During the quarter ending in November 2023, New Zealand’s agricultural real estate sector witnessed a mixed pattern of activity. The period saw a total of 188 farm transactions, marking a rise from the 157 deals in the preceding quarter, yet representing a downturn from the 265 transactions recorded in the same quarter of the previous year.
Annually, up to November 2023, the market saw 1,085 farm sales, a decrease from the prior year’s figure by 488. This downturn was consistent across various farm categories: dairy farm sales fell by 35.8%, dairy support by 9%, grazing by 29.8%, finishing by 34.2%, and arable farms by 35.8%.
The median farm price per hectare in this quarter stood at $32,340, slightly lower by 1.3% compared to November 2022’s $32,765, yet showing an 8% increase from October 2023.
Regional trends varied significantly. The Waikato and Auckland regions experienced an uptick in sales, with increases of 7 and 5 sales respectively, compared to the previous year.
Conversely, the Bay of Plenty and Manawatu-Wanganui regions saw notable declines, with 16 and 14 fewer sales, respectively. When compared to October 2023, seven regions, including Waikato and Canterbury, reported a rise in sales numbers.
Shane O’Brien of REINZ provided insights into these market dynamics. He attributed the November figures to the adaptation of buyers to the dual challenges of heightened interest rates and diminished product prices, a consequence of strenuous international trade environments.
Despite a positive adjustment in the anticipated Fonterra payout, the broader market faced pressures from lower product prices and escalating farm operating costs.
Buyer behaviour reflected a prudent approach, influenced by projections of long-term interest rates and farm revenues. This resulted in a subdued clearance rate, with a higher number of properties remaining unsold at the end of the year compared to previous years. O’Brien noted a preference for quality, with buyers showing readiness to invest in properties that excel in production efficiency and meet environmental standards.
The East Coast of the North Island observed a dip in sales activities, primarily due to weather-related disruptions, mirroring the trends in the horticulture and forestry sectors. The dairy support segment across New Zealand encountered reduced buyer interest, as market participants balanced between managing grazing/feed systems and contending with increased interest costs against reduced payouts.
In traditionally vibrant Spring markets like Canterbury and Southland, there was a noticeable drop in sales volumes, resulting in several properties remaining on the market. The Waikato region, however, saw a marginally more active market, though still trailing behind the figures from previous years.
Breaking down the sales by farm type, finishing farms represented 38% of all transactions, grazing farms 20%, dairy farms 14%, and dairy support farms 12%. Collectively, these categories constituted 83% of the total sales in the three-month period ending November 2023.
