REINZ blames lack of finance for slump in farm sales and values

REINZ blames lack of finance for slump in farm sales and values

The Real Estate Institute of New Zealand (REINZ) has blamed banks being reluctant to lend for a 57% fall in the number of farm sales in the last two years and a 44% fall in median farm prices.

REINZ President Peter McDonald said an improvement in farm profitability and the bright outlook for output and commodity prices was not being reflected in land values because banks lacked confidence. Earlier today MAF released its annual situation and outlook report which included bullish forecasts for prices and returns as Chinese demand surged.  

McDonald was commenting after releasing farm sales figures for May showing 319 farms were sold in the three months to May, including just 11 dairy farms in the month of May itself. This was down from 12 the previous month. REINZ said the 319 sold in the last three months was up slightly on the 288 sold in the same period a year ago, but was down 57% on the 745 sold in the three months to May 2008.

The median farm price in the three months to May was NZ$1.035 million, which was down 44% on the median two years ago of NZ$1.86 million. It was up fractionally from the NZ$1 million seen in the three months to April. The median dairy farm price was down at NZ$3.7 million in the three months to May from NZ$4.05 million two years earlier.

REINZ President Peter McDonald“For most agents it has been a frustrating and challenging marketing season with lots of interest and good properties listed, but the number of successful sales down on past years because of the unavailability of finance,” McDonald said.

 “Rural property sale prices and current values are being determined by lending policies and the availability of finance rather than farming returns,” he said.

“It should have been a good year with the second highest milk solids payout ever, but sales of dairy farms have been disappointingly low because of the lack of confidence amongst lenders.”

After falling to just NZ$36/kg in April, the average price per kilogram of milk solids recovered to NZ$45 in May, McDonald said.

“Prospects for dairying have never looked better with forecasted payments expected to set new records in the oncoming years and we need to see consistent investment,” McDonald said.

"It would be concerning if the lending attitudes currently preventing New Zealand farmers buying into dairy properties at reasonable prices should suddenly change and cause another market spike, like we saw in 2007, if lenders were to decide they want to invest in agriculture again.”

Here is regional detail below from REINZ: See the attached table below with prices etc. Also see our interactive chart here and below.

Northland

The information provided by the Real Estate Institute in relation to the rural and lifestyle real estate market covers a three month period. Therefore references to May results refer to the period from 1 March – 31 May 2010 and references to April refer to the period from 1 February - 30 April 2010.

The median farm price in Northland decreased to $650,000 in May (April 2010: $680,000; May 2009: $850,000). 31 farms sold (April 2010: 25; May 2009: 29).

The 31 farms sold consisted of 18 grazing, eight horticulture, two each dairy and finishing and one arable. At $285,000 the median price for a lifestyle block was down in May (April 2010: $310,000; May 2009: $325,000). 86 lifestyle blocks sold during the period (April 2010: 83; May 2009: 112).

Auckland

The median farm price in Auckland decreased to $830,000 in May (April 2010: $922,500; May 2009: $895,000). 21 farms sold (15 grazing, four horticulture and two dairy). (April 2010: 14; May 2009: 15).

The number of lifestyle blocks sold increased to 234 in May (April 2010: 225; May 2009: 219).

The median price eased back to $705,000 in May (April 2010: $706,000; May 2009: $700,000).

Waikato

41 farms (20 dairy, 14 grazing, three finishing, two horticulture and one each arable and special) sold in May, up on the 38 sold in April (May 2009: 36).

The median price was down at $1,800,000 in May (April 2010: $1,985,000; May 2009: $2,090,000). 151 lifestyle blocks sold in May, up on the 137 sold in April. The median price decreased to $420,000 (April 2010: $446,000). In May 2009, 162 lifestyle blocks sold with a median price of $381,250.

Bay of Plenty

The median price for a farm was up at $975,000 in May (April 2010: $922,500; May 2009: $1,150,000). 34 farms (24 horticulture, seven grazing and three dairy) sold in May, up from the 26 sold in April (May 2009: 31). 94 lifestyle blocks sold in May (April 2010: 85; May 2009: 110).

The median price increased to $480,000 (April 2010: $475,000; May 2009: $477,000).

Gisborne

Lifestyle block sales volume increased with eight sold (April 2010: six; May 2009: 16).

The median price dropped to $257,500 from April’s $400,063 (May 2009: $277,000).

Hawkes Bay

The median farm price decreased to $1,322,500 in May, down from $1,410,000 in April (May 2009: $900,000).

14 farms sold (April 2010: 12; May 2009: 17) consisting of eight grazing, two each finishing and horticulture, and one each dairy and forestry. 55 lifestyle blocks sold in May, down one from the 56 sold in April.

The median price was down at $400,000 (April 2010: $419,000). In May 2009, 52 lifestyle blocks sold with a median sale price of $412,500.

Taranaki

The median farm price in Taranaki was down at $1,050,000 in May, from $1,200,000 in April (May 2009: $1,501,250). 19 farms (14 grazing, four dairy and one forestry) sold in May (April 2010: 21; May 2009: 18).

51 lifestyle blocks sold in May (April 2010: 52; May 2009: 58). The median price eased back to $393,000 in May (April 2010: $396,000; May 2009: $340,500).

Manawatu/Wanganui

28 farms (14 grazing, seven finishing, two each dairy and forestry and one each arable, horticulture and special) sold in May (April 2010: 30; May 2009: 20).

The median price increased to $1,112,500 from April’s $930,000 (May 2009: $1,100,000).

The median price for a lifestyle block increased to $360,000 in May (April 2010: $292,500; May 2009: $337,500). In total 90 lifestyle blocks sold, down on the 103 sold in April (May 2009: 98).

Wellington

76 lifestyle blocks sold in May (April 2010: 69; May 2009: 85).

The median price rose to $476,000 from $400,000 in April (May 2009: $440,000).

Nelson/Marlborough 

The median farm price dropped to $648,350 in May (April 2010: $800,000; May 2009: $583,750).

The number of farm sales rose to 18 (eight grazing, three each forestry and horticulture, two special and one each dairy and finishing). (April 2010: 10; May 2009:14). 46 lifestyle blocks sold in April, down on the 53 sold in April 2010 (May 2009: 74).

The median price increased to $567,500 (April 2010: $525,000; May 2009: $525,000).

West Coast

The median price for a lifestyle block was steady at $202,000 (April $202,000; May 2009: $147,000).

13 lifestyle blocks sold in May (April 2010: 13; May 2009: 11).

Canterbury

41 farms (23 grazing, seven finishing, four special, three each arable and forestry and one South Island HC Merino) sold in May, up on the 29 sold in April (May 2009: 35). The median rose to $1,780,000 (April 2010: $1,500,000; May 2009: $1,050,000).

177 lifestyle blocks sold, compared with 176 sold in April. The median price increased to $440,000 from $432,500 in April. In May 2009, 240 lifestyle blocks sold with a median price of $417,500.

Otago

The median farm price dipped to $515,000 in May, from $758,750 in April (May 2009: $847,500). 28 farms sold (April 2010: 28; May 2009: 26). The farms sold consisted of 11 each finishing and grazing, four special and one each dairy and forestry.

52 lifestyle blocks sold in May (April 2010: 65; May 2009: 68). The median price increased to $386,500 (April 2010: $380,000; May 2009: $377,500).

Southland

Farm sales increased with 31 farms (12 grazing, 10 finishing, six dairy, two special and one arable) sold in May (April 2010: 21; May 2009: 23).

The median price increased to $1,100,000 in May (April 2010: $815,000; May 2009: $1,276,914). 45 lifestyle blocks sold in May, compared with 44 sold in April.

The median price was up at $393,000 (April 2010: $343,500). In May 2009, 48 lifestyle blocks sold with a median price of $303,500.

We welcome your help to improve our coverage of this issue. Any examples or experiences to relate? Any links to other news, data or research to shed more light on this? Any insight or views on what might happen next or what should happen next? Any errors to correct?

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1 Comments

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Highlight new comments in the last hr(s).

Andy,

I'm keen for a robust debate on this site, rather than just as a place for my own views.

This is what the REINZ is saying, so I've reported that.

Very keen to given the REINZ plenty of rope with which to ....

cheers
Bernard