REINZ rural spokesperson Brian Peacocke says some landowners are hanging on to their farms to take advantage of high commodity prices.
Landowners wanting to capitalise on high commodity prices are likely to be behind a drop of almost 50% in farm sales for the three months ended December than for the same period a year before, Real Estate Institute of NZ rural spokesperson Brian Peacocke says.
REINZ data shows there were 293 farm sales for the three months, 256 fewer than the same three months in 2020, a fall of 46.6%.
He says logic would suggest that due to the strong dairy payout forecast for the 2021-22 season, and strong prices for beef, lamb and horticultural products, fewer rural properties have been available for sale, as landowners retained properties at capitalise on current returns.
“Nevertheless, the total volume of farm sales for the 2021 calendar year increased considerably from 2020, again reinforcing the strong demand for continuing investment in rural land, that in itself being a reflection of confidence in the agricultural sector,” Peacocke said.
There were 1831 farms sold in the year in the year to December 2021, 235 more than were sold in the year to December 2020, with 84% more dairy farms, 23.1% less dairy support, 7% more grazing farms, 10% more finishing farms and 14.7% less arable farms sold over the same period.
There was a significant increase in the median price paid per hectare in the three months to December than the same period the year before, with the median for the three months in 2021 $37,980 compared to $27,320 in 2020, an increase of 39%.
Despite the confidence in the farm sector and corresponding high demand, other factors are balancing that.
“While the banking sector is currently more amenable to backing soundly structured lending proposals, the inexorable grind of increasing costs, the shortage of quality labour and supply chain difficulties are well recognised constraints that continue to challenge the rural industry,” he said.
