2020 Closes On A Healthy Note

Data released today by the Real Estate Institute of New Zealand (REINZ) shows there were 175 more farm sales (+50.7%) for the three months ended December 2020 than for the three months ended December 2019. Overall, there were 520 farm sales in the three months ended December 2020, compared to 441 farm sales for the three months ended November 2020 (+17.9%), and 345 farm sales for the three months ended December 2019.

1,462 farms were sold in the year to December 2020, 15.6% more than were sold in the year to December 2019, with 26.2% more Dairy farms, 9.6% less Grazing farms, 32.0% more Finishing farms and 23.8% less Arable farms sold over the same period.

The median price per hectare for all farms sold in the three months to December 2020 was $27,317 compared to $22,981 recorded for three months ended December 2019 (+18.9%). The median price per hectare decreased 1.6% compared to November 2020.

The REINZ All Farm Price Index increased 2.5% in the three months to December 2020 compared to the three months to November 2020. Compared to the three months ending December 2019 the REINZ All Farm Price Index rose 1.4%. 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.

Eleven of the 14 regions recorded an increase in the number of farm sales for the three months ended December 2020 compared to the three months ended December 2019, with the most notable being Waikato (+42) and Northland (+28). Otago recorded only decline in sales (-7). Compared to the three months ended November 2020, eleven regions recorded an increase in sales with the biggest increases being in Waikato (+25), and Manawatu/Wanganui (+12).

Brian Peacocke, Rural Spokesman, at REINZ says: “Sales figures for the 3-month period ending 31 December 2020 reflect a further consolidation in the results which have been emerging in recent months, with dairy in particular achieving the strongest December since 2017.

“As is always the case, climate is the uncontrollable variable, so it was regretful that heavy rain and hail in the South Island in December caused flooding to pasture land and severe damage to horticultural crops in both the Central Otago and Nelson/Marlborough regions.

“The degree of damage was such that some growers and orchardists have lost a major portion of their income for the year which is most distressing for those involved.

“However, it is an ill wind that blows no good so for many other parts of the country, late spring/early summer rainfall has been an absolute bonus, with numerous farmers heading into one of their better seasons for years.

“Of particular encouragement is the resilience of the dairy industry with current Global Dairy Trade Auctions being positive enough to encourage Fonterra to increase both its mid-season price and the forecast for the end of season payment – extremely positive for the dairy industry and for the overall economy.

“The flip side of the equation is that schedule prices for beef in particular, and lamb, are being impacted negatively.

“Returns for both products are under pressure due to the mix of supply chain issues and the temperamental nature of the EEC and the Chinese markets, to the extent that margins for spring-purchased cattle are likely to be quite thin.

“Those issues, COVID-19 and the shortage of labour aside, the rural economy appears to be in reasonable heart,” he concludes.

Points of Interest around New Zealand include:

• Northland/Auckland - continuation of the steady level of sales for dairy units but a slight easing from the good level of sales last month for finishing and grazing units. In terms of price, again in many instances, prices per hectare for dairy support properties and finishing farms in particular, are stronger by a considerable margin than those being paid for dairy farms
• Waikato/King Country - a healthy level of solidly-priced dairy farm sales, the best in 12 months but nevertheless exceeded by a stellar run of finishing unit sales with top end prices in the range of $50,000 to $80,000 per hectare, albeit generally for smaller units; dairy support farms are in strong demand but that focus has not extended into the Waitomo and Taupo districts where activity was light.
• Bay of Plenty/Rotorua - modest volumes but solid prices in the pastoral sector throughout the region and an easing in horticultural sales from last month with smaller avocado orchards being the flavour of the month
• Gisborne/Hawke’s Bay - a brace of grazing unit sales under-pinned by solid sales for a smaller finishing unit and a versatile finishing/cropping/horticulture property in the Gisborne district; good volumes of finishing and grazing property sales throughout the wider Hawke’s Bay region with the feature again being the strong prices paid for smaller finishing units
• Taranaki - consistent sales of dairy farms with consistently solid prices paid; healthy activity in the dairy support and finishing sectors with good prices being achieved
• Wanganui/Manawatu/Tararua - a good cross section of sales at steady prices throughout the Ruapehu, Wanganui and Rangitikei districts; quieter than previously throughout the Manawatu but consistently strong across the board in the Tararua district with good sales of dairy, finishing and grazing properties; not to be outdone, Horowhenua logged in with results in the dairy and grazing sectors
• Wairarapa/Wellington - a good solid station sale backed up by a grazing unit, both in the Masterton district but quietly superseded by a sparkling sale of a smaller pinot noir vineyard in Martinborough
• Tasman/Marlborough - two strong sales of vineyards dominated Marlborough whilst strong sales of finishing units dominated Tasman district; light activity in other sectors
• Canterbury/West Coast - strongly priced finishing units in the Hurunui, Selwyn and Timaru districts continued the nationwide trend with several good sales of dairy properties and a smaller arable block being the consistent features in the Ashburton district; overall volumes across the province eased slightly; West Coast by comparison experienced a surge of activity across the range of categories with dairy support farms being the dominant feature
• Otago - a good outcome for grazing properties across the Waitaki, Central Otago and Clutha districts with solid prices being maintained; quiet in the other sectors
• Southland - good activity throughout the province with again, good strong prices being paid for finishing units, solid results on some medium to larger dairy units with dairy support and grazing blocks rounding off a good month in the deep south.

Finishing farms accounted for the largest number of sales with a 33% share of all sales over the three months to December 2020, Grazing farms accounted for 26%, Dairy accounted for 15% and Horticulture accounted for 11% of all sales. These four property types accounted for 84% of all sales during the three months ended December 2020.

Dairy Farms

For the three months ended December 2020, the median sales price per hectare for dairy farms was $33,126 (78 properties), compared to $33,723 (44 properties) for the three months ended November 2020, and $38,152 (35 properties) for the three months ended December 2019. The median price per hectare for dairy farms has decreased 13.2% over the past 12 months. The median dairy farm size for the three months ended December 2020 was 124 hectares.

On a price per kilo of milk solids basis the median sales price was $35.26 per kg of milk solids for the three months ended December 2020, compared to $35.29 per kg of milk solids for the three months ended November 2020 (-0.1%), and $41.40 per kg of milk solids for the three months ended December 2019 (-14.8%).

The REINZ Dairy Farm Price Index fell 1.5% in the three months to December 2020 compared to the three months to November 2020. Compared to December 2019, the REINZ Dairy Farm Price Index rose 13.7%. 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 December 2020, the median sale price per hectare for finishing farms was $34,482 (169 properties), compared to $31,956 (148 properties) for the three months ended November 2020, and $31,008 (90 properties) for the three months ended December 2019. The median price per hectare for finishing farms has increased 11.2% over the past 12 months. The median finishing farm size for the three months ended December 2020 was 37 hectares.

Grazing Farms

For the three months ended December 2020, the median sales price per hectare for grazing farms was $10,602 (135 properties), compared to $10,127 (115 properties) for the three months ended November 2020 and $10,177 (119 properties) for the three months ended December 2019. The median price per hectare for grazing farms has increased 4.2% over the past 12 months. The median grazing farm size for the three months ended December 2020 was 109 hectares.

Horticulture Farms

For the three months ended December 2020, the median sales price per hectare for horticulture farms was $308,960 (57 properties), compared to $278,589 (56 properties) for the three months ended November 2020 and $261,131 (31 properties) for the three months ended December 2019. The median price per hectare for horticulture farms has increased 18.3% over the past 12 months. The median horticulture farm size for the three months ended December 2020 was 6 hectares.

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