Tuesday, March 5, 2024

Farm sales feel chill of economic headwinds

Avatar photo
Prices fall, and so do number of properties sold.
REINZ rural spokesperson Shane O’Brien says interest in farmland for forestry and carbon conversion remains strong despite changes to purchasers’ obligations.
Reading Time: 2 minutes

Farm sales for the three months to December fell by a third, with 166 fewer farms changing hands compared to the same period 12 months ago.

This is according to data from the Real Estate Institute of New Zealand (REINZ).

Overall, there were 353 farm sales in the three months to December 2022, compared to 519 farm sales for the three months to December 2021. In the three months to November 2022, 249 farm sales were recorded.

In the year to December, 1509 farms were sold, a drop of 366 sales compared to the same period in 2021, with 15.2% fewer dairy farms, 18.7% fewer dairy support farms, 16% fewer grazing farms, 14.4% fewer finishing farms and 19.4% fewer arable farms.

The median price per hectare for all farms sold in the three months to December fell 5.8%, from $34,500 to $32,490, while the median price per hectare increased 0.2% compared to November 2022. 

REINZ rural spokesperson Shane O’Brien said the lower number of sales for the last quarter of 2022 may well be explained by a lower number of listings in many regions. 

“A late spring and a wet October across a number of regions saw a delay in the release of many listings with a healthy number of farms under offer (but not sold) at year end, [which] may flow through in sales records in early 2023.”

Increased environmental compliance meant greater preparation by sellers and more due diligence by buyers pushing out traditional selling times, he said.

“Also, the increase in direct farm costs coupled with the near doubling of interest rates has brought a degree of caution to the market from buyers as they fully consider land purchase decisions with no evidence in a decrease in on-farm inflation or interest costs going into 2023.

“The somewhat uncertain political scene is adding another dynamic into farm purchasing decisions, with many adopting a wait-and-see approach.”

O’Brien said interest in farmland for forestry and carbon conversion remains strong despite changes to purchasers’ obligations.

“The Overseas Investment Office is still a market driver in some regions with good, well-developed dairy farms or dairy support land continuing to be keenly sought after by local buyers in the stronger dairying regions of Southland and Waikato.”

In December 2022, grazing farms accounted for a 28% share of all sales. Finishing farms accounted for 28% of sales, dairy farms accounted for 22% of all sales and horticulture farms accounted for 7% of all sales.

These four property types accounted for 85% of all sales during the three months ended December 2022.

Total
0
Shares
People are also reading