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Dairy Farms Tread Water But New Payouts Set To Extend Market


11 Oct 2007


The rural property market was a little subdued in September mainly due to a lower level of dairy farm sales and prices, the Real Estate Institute said today.

 

The national farm median price was up from $1,262,800 to $1,320,000 in September but on sales for the latest three months to September down from 592 to August to 557.

 

The dairy farm median price was weaker as were finishing and grazing properties.

 

However, there is a growing expectation that once the new dairy season farm sales programme begins in the coming weeks, values are likely to rise on the back of expected record dairy payouts.

 

According to REINZ National Councillor and rural spokesperson Mr Peter McDonald, “little should be read into the latest decrease in the dairy farm median price from $3,450,000 in August to $3,050,000 in September because some of those sales are likely to be left over from the tail of the last season and will have generally comprised smaller, lower priced properties.

 

“Given that the original Fonterra prediction for the fifteen year average milk solid price was $4.15 per kilo, and the last announcement was $6.45, we are seeing an expectation in the market that the price could go to $7.00 or $8.00, and that will have a potentially huge effect on values.

 

“We expect that dairy property prices will experience strong growth in this new season, which began on June 1, because sales to date have been based on the last payout figure of $4.35.  The market is treading water at present waiting for the next Fonterra payout announcement and that is likely to push farm prices up strongly, when the new sales period begins in late spring with settlement on those properties due in June 2008.”

 

In other farm categories, the arable price moved from $1,587,000 in August to $1,624,000 in September, but finishing property median prices were down from $2,150,000 to $1,974,174, despite sales being up from 117 in August to 120 in September.

 

Grazing properties, the largest single category of sales, saw sales down from 242 to August to 227 in the latest period, with prices easing slightly with a median of $1,123,762, down from $1,129,881 in August.

 

Horticulture properties continued to be in buoyant demand with sales up from 48 in August to 50 in the latest period, and the median price firming from $1,075,000 to August, to $1,137,500.

 

The lifestyle property market pretty much mirrored the residential market with a fall in sales from 1752 for the three months to August, down to 1645 in the latest period.

 

But the median price was up slightly from $430,000 to August, to $435,000, driven mainly by stronger prices in the South Island.

 

Download documents:

REINZ Rural Market Report Sept 2007.pdf

REINZ Rural Market Report Stats Sept 2007.pdf