Despite a recent dip in activity, confidence in rural property remains high with values continuing to show solid growth.
VALUES FIRMING, ACTIVITY EASING
The median “All Farm” sales value for the three months to February 2015 was $28,009 per hectare, up a very strong 24% over the same period last year. Values have continued to trend higher since mid 2011 and are now close to their pre GFC peak reached in early 2009 supported by the low interest rate environment which now seems likely to persist through 2016.
Prices across all the main farm types have increased when compared to the same period in 2014. Horticulture and arable land values over the past 3 months to February were up 99% and 76% respectively from the same period the previous year. Five regions saw increases in sales volume for the three months ended February 2015 compared to the same period the previous year. Canterbury recorded the largest increase in number of sales followed by Auckland, Bay of Plenty and Wellington with an increase of six sales each.
Recent sales across the country have seen rural prices surge for top grade
farms. By way of example a buoyant market for top-of-the-line kiwifruit orchards in the Bay of Plenty saw median sales values for horticultural properties spike to $300,000 per ha compared to $131,250 per ha a year earlier. Busy localised activity in Taranaki saw a particularly strong dairy farm sale reach $77,000 per ha (excluding shares), while Waikato continued to record high levels of activity in the dairy sector.
A shortage of listings is adding to the upward pressure on values. This is reflected in sales statistics released by the Real Estate Institute of New Zealand (REINZ) which show that since the second half of 2014 activity has eased. For the 3 months to February 2015 the total annualised number of All Farm sales dipped 13.9% to 1,779 compared to the same period in 2014. The tight market conditions are benefitting second tier properties which are experiencing an increase in activity.
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