Farm sales robust despite product price drop, drought

The kiwifruit sector has contributed to buoyant prices for horticultural properties. Photo / Christine Cornege

The rural property market has remained remarkably resilient in the face of lower farm-gate prices and dry summer conditions, with prices - by some measures - returning to pre-global financial crisis levels, ANZ says.

The seasonally adjusted measure for total turnover continued to hover around the 10-year average, and the all-farm price measure was sitting at a very elevated level, the bank said its latest issue of Agri Focus.

Arable and finishing property prices had softened, reflecting a bit of a pull-back from dairy sector interests and a shortage of suitable properties. Existing quality dairy farms remained sought-after, however, the bank said.

Grazing and horticultural property prices have improved, a lot of the buoyancy in the latter coming from the kiwifruit sector.

Some recent green kiwifruit orchard sales have been comfortably above the $300,000 per canopy hectare mark, while sales of gold are comfortably over $400,000 per canopy hectare.

Orchard sale volumes in western Bay of Plenty have been strong. Prices for pipfruit and viticulture properties have also been reported as solid.

The all-farm price measure for February rose to $27,300 a hectare- a 54 per cent improvement in the past decade.

Total turnover has remained stable over the past six months at about 450 a month - similar to the 10-year average.

"Within this, existing quality dairy farms have remained sought-after, with the average price kicking up in February," the bank said.

Most sales in recent months have been in the traditionally more expensive dairying regions of Taranaki and Waikato.

According to the REINZ's all-farm index, which adjusts for compositional differences, prices are now back to pre-GFC levels.

"Much of this activity has been dairy-centric, so the major challenge farm prices now face is the extent of the recovery we might see in farm-gate returns, and constrained cash-flow over the coming year," ANZ said.

However, the run-up in land values in the past two years had not been reflected in the growth in rural credit, as was seen during the pre-GFC era.

"This suggests [most] purchases, or at least a large proportion, have been funded by other capital sources over the last two years. Intuitively this would seem to be the case, given a different mix of buyers, including more foreign and equity investors."

Farm sales

• All-farm price measure for February rose to $27,300 per ha - up 54% in the past decade.
• Total turnover has been stable over the past six months at about 450 a month - similar to the 10-year average.