Challenges impacting the market revealed
The Real Estate Institute of New Zealand (REINZ) has released new data highlighting a significant downturn in the farm sales market, with its latest report indicating a marked decrease in transactions across various sectors of New Zealand’s agricultural real estate.
A downward trend in farm sales
For the three months ending February, farm sales have declined by 32.3% compared to the same period in 2023, with a total of 218 farms sold. The trend reflects a broader cautiousness among buyers, influenced by a variety of economic and environmental factors.
“The lower volume of sales was anticipated as buyers reacted to higher interest costs, environmental compliance, and poor farm product prices,” said Shane O’Brien (pictured above), REINZ rural spokesperson.
See LinkedIn post here.
Challenges influencing the market
The report cited several challenges impacting the market, including higher interest costs, stringent environmental compliance regulations, fluctuating farm product prices, and dry conditions in parts of the country.
“The very dry conditions across much of the upper South Island is also impacting buyers and sellers as they focus on on-farm activities during these months,” O’Brien said.
Market fundamentals remain sound
Despite the decrease in sales volume, the fundamentals of the market are considered to be sound, with median sale prices demonstrating stability. However, O’Brien advises sellers to adjust their expectations.
“Although the market is sound, sellers need to realise that there isn’t the depth of buyers or buyer confidence of the preceding two years,” he said.
Sector highlights and price dynamics
The median price per hectare for all farms sold in the period under review was $28,140, a decrease of 8.5% from February 2023. The report provided detailed insights into specific farm types, including dairy, finishing, grazing, and horticulture farms, each showing different trends in sales prices and sizes.
For instance, dairy farms showed a median sales price per hectare of $38,620, while horticulture farms reached a median sales price per hectare of $218,175, indicating the diverse economic landscapes within the agricultural sector.
Regional variations, REINZ All Farm Price Index
The report also shed light on regional variations in farm sales, with Northland experiencing an increase, whereas Manawatu-Whanganui and Waikato saw significant decreases.
The REINZ All Farm Price Index, which accounts for variations in farm size, location, and type, decreased by 2.4% in the three months to February compared to January 2024 and by 10.6% compared to February 2023.
Read REINZ’s rural report in full here. To compare with previous results, click here.
REINZ also recently reported a steady increase in lifestyle property sales.
Get the hottest and freshest mortgage news delivered right into your inbox. Subscribe now to our FREE daily newsletter.
