Increased environmental compliance has required greater preparation by sellers and more due diligence by buyers, pushing out traditional selling times, REINZ Rural Spokesman Shane O’Brien says
Data released by the Real Estate Institute of New Zealand (REINZ) shows there were 166 fewer farm sales (-32.0%) for the three months ended December 2022 than for the three months ended December 2021.
Overall, there were 353 farm sales in the three months ended December 2022, compared to 249 farm sales for the three months ended November 2022 (+41.8%), and 519 farm sales for the three months ended December 2021.
1,509 farms were sold in the year to December 2022, 366 fewer than were sold in the year to December 2021, with 15 .2% fewer dairy farms, 18.7% fewer dairy support, 16% fewer grazing farms, 14.4% fewer finishing farms and 19.4% fewer arable farms sold over the same period .
The median price per hectare for all farms sold in the three months to December 2022 was $32,490 compared to $34,500 recorded for three months ended December 2021 (-5.8%).
The median price per hectare increased 0.2% compared to November 2022.
The REINZ All Farm Price Index increased 0.4% in the three months to December 2022 compared to the three months to November 2022.
Compared to the three months ending December 2021 the REINZ All Farm Price Index increased 0.4%.
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 .
Two regions recorded an increase in the number of farm sales for the three months ended December 2022 compared to the three months ended December 2021, with the most notable being West Coast (+3 sales) and Southland (+2 sales) . Northland (-29 sales) and Canterbury (-28 sales) recorded the biggest decreases in sales .
Compared to the three months ended November 2022, 11 regions recorded an increase in sales, the most notable being Waikato (+23 sales) and Manawatu-Whanganui (+17 sales) .
The lower number of sales for the last quarter of 2022 when compared to 2021 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 may flow through in sales records in early 2023 .
Increased environmental compliance has required greater preparation by sellers and more due diligence by buyers pushing out traditional selling times.
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 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.
The continued interest in farmland for forestry and carbon conversion remains strong despite some changes in the purchaser’s obligations and the Overseas Investment Office (OIO) 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 all 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 .
Dairy Farms
For the three months ended December 2022, the median sales price per hectare for dairy farms was $44,060 (77 properties), compared to $43,160 (43 properties) for the three months ended November 2022, and $44,310 (107 properties) for the three months ended December 2021 .
The median price per hectare for dairy farms has decreased -0.6% over the past 12 months .
The median dairy farm size for the three months ended December 2022 was 107 hectares .
On a price per kilo of milk solids basis the median sales price was $39.78 per kg of milk solids for the three months ended December 2022, compared to $32.63 per kg of milk solids for the three months ended November 2022 (+21.9%), and $36.41 per kg of milk solids for the three months ended December 2021 (+9.2%).
The REINZ Dairy Farm Price Index increased 7.5% in the three months to December 2022 compared to the three months to November 2022.
Compared to December 2021, the REINZ Dairy Farm Price Index increased 13.2% .
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 2022, the median sale price per hectare for finishing farms was $37,465 (98 properties), compared to $35,870 (72 properties) for the three months ended November 2022, and $36,770 (144 properties) for the three months ended December 2021 .
The median price per hectare for finishing farms has increased 1.9% over the past 12 months.
The median finishing farm size for the three months ended December 2022 was 44 hectares.
Grazing farms
For the three months ended December 2022, the median sales price per hectare for grazing farms was $13,790 (100 properties), compared to $12,870 (64 properties) for the three months ended November 2022 and $11,680 (120 properties) for the three months ended December 2021 .
The median price per hectare for grazing farms has increased 18.1% over the past 12 months.
The median grazing farm size for the three months ended December 2022 was 145 hectares.
Horticulture farms
For the three months ended December 2022, the median sales price per hectare for horticulture farms was $358,475 (24 properties), compared to $298,035 (24 properties) for the three months ended November 2022 and $299,130 (57 properties) for the three months ended December 2021 .
The median price per hectare for horticulture farms has increased 19.8% over the past 12 months .
The median horticulture farm size for the three months ended December 2022 was 7 hectares .
Lower listing mean lower sales for lifestyle properties
Data released by the Real Estate Institute of New Zealand (REINZ) shows there were 31 fewer lifestyle property sales (-2.4%) for the three months ended December 2022 than for the three months ended November 2022. Overall, there were 1,272 lifestyle property sales in the three months ended December 2022, compared to 2,252 lifestyle property sales for the three months ended December 2021 (-43.5%), and 1,303 lifestyle property sales for the three months ended November 2022.
6,706 lifestyle properties were sold in the year to December 2022, 3,041 (-31.2%) fewer than were sold in the year to December 2021. The value of lifestyle properties sold was $8.16 billion for the year to December 2022.
The median price for all lifestyle properties sold in the three months to December 2022 was $1,050,000 and was unchanged compared to the three months ended December 2021 (+0.0%). The median price for bare land lifestyle properties sold in the three months to December 2022 was $457,500 and was $20,000 lower compared to the three months ended December 2021 (-4.2%). The median price for farmlet lifestyle properties sold in the three months to December 2022 was $1,200,000 and was $90,000 lower compared to the three months ended December 2021 (-7.0%).
A significant reduction in the number of lifestyle properties on the market in spring 2022 has been highlighted with an over 40% reduction in sales in the last quarter of last year. This is not unexpected with uncertainty creeping into the residential markets across the country on the back of record inflation, higher interest rates and economic uncertainty.
Many stocks of bare land have been absorbed in the marketplace throughout the buoyant 2021/22 thus reducing the overall number of lifestyle properties available in late 2022. The median price remains unchanged to the previous 12 months showing the lower number of buyers are still willing to pay for the right property. There are still positive reports of good numbers of out of region buyers moving around New Zealand.
No regions recorded an increase in sales compared to December 2021, with Taranaki (-21 sales) and Southland (-26 sales) observing the smallest decreases. Auckland (-149 sales) and Canterbury (-149 sales) recorded the biggest decreases in sales in the three months to December 2022 compared to the three months to December 2021. Compared to the three months to November 2022, three regions recorded an increase in sales.
Seven regions saw the median price of lifestyle blocks increase between the three months ending December 2021 and the three months ending December 2022. The most notable examples were in West Coast (+110.7%) and Nelson/Marlborough/Tasman (+11.1%) with the biggest decreases being in Auckland (-26.9%) and Wellington (-18.5%).
The median number of days to sell for lifestyle properties was 10 days more in the three months to December 2022 than in the three months to December 2021, sitting at 49 days.
Nelson/Marlborough/Tasman (34 days) recorded the shortest number of days to sell in December 2022. Taranaki (66 days) recorded the longest number of days to sell.
