckland (+10) and Northland (+9). Waikato recorded the most substantial decline in sales (-32 sales) followed by Taranaki (-13 sales). Compared to the three months ended in December 2019, eight regions recorded an increase in sales with the biggest increase being in Northland (+13), Waikato and Southland (both +5 sales).

“Sales figures for the three month period ending January 2020 reflect the improving trend referred to last month but nevertheless are still 16% below the same period 12 months ago and 9% below the equivalent period 2 years ago” says the Rural Spokesperson at REINZ.

“Volatility in the median price is the other notable factor with increases in the finishing and horticulture sectors, but decreases in the grazing and dairy sectors, particularly the latter”

“Numerous issues continue to impact the rural sector with the well-publicized restrictions emanating from some members of the banking sector now being trumped by market restrictions resulting from coronavirus to shortage of killing space at a critical time of the year to the onset of extraordinarily dry conditions bordering on drought throughout the North Island and the top of the South.”

“The amazing contrast has been heavy rain, cooler temperatures and flooding in the lower South Island”

“Again, as a regular occurrence, the resilience of the rural sector is being severely tested, “ He concludes.

Source: REINZ Rural Press Release 19 February 2020