Farm sales 20pc higher than last year (+graphic)

Farm sales have lifted at the same time as rural confidence improves. Photo / Steven McNicholl

Farms sales are up by more than 20 per cent compared to last year and there are early signs of a supply shortage heading into spring, according to the Real Estate Institute of NZ.

There were 438 farms sold in the three months to end of July, down from 474 in the previous three months, REINZ said in its latest Rural Market Report.

Despite the monthly fall, sales volumes were 23 per cent higher than in the same three months last year.

Overall, there were 1,536 farms sold in the year to July, 6.7 per cent higher than in the year to July 2012.

REINZ spokesperson Brian Peacocke said things were looking positive on farms around the country right now.

"Ideal late winter and early spring conditions, combined with solid payout predictions for primary produce have raised levels of confidence in the rural sector," he said.

"Demand for quality farms is strong across the entire country and in most regions, early signs indicate a shortage of supply for the spring selling season."

Prices also rose in the last three months, with the median price per hectare up 15.1 per cent from last year, to $20,667. The median price per hectare rose 4.8 per cent compared to June.

The REINZ All Farm Price Index - which adjusts for differences in farm size, location and farming type - rose by 2.1 per cent from June to July. The index was 4.6 per cent higher than a year ago.

"Calving activity reduced sales of dairy farms in July, but sales of finishing and grazing properties have remained at healthy levels in the top half of the North Island as well as in Canterbury, Otago and Southland regions," Peacocke said.

"Sales for other farm types have remained light."

Dairy farm volumes fell in July, from 66 sales to 47 sales, but the median price per hectare rose from $29,555 to $34,882.

The REINZ Dairy Farm Price Index - which adjusts for differences in farm size and location- increased by 2.2 per cent compared to June, from 1,738.9 to 1,777.1. The index was 12.2 per cent higher than last year.

In the regions, Waikato recorded the largest annual increase in sales (+25 sales), ahead of Auckland (+23 sales) and Bay of Plenty (+13 sales).

The largest falls were in Wellington (-7 sales), Manawatu/Wanganui and West Coast (-2) and Gisborne (-1 sale).

Compared to the three months ended June, six regions recorded an increase in sales, led by Bay of Plenty (+10 sales).

Peacocke said proposed irrigation schemes in Canterbury and Hawkes Bay was generating interest in farms in those regions."

Grazing properties accounted for the largest number of sales with a 44.1 per cent share, with dairy properties making up 10.7 per cent, finishing properties 24.9 per cent and horticulture 8.9 per cent.