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.
The data shows 1131 farms were sold in the year to June 2023, with 571 less than were sold in the year June 2022.
There were 37.5% fewer dairy farms sold, 13.5% fewer dairy support farms sold, 37.4% fewer finishing farms sold, and 22.3% fewer grazing farms sold for that period.
For the three months ended June 2023, the median sales price per hectare for dairy farms was $38,160 compared to $37,010 for the three months ended June 2022.
The median price per hectare for dairy farms has increased 3.1% over the past 12 months.
On a price per kilo of milk solids basis, the median sales price was $36.67 per kg of milk solids for the three months ended June 2023, compared to $36.95 per kg of milk solids for the three months ended May 2023 (-0.8%), and $35.94 per kg of milk solids for the three months ended June 2022 (+2%).
Shane O’Brien, rural spokesman at REINZ, says the sales figures continue the steady trend that has evolved over much of 2023.
He says there has been a noticeable decrease in the volume of sales, but the median sales price has remained relatively consistent, with only a 3.7% drop on the previous 12-month period.
“The drop in the number of sales of dairy support land is a reflection on the time of year and possibly, more importantly, the decrease in farm margins from lower milk payout, higher farm expenses and of course interest rate rises,” says O’Brien.
“Dairy farmers are focused on calving coming up and as such they are not making land purchases.”
O’Brien says the looming general election is also at the forefront of people’s minds with general uncertainty over government policies directed at farming still being crystalised.
“In over 30 years in the rural real estate profession, I have never seen the election have such a pronounced impact on people’s mindsets and decision-making,” he says.
“It is important to note however amongst this negative sentiment that the market is still fundamentally strong as evidenced by the median sale prices showing little variation over the preceding 12 months,” he says.
“This tells us buyers are still prepared to pay good money for the right property that meets all their requirements.”
