Farm sales continued to decline in May, as buyers kept their cash in their pockets.
The latest rural sales figures from the Real Estate Institute of New Zealand (REINZ) show that 258 farms of all types were sold nationally over the three months to the end of May, down 39% compared to the same period of last year.
REINZ rural spokesman Shane O'Brien said the decline in sales had been evident throughout this year.
O'Brien said many buyers were taking a wait and see approach against a backdrop of higher interest rates, increased farm expenses and lower farm incomes off the back of adverse weather and challenging economic conditions.
"Many agents are reporting continued enquiry from buyers, but many are not committing to land purchases yet," O'Brien said.
"While no one factor is causing the reduction in sales, the culmination of these along with an uncertain outcome in this year's general election is creating caution in many areas," he said.
The dramatic downturn in sales has affected all farm types, with dairy farm sales down 47% over the three months to May compared to the same period of last year, while finishing farm sales were down 50%, grazing farm sales were down 30% and horticultural property sales were down a whopping 64%.
Prices have also eased, with the REINZ All Farm Price Index, which adjusts for differences in the mix of properties sold by farm size, location and type, declining by 5.5% over the 12 months to the end of May.
Dairy farm prices fared better, with the REINZ Diary Farm Price Index increasing by 1.6% over the 12 months to the end of May.
The comment stream in this article is now closed.
- You can have articles like this delivered directly to your inbox via our free Property Newsletter. We send it out 3-5 times a week with all of our property-related news, including auction results, interest rate movements and market commentary and analysis. To start receiving them, register here (it's free) and when approved you can select any of our free email newsletters.
9 Comments
Caution seems to be the prudent path at the moment
The sudden fall off in forestry demand is really impacting sentiment. Especially for any 2nd or 3rd class land or more than 30mins from town.
shortage of volunteer punching bags :-)
Why aren"t farm prices down then? (Not much anyway). Is it because farms still receive special treatment from the banks?
stefanblaise. I know I shouldn't bite when people make silly comments on this site but really ?? Special treatment from the banks??.
I guess farms present a low lower risk than other types of commercial lending.
Don't think that's true. But they never went up as stupid as house prices. Note that average farmer pays a interest rate at least 1.5% higher than most home loans.
I wouldn't say special in fact the opposite it's hard to get funds as costs etc go up. The stopping of forestry buyers will bite hard in some areas as they have stopped apart from a few cases and are unlikelyto come back. Going to be an interesting 12 months.
In my locale farm prices remained fairly consistent despite the insanity evident in the housing market over the last three years.Talking to colleagues within farming banks are taking a very cautious approach far from the “special treatment “ concept
We welcome your comments below. If you are not already registered, please register to comment.
Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.