Rural property prices defy dairy downturn but fewer listings

PGG Wrightson real estate general manager Peter Newbold says prices of farms on a per hectare basis remain as healthy as 12 months ago.

He was commenting on the latest April Real Estate Institute sales figures, which show sales and value growth both slowing when compared with a month ago, but still buoyant compared with 12 months ago.

Mr Newbold says the problem facing agents is the reluctance of sellers to list properties for sale.

He claims his firm has motivated buyers for all farm categories, at a ratio of approximately two buyers for every listed property, suggesting unsatisfied market demand.

The REINZ figures show per hectare values are holding up, including for dairy properties in Southland, where better-quality properties are selling for between $41,000 and $46,000 a hectare; Canterbury, where farms are changing hands at between $50,000 and $56,000 per hectare; and Waikato where the market for more sought-after dairy properties sits between $40,000 and $50,000 per hectare.

REINZ figures confirm the median price of dairy farms fluctuated slightly in some areas but generally reflected the overall New Zealand median of 38,802 per hectare compared with 37,761 per hectare in March.

There were 485 farm sales in the three months to the end of April 2015, compared with 425 farm sales for the three months ended March 2015 (+14.1%), and 498 farm sales for the three months to the end of April 2014. 

There were 1798 farms sold in the year to April 2015 – 2.8% fewer than were sold in the year to April 2014.  The median price per hectare for all farms sold in the three months to April 2015 was $28,668 compared with $24,574 for three months ended April 2014 (+16.7%). 

The median price per hectare rose 2.5% in April 2015 compared with March 2015. 

Highlights include:

• reduced sales in Northland, resulting in a higher level of listings in parts of the region;
• Waikato region dairy and grazing properties values holding up;
• a lift in horticultural block sales in Bay of Plenty where prices are equal to or above pre-PSA levels, for example, $500,000 per canopy hectare for gold kiwifruit and up to $375,000 per canopy hectare for green;
• limited properties available in Hawke’s Bay;
• steady activity on dry stock properties throughout the Taranaki, Wanganui, Manawatu and Wairarapa regions where local buyers dominate;
• shortage of listings in Canterbury and reduced sales; and
• better properties throughout Otago and Southland selling, with lesser quality and outlying farms being harder to attract enquiry.

Grazing properties accounted for the largest number of sales, with 39.6% share of all sales over the three months to April 2015, dairy properties accounted for 20%, finishing properties accounted for 15.9% and Horticulture properties accounted for 15.1% of all sales. These four property types accounted for 90.5% of all sales. 

The median price for lifestyle blocks rose 8.3% from April 2014 and there was a lift of 37% in sale numbers over the year.