Slight rise in Hawke's Bay farm prices

The median Hawke's Bay farm price increased to $1,080,000 from the three months from December 1 2010 - February 28 2011, up from $1,060,000 in January, according to the latest statistics from Real Estate Institute of New Zealand.
Twelve farms sold in the three-month period consisting of six grazing, two each of forestry and horticulture and one each of dairy and finishing.
In February 39 lifestyle blocks sold, similar to the 38 sold in January. The median price decreased to $382,500 from January 2011 price of $420,500. In February 2010, 41 lifestyle blocks sold with a median sale price of $483,000.
Nationally the were 204 farm sales in the three months ended February 2011 compared to 219 in the three months ended January 2011 and 205 in the three months to February 2010, continuing the trend of low farm sales over the past three years.
REINZ rural market spokesman Peter McDonald said there was plenty of buyer interest in farms across the country commensurate with rising farm returns but buyers were cautious and finance difficult - but he said the banks may have started loosening their lending reins. "Anecdotal evidence suggests banks may be starting to have greater confidence in the rural sector," he said.
Included in sales for the month of February were 13 dairy farms at an average sale value of $35,000 per hectare and $38 per kg of milk solids (MS). There was considerable variability in these numbers with the values ranging from $26 per kg of MS in Oamaru to $52 per kg of MS in Taranaki. The average farm size was 138 ha with a range of 52 hectares in Taranaki to 536 hectares in Hawke's Bay. The average production per hectare across all dairy farms sold in February was 942 kgs.
Of note was the sale of the 1001 ha Gwavas fattening property in Tikokino to a Maori trust, sold in February for $9.2 million - the first sale of this size for some time.
Grazing properties accounted for the largest number of sales nationally with 41.2 per cent share of all sales over the three months. Dairy properties accounted for 24.5 per cent, horticulture properties 10.6 per cent and finishing properties 8.8 per cent. These four property types accounted for 85.1 per cent of all sales during the three months ended February 2011.
"The utility of the median price has become more challenging with the much lower volume of sales being completed. By way of comparison the number of sales in the three months to February 2008 was 713, whereas the number of sales in the three months to February 2011 was less than 30 per cent of this total," Mr McDonald said.
"Because of these low volumes the median figures should be treated with some caution."
The median prices across the four major farm types were little changed between January 2011 and February 2011. The dairy farm median was unchanged at $3,574,450, the finishing median rose $50,000 to $1,200,000, the grazing median was unchanged at $1,000,000 and the horticulture median rose $10,000 to $785,000. Compared to February 2010, the dairy median rose $524,000, the finishing median rose $247,000, the grazing median rose $100,000 and the horticulture median fell $165,000.
The lifestyle property market also saw a contraction in median prices and volumes in the three months to February 2011. The national median price was $435,500 for the three months to February 2011, down $4500 compared to the three months to January 2011, and down $2500 compared to the three months ended February 2010. Total sales completed for the three months to February 2011 were 930, down 55 (5.6 per cent) compared to the three months ended January 2011, and down 175 (15.8 per cent) compared to the three months ended February 2010.
"The ongoing stability in the median prices for lifestyle properties continues a trend apparent over the past few years. While other types of property have seen noticeable changes in median prices the lifestyle market has remained relatively stable.
"Looking forward the improvement in farm returns will be encouraging buyers and motivating vendors to complete transactions. Given that farm sales have been at historical lows for three years there is likely to be pent up pressure on both sides."