The rural property market ended 2023 on a very soft note with farm sale numbers well down on previous years.
According to the Real Estate Institute of NZ, just 241 farms were sold throughout the country in the fourth quarter of last year.
That was down 37% compared to 383 sales in Q4 2022.
Over the full 12 months of 2023, 1059 farms were sold around the country, down 32% compared to 2022.
The slump in sales affected all farm types, with dairy farm sales down 41% for the year, dairy support -7.3%, grazing properties -32%, finishing farms -35% and arable farms -26%.
"For the first time in several years a considerable number of properties remained unsold at the end of the spring selling season," REINZ rural spokesman Shane O'Brien said.
"This reduction, especially when compared to previous years, has affected all regions and sectors for various regions.
"There is no doubt the head winds from farm product prices combined with on-farm interest rates (circa 8.0%) and rising on-farm inflation have challenged buyers when looking at property options," he said.
The lifestyle block market hasn't fared much better.
Last year 5433 lifestyle blocks were sold throughout the country, down 20% compared to 2022.
The median price of lifestyle blocks sold in Q4 last year was $950,000, down by $90,000 (-8.7%) compared to Q4 2022.
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23 Comments
After the panic buying over covld to flee the cities, where people literally clicked buy now on stupido prices, this should not be a surprise to anyone.
I'm very glad I convinced my partner we should rent a lifestyle block in 2022 rather than take the plunge and buy. We quickly realised it wasn't for us.
We had been actively searching to purchase a lifestyle property from July 2022. It took till Dec 2023 to finally find one.
The weather events (flooding and cyclones) coupled with winter and high interest rates really slammed the brakes on in 2023.
At the end of the day the main cuplrit of lack of movement was unrealistic vendors (expecting to cash in on 2021 prices in 2023) and deluded real estate agents which resulted in a large percentage of properties staying on the market for 6 to 12 months prior to being withdrawn from sale.
We placed fair market price offers on a number of properties and the vendors didn't even counter-offer so we walked away, all those properties did not sell and were withdrawn.
Case in point - one property currently asking for offers around $1.7m has been on the market for 7 months, as it is only worth $1.3m to $1.4m based on comparables. Purchsed by the vendors for $560k in 2010 with no significant additions.
Agree starrider, we are having the exact same experience in the Wairarapa, what area are you in?
Hawkes bay
Have to very generic property to find real comparables, often there are few like for like. The prices in our area have gone up in the past three years..
Is that sale price? We find that list prices have gone up, but the properties that are selling ( and that’s a very few of the total listings) are selling for what you would expect in the current market. REINZ HPI data for our tiny districts backs this up. When we first started looking good lifestyle blocks were between $1,000,000 and $1,500,000 ( this was a while before we moved down). During the pandemic locals caught wind of the crazy price hikes fueled by multioffer and every second person ( tradesman at our property, people you would meet socially) would tell you their properties were now worth $2 to $2.5 million. This was an unheard of price in this area except for the odd large historic homestead or an architectural monstrosity built by an out of towner with more money than sense. A bit laughable as these are fairly modest properties, no formed driveways, no swimming pool usually a largish house but totally dated and in need of total renovation. During the pandemic many purchased these houses at astoundingly high prices with no due diligence, they are now coming back on the market several hundred thousand less that the 2021 purchase price. It was a kind of gold rush in an area with low incomes and like the forestry story below many are now experiencing real grief at having missed a too good to be true opportunity. So in hopes of finding a buyer who doesn’t fully understand the market they list at 2021 prices.
"We placed fair market price offers on a number of properties and the vendors didn't even counter-offer"
Clearly your offers weren't "fair market price", they were the prices you were hoping for.
I guess you were there and have done the hundreds of hours of research that we had.... We viewed in person over 50 homes.
But you know better, right?
Ah ah, if the property isn't sold after 12 months and is withdrawn from the market then definitely sellers expectations weren't fair market value neither.
If a property sits on the market for that long, and they get an offer, it is the very definition of “fair market price”. The buyer making the offer is “the market”. Look around, don’t see anyone else making offers…
Curious as to what the definition of a lifestyle property is. We have a 1ha property - but its more of a large section that a lifestyle property. Zoned rural-coastal.
There's no official definition for lifestyle blocks, which means the line between farms and residential properties is easily blurred. But put simply, if you can mow the lawns with a hand mower, it's a residential property. If you need a ride on, it's a lifestyle block - and further, if you need a tractor, it's a farm.
I'm guessing they're using valuation category codes - you can see yours through your local council rates page or somewhere like QV. If yours starts with LI it's considered a lifestyle block, not sure of all the different values, there's bound to be a table online, but mine starts with HX (horticulture-other) and standard residential seem to start with RD.
Inbetween is finishing blocks, often great than 20ha and have some scale.
All the hype around luxurious lifestyle was just a bad idea for many.. many jumped into buying rural blocks, but are now regretting that
Indeed - its a lot more work than a lot of people think. And its a hell of a lot more expensive to own and keep looking good. Like any property type they are not for everyone.
They’re a life sentence not a lifestyle.
I'm pretty sure the neighbour (on a lifestyle block) spends more time stressing over the state of his lawn than I do worrying about the state of my paddocks. Urban escapees would do well to accept their lawn will not be perfect, and things will be messy. A single thistle is not the end of the world.
There are selective herbicides for that.
A little salt.
Any many enjoy it… they all vary so such yet a DGM is simply that! 😅
Hill Country Forestry buyers are gone as desired by farmer groups. Now inundated with farmers wanting to sell hill country farms and escape - "I think we missed our chance" common comment - Greed? Only other farmers can really buy - average age is 62 years old for hill country farmers. As land values fall bank ratios get tested - they will be nice for a while but head office in Australia will only tolerate for a season or so. Costs up 30%, returns down 30% - vice coming in from both sides. Will interest rates go back to 3 - 4%? Will more customers appear prepared/able to pay higher prices? Government spending to reduce - your on your own now. Interesting times ahead.
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