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Big Chill Hits Rural Property Market

20 Jul 2006

The traditional winter slow-down affected the rural property market in June, according to the latest rural market report from the Real Estate Institute of New Zealand (Inc). 

Abnormally cold temperatures seemed to chill the market as well with a sizeable dip in sales from 251 in May to just 158 in June, compared with 208 in June 2005.

While the drop in activity was predicted, the extent of it was a surprise, according to REINZ Vice President and rural spokesperson Murray Cleland.

“April and May experience a higher volume of dairy farm transactions which then tend to tail off in June and that was certainly the case this month, but other farm sales were also well down, especially grazing and finishing properties.

“The market fundamentals remain good however, especially with the falling dollar and we expect that spring will see a revival of interest in the market.

The national median price was down as a result of the lower turnovers, from $990,000 in May to $820,000 in June, well down on the $937,500 median recorded for June 2005.

Low sales had the opposite effect on the dairy farm median, with just 17 sales in June of predominantly larger, more expensive, properties, compared with 43 in May. This propelled the dairy median upwards from $2,500,000 in May to a ‘spike’ of $3,470,000 in June.

Finishing property sales were down by half from 24 in May to 12 in June, below also the June 2005 figure of 25, but a predominance of more expensive properties pushed the median up from $1,209,000 in May to $1,487,500 in June.

Grazing property sales fell from 135 to 92 in June, well down on the June 2005 figure of 124 sales,
the grazing median price was down from $740,000 to $725,000 and the horticultural property median dropped from $1,275,000 to $832,500 on just 20 sales, down from 26 in May.

The lifestyle property market also seemed to catch some of the cold, with a drop in the May median from $425,000 to $397,500 in June on turnover down from 713 sales to 660.

Mr Cleland said that the May lifestyle property market has benefited from a relatively strong residential property market with an increase in sales, while both markets had experienced a drop in sales in June.

Download full release: REINZ Rural Market Report June 2006.pdf