Dairy Sector Drives Strong Rural Property Market Activity in NZ
The latest data from the Real Estate Institute of New Zealand (REINZ) reveals a mixed rural property market due to consistent inflation concerns.
REINZ recorded a total of 142 fewer farm sales for the quarter ended December 2023, down 37.1% on the same period in December 2022.
Overall, there were 241 farm sales during the three months ended December 2023, up 23.6% on the three months ended November 2023.
For the three months ended December 2023, the median sales price per hectare for dairy farms was $41,020 (37 properties), compared to $36,650 (27 properties) for the three months ended November 2023, and $44,055 (80 properties) for the three months ended December 2022.
On the whole, in 2023, 1059 farms were sold, 499 fewer than were sold in 2022; 41.2% fewer dairy farms and 7.3% fewer dairy support properties were sold during that time.
The median price per hectare for dairy farms has decreased 6.9% over the past 12 months. The median dairy farm size for the three months ended December 2023 was 128 hectares.
Meanwhile, for the three months ended December 2023, the median sale price per hectare for finishing farms was $35,625 (80 properties), compared to $38,345 (74 properties) for the three months ended November 2023, and $39,270 (105 properties) for the three months ended December 2022.
The median price per hectare for finishing farms has decreased by 9.3% over the past 12 months. The median finishing farm size for the three months ended December 2023 was 37 hectares.
Shane O’Brien, rural spokesman for REINZ, says that while the year result was largely anticipated by the industry, there has still been a substantial reduction in the volume of sales across the year 2023.
“This reduction, especially when compared to previous years, has affected all regions and sectors for varying reasons,” O’Brien says.
“There is no doubt the headwinds from farm product prices combined with on-farm interest rates (circa 8.0%) and rising on-farm inflation has challenged buyers when looking at property options,” he says.
O’Brien says that for the first time in several years, a considerable number of properties remained unsold at the end of the spring selling season. “Buyers are cautious and considered with buying decisions, but buyers indicated they will pay for the ‘right’ property,” he says. “The depth of the buyer pool has been reduced due to lack of the right listings for active buyers.”
“The dairy sector had 57 dairy sales across New Zealand in December 2021 which reduced to 42 sales in December 2022 but only 14 sales of dairy farms across all of New Zealand in December 2023.”
O’Brien says this represents a significant drop.
“Similar sale trends have occurred in other sectors including grazing properties that have missed out on any active buyers who see an opportunity for conversion say to forestry,” he concludes.
