Saturday, December 2, 2023

Buyer interest builds this side of election uncertainty

Neal Wallace
Good volume of property available as spring freshens real estate market.
Reading Time: 2 minutes

The expectation that farmer buyers would be cautious in the lead-up to the general election proved correct.

Real Estate Institute of New Zealand (REINZ) figures show 39 (20.5%) fewer farms were sold in the three months to the end of September compared to a year earlier.

The median price per hectare for all farms sold in the three months to September was $24,730 compared to $23,140 for the same three months last year (a 6.9% increase).

REINZ rural spokesperson Shane O’Brien said sales figures were as expected, given caution around the general election, the weather and lower product prices, which prompted properties to be listed later than in other years.

“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.”

He said agents report buyer interest is building weekly as they adjust to a higher interest rate environment and a market that was buoyed by Fonterra increasing its forecast milk price.

O’Brien said the sector has been encouraged by the slight rise in the median sale price, which shows buyers will pay for a property that 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.”

Demand for land for forestry and carbon conversion has been softened by recent changes to the Overseas Investment Act and the carbon price.

The Bay of Plenty, Waikato and Canterbury had a reduction in sales numbers but there was increased activity in the West Coast and Southland and a recovery in listings in Hawke’s Bay.

For the three months to September, finishing farms accounted for 34% of all sales, grazing 27%, horticulture 10% and dairy farms 9%.

In the past 12 months the median price per hectare for dairy farms has fallen 14.1%, grazing 12.9% and horticulture 20.6%. Finishing farms rose 9.4%.

The median sales price for dairy farms in the September quarter was $34,325/ha (14 properties), unchanged from the three months to August 31. For the September quarter a year earlier the median price was $39,950/ha for 18 property sales. 

On a milk solids basis, the median price for September was steady with the August quarter at $28.59/kg/MS, but 24.9% lower the September last year when it was $38.06/kg/MS.

The $11,700/ha median price for 41 grazing farms was virtually unchanged compared to the previous three-month period but down on the $13.430/ha a year earlier.

The median price for the 52 finishing farms sold was $38,330/ha up on $35,600/ha paid for the 56 properties sold in three months to August. For the September period last year the median price was $35,025/ha for 58 properties.

Fifteen horticulture farms sold in the three months to the end of September at a median price of $324,210/ha compared to $444,310/ha for 21 properties for the three months to the end of August 2023. For the September quarter last year, 19 sold at a median price of $408,400/ha.

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