August rural data: Slow market continues, with signs of activity picking up

27 September 2023

Data released today by the Real Estate Institute of New Zealand (REINZ) shows there were -47 fewer farm sales (-21.2%) for the three months ended August 2023 than for the three months ended August 2022. Overall, there were 175 farm sales in the three months ended August 2023, compared to 214 farm sales for the three months ended July 2023 (-18.2%), and 222 farm sales for the three months ended August 2022.

In the year to August 2023, 1,085 farms were sold, 494 fewer than were sold in the year to August 2022, with 34.4% fewer dairy farms, 7.9% fewer dairy support, 20.7% fewer grazing farms, 39.2% fewer finishing farms, and 16.3% fewer arable farms sold over the same period.

The median price per hectare for all farms sold in the three months to August 2023 was $24,920 compared to $27,170 recorded for the three months ended August 2022 (-8.3%). The median price per hectare decreased by 14.8% compared to July 2023.

The REINZ All Farm Price Index decreased 8.1% in the three months to August 2023 compared to the three months to July 2023. Compared to the three months ending August 2022, the REINZ All Farm Price Index decreased 7.0%. The REINZ All Farm Price Index adjusts for differences in farm size, location, and farming type, unlike the median price per hectare, which does not adjust for these factors.

Three regions recorded an increase in the number of farm sales for the three months ended August 2023 compared to the three months ended August 2022, with the most notable being Otago (+4 sales) and Bay of Plenty and West Coast (+2 sales). Canterbury ( -14 sales) and Southland ( -13 sales) recorded the biggest decreases in sales. Compared to the three months ended July 2023, four regions recorded an increase in sales, the most notable being Northland (+4 sales) and Auckland (+2 sales).

Shane O’Brien, Rural Spokesman at REINZ, said: “The results are as expected, continuing a trend that has been prevalent through most of 2023. The lower sales volume is expected during the winter months but it is encouraging to note that despite a lower number of sales than previous years, median sale prices are holding across most sectors.

Many of the rural sales teams are already noting an increase in activity as we hit, Spring with listings being readied for market. The wetter than usual winter across many regions has seen a delay in releasing some properties to the market and some vendors are choosing to hold off awaiting the outcome of the General Election in October to give more certainty around buying and selling decisions.

There is no doubt the recent drop in the dairy payout has impacted prospective buyers for dairy farms and dairy support land, but this is expected to be short term, based on commentary coming out of NZ’s largest dairy company, Fonterra.

Interest continues in the carbon and forestry sector, but the market noted the recent decision by the Overseas Investment Office not approving two applications for land for forestry conversion, which will undoubtedly be a factor for some buyers to consider. REINZ was recently advised that there are 18 applications for rural land to be converted to forestry sitting before the OIO and Ministers awaiting approval.”

In August 2023, finishing farms accounted for a 31% share of all sales. Grazing farms accounted for 24% of all sales, horticulture farms accounted for 12% of all sales and forestry farms accounted for 10% of all sales. These four property types accounted for 77% of all sales during the three months ended August 2023.

Dairy Farms

For the three months ended August 2023, the median sales price per hectare for dairy farms was $35,960 (15 properties), compared to $38,160 (26 properties) for the three months ended July 2023, and $36,500 (19 properties) for the three months ended August 2022. The median price per hectare for dairy farms has decreased by 1.5% over the past 12 months. The median dairy farm size for the three months ended August 2023 was 122 hectares.

On a price per kilo of milk solids basis, the median sales price was $28.24 per kg of milk solids for the three months ended August 2023, compared to $31.94 per kg of milk solids for the three months ended July 2023 (-11.6%), and $35.94 per kg of milk solids for the three months ended August 2022 (-21.4%).

The REINZ Dairy Farm Price Index decreased by 3.6% in the three months to August 2023 compared to the three months to July 2023. Compared to August 2022, the REINZ Dairy Farm Price Index decreased by 7.7%. The REINZ Dairy Farm Price Index adjusts for differences in farm size and location compared to the median price per hectare, which does not adjust for these factors.

Finishing Farms

For the three months ended August 2023, the median sale price per hectare for finishing farms was $35,410 (55 properties), compared to $35,050 (66 properties) for the three months ended July 2023, and $37,180 (81 properties) for the three months ended August 2022. The median price per hectare for finishing farms has decreased by 4.8% over the past 12 months. The median finishing farm size for the three months ended August 2023 was 32 hectares.

Grazing Farms

For the three months ended August 2023, the median sale price per hectare for grazing farms was $11,760 (42 properties), compared to $13,585 (56 properties) for the three months ended July 2023 and $13,615 (68 properties) for the three months ended August 2022. The median price per hectare for grazing farms has decreased by 13.6% over the past 12 months. The median grazing farm size for the three months ended August 2023 was 156 hectares.

Horticulture Farms

For the three months ended August 2023, the median sale price per hectare for horticulture farms was $444,310 (21 properties), compared to $459,770 (22 properties) for the three months ended July 2023 and $404,800 (25 properties) for the three months ended August 2022. The median price per hectare for horticulture farms has increased by 9.8% over the past 12 months. The median horticulture farm size for the three months ended August 2023 was 5 hectares.

Real Estate Institute of New Zealand

For more real estate information and market trends data, visit www.reinz.co.nz. For New Zealand's most comprehensive range of listings for residential, lifestyle, rural, commercial, investment and rental properties, visit www.realestate.co.nz - REINZ's official property directory website.

Notes to Editors:

The information provided by REINZ in relation to the rural real estate market covers the most recently completed three-month period; thus, references to February 2023 refer to the period from 1 December 2022 to 28 February 2023.

The REINZ Farm Price Indices have been developed in conjunction with the Reserve Bank of New Zealand. It adjusts sale prices for property specific factors such as location, size and farm type which can affect the median $/hectare calculations and provides a more accurate measure of farm price movements. The REINZ Farm Price Indices has been calculated with a base of 1,000 for the three months ended March 1996. The REINZ Farm Price Indices is best utilised in assessing percentage changes over various time periods rather than trying to apply changes in the REINZ Farm Price Index to specific property transactions.

From March 2021 there has been a change in the methodology for calculating rural statistics. To date, the rural statistics have referred to a Return Period which is the month in which a sale record was submitted to REINZ. Going forward, the rural statistics will refer to an Unconditional Month i.e., the month in which the sale went unconditional. This change in methodology ensures that sales that took place in April, for instance, are recorded against April even if they were submitted to REINZ late. The change also brings Rural statistics calculation into line with the Residential statistics calculation, where the Unconditional Month approach has been used successfully to calculate Residential Statistics for several years now. The Unconditional Month methodology also ensures that the most up-to-date state of the REINZ database is reported at the time the data is released with revision of prior months statistics often occurring to reflect the submission of late data or sale amendments that took place after the prior statistics release.

In addition to the calculation period change there are two additional changes to the data worth noting:
1. 12 Districts have been replaced by 13 Regions. These are consistent with the parts of the residential press release and it has been done to be consistent with regional definitions outside REINZ e.g., Statistics NZ
2. Dairy Support is a new farm category and we now have the ability to separate Lifestyle Blocks into Bareland and Farmlets.

If you have any questions regarding this change in methodology, please email [email protected].