More farms were sold in April than in any single month since July 2008, the Real Estate Institute of New Zealand (REINZ) says, with a significant increase in sales of dairy support blocks in the South Island as farmers prepare for winter grazing.
A total of 152 farms changed hands in April, the most since 154 in July 2008. The preceding three April months - 2010, 2009 and 2008 - saw 103, 108 and 264 sales, respectively.
REINZ rural market spokesman Peter McDonald said there had been rising confidence in the rural sector for some months now and this, along side high commodity prices, was now translating into greater confidence in buying farms, especially in the dairy support sector. The 83 grazing farms sold during April was the most in a single month since 111 in June 2008. Just 36 grazing farms were sold in March and 49 in April last year.
“There has been something of a turnaround in farm sales during April particularly with grazing and dairy support properties in the South Island,” McDonald said.
Good levels of interest were coming in from investors suggesting finance was becoming "a little easier" to secure.
“The rural property market has been very quiet for the past two years but it is too early to tell whether this lift in activity is merely ‘catching up’ or the beginning of a more sustained trend in farm transactions,” McDonald added.
In the three months to April there were 290 farms sold compared with 190 sales in the three months to March 2011 and 267 sales in the three months to April 2010. Most of the sales increase came in the South Island with Canterbury, Otago and Southland accounting for half the national increase in sales, the REINZ said.
All regions, apart from Wellington, recorded an increase in sales between March and April with no regions reporting a decrease in sales.
The number of farms sold in the year to April was 918, up from 869 for the year to March, and higher than the 909 sold in the year to April 2010.
The April month saw 24 dairy farms sold at an average sale value of NZ$29,153 per hectare and NZ$34 per kilogramme of milk solids (MS). The average farm size was 177 hectares and the average production per hectare across all dairy farms sold in April was 863 kgs. The 24 April dairy farm sales tops the 15 sold during March and 12 in April 2010.
Grazing properties accounted for the largest number of sales with 48.3% share of all sales in the three months to April. Dairy properties accounted for 17.9%, finishing properties 13.1% and horticulture properties 9.7%. Between them the four property types comprised 89.0% of all sales during the three months to April.
See the REINZ's full release here and its rural market statistics here.
Farm sales
Select chart tabs
(Update adds additional detail).
6 Comments
I can definately understand the sales of grazing blocks, as my neighbour just did the sums with me on a property he is set to buy.
15Tonne crops wintering 14 cows / ha at $26/week for 10 weeks. Only costs him $2200/year to grow and maintain the land, pay wages etc. Sweet margin of $1440/ha or $480/year if he builds it into a 3 year rotation of winter grazing. Buying land for $9k/ha means break even after debt servicing, but he still has 2/3 of the new land available for hogget grazing each year on top to cream his profit.
Word in Southland is that the Germans are back again, this time buying up farms for dairy conversion.
VC, grazing has dropped to $20/cow down south at the moment due to great feed growing conditions and farmers planning to winter more cows at home/and or having purchased their own support blocks. Your neighbour will be fine if he has grazing contracts sorted, otherwise he may find that like some this year, he is unable to attract grazers at his expected price. Dairy farmers I speak to are expecting next season's payout to be in the $6 range. Sounds like he intends to feed them well - I guess he will also be feeding hay or silage as well as crop. ;-)
Yea i'm aware of the feed situation putting downward pressure on grazing prices. Our neighbour has done it for 3 years now, has an excellent reputation. Talking to a few around the traps $26 is the average here for people with good reps or a history of taking same persons cows.
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.