27 Jan 2021

Farm sales rise at the end of 2020

11:51 am on 27 January 2021

Farm sales ended 2020 on a healthy note with a 15 percent increase compared to the same time the previous year.

Sheep in New Zealand.

Photo: 123RF

Real Estate Institute of New Zealand (REINZ) data shows 32 percent more finishing farms and 26 percent more dairy farms were sold in the three months ended December 2020 compared to the same time in 2019. Sales of grazing farms were down 9 percent and 23 percent fewer arable farms were sold.

The median price per hectare was up $4000 to just over $27,000.

Eleven of the 14 regions recorded an increase in farm sales, notably Waikato, which had with 42 more sales, and Northland with a rise of 28. Otago, with seven fewer sales, was the only region to record a decline.

REINZ rural spokesperson Brian Peacocke said the figures reflected strong confidence in the market.

"Also the fact that over the last several years their has been a sinking lid applied from the trading banks, particularly the Australian-owned banks, and it appears that during this most recent spring that the pressure has eased, the banks are becoming more involved again," Peacocke said.

That had influenced sales activity, he said.

There had been fewer farms on the market and most of what had been for sale had sold, he said.

"From a price perspective, we are still seeing downward pressure on dairy farm prices from the median price point of view."

Peacocke said sales were mainly to existing owners. "It is generally farmers who are quite well situated from the point of equity, and therefore cash-flow, so there has been less consents for loans given to first farm buyers who might be constrained by the amount of capital they have got."

Peacocke said banks were still demanding strong levels of equity and cash-flow before they gave loans.