Strong month for rural property sales (+graphic)

Improving confidence in the dairy sector saw farms sales and prices jump last month. Photo / NZH

Rising confidence in New Zealand's agricultural sector is having a positive knock-on effect for the rural property market, says the Real Estate Institute of NZ.

A total of 512 farms were sold across the country in the three months ended May, which is 10 per cent more than last year and the highest number for a May since 2008.

REINZ figures also showed there were 15.6 per cent (69) more farm sales than in the three months ended April.

In the year to May, farm sales lifted 6.6 per cent to 1,490.

Prices have also gone up, with the median price per hectare rising 20.4 per cent compared to last year, from $17,031 to $20,499. The median price per hectare rose 1.3 per cent compared to April.

Westpac economist Nathan Penny said both farm prices and sales showed signs of life in May.

"Farming confidence is more upbeat than in previous months. Drought concerns have eased, as generally autumn has been good and growing conditions have aided recovery," Penny said.

He added that high world dairy prices and Fonterra's $7 per kg opening forecast for the coming season had boosted farmer sentiment.

"Finally, this all gels with an upbeat vibe from last week's Fieldays. News reports suggest that exhibitors made record sales at this year's event."

The REINZ All Farm Price Index - which adjusts for differences in farm size, location and farming type - increased by 0.7 per cent compared to the three months to April, from 2,946.57 to 2,968.49.

Compared to May last year, the index lifted by 0.9 per cent.

REINZ spokesperson Brian Peacocke said sales in the dairy sector had concluded the season on a solid note with continued strong demand for properties.

"The number of dairy sales for the year ending May 2013 was strongly ahead of the previous year and reflects an increasing degree of confidence within the dairy industry."

Compared to last year, dairy farm sale volumes jumped from 60 to 90 and the median price per hectare from $29,485 to $34,850.

In the three months to April, there were 87 dairy properties sold at a median price of $34,819.

The REINZ Dairy Farm Price Index rose by 0.4 per cent compared to the three months to April but fell 4.6 per cent compared to the same time last year.

Peacocke said a similar improvement in sentiment in the drystock sector was carrying over into healthy sales volumes of finishing and grazing properties.

"The focus in the red meat sector on the potential for rationalisation or restructuring of the meat processing industry has not dampened demand for quality sheep and beef properties."

Looking at the regions, Waikato, Auckland and Northland posted the biggest increases in sales compared to the three months ended May last year. Southland recorded the largest fall, down 11, followed by Nelson and Canterbury.

Peacocke said rising confidence in the lifestyle sector was also leading to more sales around Auckland and Christchurch, and in the Waikato.

"Across the country cautious optimism is being expressed that buoyancy in the rural sector will push positive cash flows into the wider economy."