Property Research - Annual Northland Rural Report

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Property Research - Annual Northland Rural Report

Tags: Research Rural

Despite concerns about another year of low dairy incomes, rural land values in the Northland region continue to rise and rise strongly.


In fact Northland price growth was almost double that of the national average over the past 12 months to May 2015 according to the latest results reported by the Real Estate Institute of New Zealand (REINZ).

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The REINZ sales data for the 3 months ending May 2015 shows the Northland median sales price of All Farm land was $18,097 per hectare, up 1.9% over the month and 25.8% for the same period the previous year. This compares to the national average of $28,563 which was fl at over the month and up 14.2% for the year. Values for Northland dairy farms, in particular, rose 19.5% to $19,643 per hectare over the year despite the challenging market conditions, well above the 5% increase at a national level.

While the median sales values can be volatile due to the relatively limited number of sales and the wide variety of different farm types, the latest figures continue the trend of increases in All Farm value over the past three years.

Recent sales across Northland have seen prices strengthen for top grade farms. Sales of quality dairy farms in Tomarata, Ruawai, Hikurangi and Whangarei have realised prices in excess of $26,500 per hectare (including land and buildings). By comparison sales of second tier, poorly performing/located farms have been more challenging and have been trading below $16,000 per hectare...Read More.

IMPLICATIONS OF LOWER DAIRY PRICES

Global dairy prices almost halved last year as Chinese buyers scaled back their activity after stockpiling in 2013. Conditions are being further compounded by current high levels of production from other major exporters such as the US and Europe, coupled with the impact of sanctions on Russia and bans by Russia on many Western countries. This is resulting in more dairy products being diverted to markets that NZ sells into. The upshot, dairy prices are now at their lowest level since mid 2009 with price falls being recorded over the last eight consecutive dairy auctions...Read More.

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BEEF SECTOR HOLDING UP WELL

While the commodity price index in aggregate has fallen sharply over the past year - driven largely by weaker dairy prices - the meat, skins and wool component has been far less volatile. Although down on the peak reached in September 2014 it continues to remain at elevated levels and as with dairy farmers, sheep and beef farmers are also benefiting from the recent fall in the value of the NZ dollar...Read More.

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LIFESTYLE SALES AND VALUES UP

The ripple effect from Auckland’s overpriced residential market is now fl owing through to Northland’s lifestyle market. Both number of sales and values for the 3 months to May 2015 are up sharply from the same period the previous year and are now at their highest levels in at least 9 years.

 

Download the full Property Research Report here.

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