June rural data: Sales low yet the market remains strong overall

26 July 2023

Data released today by the Real Estate Institute of New Zealand (REINZ) shows there were 166 fewer farm sales (-39.2%) for the three months ended May 2023 than for the three months ended May 2022.

Overall, there were 258 farm sales in the three months ended May 2023, compared to 249 farm sales for the three months ended April 2023 (+3.6%), and 424 farm sales for the three months ended May 2022.

Shane O’Brien, Rural Spokesman, at REINZ says May continued to show a decline in sales compared to the previous months, an expected trend that has been evident for 2023 so far.

“Several factors continue to impact on this trend, most notably being the reduced number of listings across most sectors except for a larger than usual number of horticultural listings in the Bay of Plenty area.”

“The reduced number of sales is also impacted by buyers continuing to take a wait and see approach to buying amidst the backdrop of higher interest rates, farm expenses increasing (reported at circa 16%) and lower farm incomes off the back of adverse weather and challenging economic conditions,” comments O’Brien.

1,163 farms were sold in the year to May 2023, 570 less than were sold in the year to May 2022, with 36.1% fewer dairy farms, 6.7% fewer dairy support farms, 22.7% fewer grazing farms, 35.1% fewer finishing farms and 32.2% fewer arable farms sold over the same period.

“Many agents are reporting continued enquiry from buyers, but many are not committing to land purchases yet. 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,” says O’Brien.

“The unfavorable weather in the North Island has impacted on potential buyers focusing on matters inside the farm gate while in the South Island many farmers remain concerned about future government regulation of the farming environment.”

The median price per hectare for all farms sold in the three months to May 2023 was $28,105 compared to $29,845 recorded for the three months ended May 2022 (-5.8%). The median price per hectare was very similar to April 2023.

No regions recorded an increase in the number of farm sales for the three months ended May 2023. Waikato (-25 sales) and Northland (-24 sales) recorded the biggest decreases in sales. Compared to the three months ended April 2023, 5 regions recorded an increase in sales, the most notable being Manawatu-Wanganui (+9 sales) and Otago (+6 sales).

In May 2023, Grazing farms accounted for a 31% share of all sales. Finishing farms accounted for 26% of all sales, Dairy farms accounted for 16% of all sales and Dairy Support farms accounted for 9% of all sales. These four property types accounted for 82% of all sales during the three months ended May 2023.

Across the different farm types, Shane comments on one bright spot, the viticultural market.

“In Marlborough sales are now being reported at record levels for good quality Sauvignon Blanc land and more land is being acquired for further development in grapes. Wine exports are reportedly up 24% and along with the recent FTA with UK giving this industry some renewed confidence.”

“The much-reported acquisition of land for forestry has also slowed off the back of reduced export log and carbon pricing and some amendments in late 2022 to the OIO regulations on greenfield forestry development,” comments O’Brien.

“It is important to note however, that although sales volumes are back from 2022, the sale values in many areas remain at strong levels mostly in line to 2022. This may not be the case in the previous hot spots such as Bay of Plenty horticultural market where a dearth of sales data is making it difficult to see where the current market is sitting.”

The REINZ All Farm Price Index increased 3.8% in the three months to May 2023 compared to the three months to April 2023. Compared to the three months ending May 2022 the REINZ All Farm Price Index decreased 5.5%. 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.

Dairy Farms

For the three months ended May 2023, the median sales price per hectare for dairy farms was $35,100 (41 properties), compared to $38,945 (44 properties) for the three months ended April 2023, and $37,060 (77 properties) for the three months ended May 2022. The median price per hectare for dairy farms has decreased 5.3% over the past 12 months. The median dairy farm size for the three months ended May 2023 was 109 hectares.

On a price per kilo of milk solids basis, the median sales price was $36.95 per kg of milk solids for the three months ended May 2023, compared to $37.59 per kg of milk solids for the three months ended April 2023 (-1.7%), and $34.81 per kg of milk solids for the three months ended May 2022 (+6.1%).

The REINZ Dairy Farm Price Index increased 0.6% in the three months to May 2023 compared to the three months to April 2023. Compared to May 2022, the REINZ Dairy Farm Price Index increased by 1.6%. 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 May 2023, the median sale price per hectare for finishing farms was $37,415 (68 properties), compared to $38,510 (57 properties) for the three months ended April 2023, and $36,190 (135 properties) for the three months ended May 2022. The median price per hectare for finishing farms has increased by 3.4% over the past 12 months. The median finishing farm size for the three months ended May 2023 was 38 hectares.

Grazing Farms

For the three months ended May 2023, the median sales price per hectare for grazing farms was $13,705 (80 properties), compared to $13,205 (78 properties) for the three months ended April 2023 and $13,630 (114 properties) for the three months ended May 2022. The median price per hectare for grazing farms has increased by 0.6% over the past 12 months. The median grazing farm size for the three months ended May 2023 was 159 hectares.

Horticulture Farms

For the three months ended May 2023, the median sales price per hectare for horticulture farms was $387,500 (13 properties), compared to $321,780 (13 properties) for the three months ended April 2023 and $554,010 (36 properties) for the three months ended May 2022. The median price per hectare for horticulture farms has decreased 30.1% over the past 12 months. The median horticulture farm size for the three months ended May 2023 was 4159 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 June 2023 refer to the period from 1 April 2023 to 30 June 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].