Farm sales slide further: REINZ

Photo / The Listener

October farm sales slumped by almost one-third on last year, amid a climate of cautious buyers and tight lending criteria.

Real Estate Institute of New Zealand (REINZ) figures show just 147 farms changed hands in the three months to the end of October, most of them in the Manawatu/Wanganui.

Just eight dairy farms and four arable properties were sold during the three months.

Farm sales had fallen to fewer than half the numbers achieved in recent years, but the median sales price was up on the same time last year, REINZ said.

Turnover mirrored activity in the residential sector and continued a trend witnessed in previous months, REINZ spokesperson Bryan Thomson said.

"What we are seeing is a lack of confidence in the buying and selling community and the requirements of the financiers."

However Thomson said he expected conditions in the market to improve ahead of the traditional autumn selling period and because of the positive outlook for the future of commodities worldwide.

Anecdotal evidence suggested an increase in buyer inquiry for dairy farms in recent weeks, particularly in the South Island, he said.

However buyers were price sensitive so vendors expecting to realise the values of two and three years ago would be disappointed, Thomson said.

"Buyers have to be confident at the level they can purchase at and I think sellers have to aware of the market levels.

"They need to realise if they base their expectations on two or three years ago at best they will be disappointed, at worst they won't be able to sell."

In the three months to the end of October 2010 only 147 farms changed owners, a 28.3 per cent drop on the 205 sold in the same three months last year, and a decrease on the 164 sold in the three months to September.

Compared to the 390 farms sold in the three months to October 2008, and the 582 sales in the three months to October 2007, the decline in activity in the rural property market was even more marked, REINZ said.

The national median farm sale price also eased back to $950,000 for the three months to October, from $1,012,500 in the three months to September.

This represented an increase on the median of $875,000 recorded for the same period last year, but was still well down on the $1,500,000 for the same period two years ago.

Median prices fell in nine out of the 14 districts in the three months to October, the Real Estate Institute said.

- Susie Nordqvist