September rural data: Market activity rising as we move into summer

30 October 2023

Data released today by the Real Estate Institute of New Zealand (REINZ) shows there were 39 fewer farm sales (-20.5%) for the three months ended September 2023 than for the three months ended September 2022. Overall, there were 151 farm sales in the three months ended September 2023, compared to 179 farm sales for the three months ended August 2023 (-15.6%), and 190 farm sales for the three months ended September 2022.

In the year to September 2023, 1,076 farms were sold, 488 fewer than were sold in the year to September 2022, with 35.6% fewer dairy farms, 10.9% fewer dairy support, 23.5% fewer grazing farms, 37.2% fewer finishing farms and 18% less arable farms sold over the same period.

The median price per hectare for all farms sold in the three months to September 2023 was $24,730 compared to $23,140 recorded for the three months ended September 2022 (+6.9%). The median price per hectare saw no change compared to August 2023.

The REINZ All Farm Price Index increased 3.4% in the three months to September 2023 compared to the three months to August 2023. Compared to the three months ending September 2022, the REINZ All Farm Price Index decreased by 8.5%. 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.

Five regions recorded an increase in the number of farm sales for the three months ended September 2023 compared to the three months ended September 2022, with the most notable being Auckland (+5 sales) and West Coast and Otago (+2 sales). Canterbury (-20 sales) and Waikato and Bay of Plenty (-8 sales) recorded the largest decreases in sales. Compared to the three months ended August 2023, three regions recorded an increase in sales, the most notable being Auckland, Wellington and Southland (+1 sale).

Shane O’Brien, Rural Spokesman, at REINZ said: “The recorded sales figures for the month of September were in line with expectations with the general election, weather and lower farm product prices all impacting buyer decisions. The month of September also saw a large number of properties come to the market across all sectors in New Zealand for the traditional Spring market with a good volume of property now available. Recent weather events, plus the concern around the outcome of the election, saw a number of properties coming to the market later than in other years, but agents across the country are reporting good levels of listings across most sectors with buyer interest building weekly as they adjust to a higher interest rate environment.”

“The market was buoyed by the recent Fonterra announcement of the increase in the expected payout for this season’s milk and a steadying interest rate rise.”

“It is encouraging to note also that despite the large reduction in the volume of sales, the median sale price has risen slightly, showing buyers will pay for the right property if it meets their needs. It is becoming apparent though that buyers are being very diligent around purchasing decisions, in particular regulatory compliance and land use. Farms that don’t have the necessary consent or farming history may face buyer resistance as the market adjusts to increased levels of environmental regulation.”

“Agents across the country are reporting good levels of inquiry, although the demand for land for forestry and carbon conversion has been impacted by recent OIO decisions and the carbon price.”

“While the traditionally busy markets of Bay of Plenty, Waikato and Canterbury had a reduction in sales numbers, it is pleasing to see an increase in activity in the provincial markets on the West Coast and Southland over the month. It is also encouraging to see listings coming to market again in the hard areas of Hawkes Bay.”

In September 2023, finishing farms accounted for a 34% share of all sales. Grazing farms accounted for 27% of all sales, horticulture farms accounted for 10% of all sales and dairy farms accounted for 9% of all sales. These four property types accounted for 81% of all sales during the three months ended September 2023.

Dairy Farms

For the three months ended September 2023, the median sales price per hectare for dairy farms was $34,325 (14 properties), compared to $34,325 (16 properties) for the three months ended August 2023, and $39,950 (18 properties) for the three months ended September 2022. The median price per hectare for dairy farms has decreased by 14.1% over the past 12 months. The median dairy farm size for the three months ended September 2023 was 115 hectares.

On a price per kilo of milk solids basis, the median sales price was $28.59 per kg of milk solids for the three months ended September 2023, compared to $28.24 per kg of milk solids for the three months ended August 2023 (+1.2%), and $38.06 per kg of milk solids for the three months ended September 2022 (-24.9%).

The REINZ Dairy Farm Price Index decreased 0.1% in the three months to September 2023 compared to the three months to August 2023. Compared to September 2022, the REINZ Dairy Farm Price Index decreased by 6.7%. 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 September 2023, the median sale price per hectare for finishing farms was $38,330 (52 properties), compared to $35,600 (56 properties) for the three months ended August 2023, and $35,025 (58 properties) for the three months ended September 2022. The median price per hectare for finishing farms has increased by 9.4% over the past 12 months. The median finishing farm size for the three months ended September 2023 was 38 hectares.

Grazing Farms

For the three months ended September 2023, the median sale price per hectare for grazing farms was $11,700 (41 properties), compared to $11,740 (44 properties) for the three months ended August 2023 and $13,430 (73 properties) for the three months ended September 2022. The median price per hectare for grazing farms has decreased by 12.9% over the past 12 months. The median grazing farm size for the three months ended September 2023 was 165 hectares.

Horticulture Farms

For the three months ended September 2023, the median sale price per hectare for horticulture farms was $324,210 (15 properties), compared to $444,310 (21 properties) for the three months ended August 2023 and $408,400 (19 properties) for the three months ended September 2022. The median price per hectare for horticulture farms has decreased by 20.6% over the past 12 months. The median horticulture farm size for the three months ended September 2023 was 6 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].