Dairy Farm Sales Collapse To Zero In August

NEW ZEALAND - Not a single New Zealand dairy farm changed hands in August as overall farm sales fell again during "a seasonally quiet period", figures released by the Real Estate Institute of New Zealand (REINZ) show.
calendar icon 15 September 2009
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There were 51 farm sales nationwide in the month of August, compared to 146 in August 2008. August sales were 70 per cent below average August sales over the past four years, the same as in July when there were 52 farm sales reports The New Zealand Herald.

There were no dairy farm sales in August, compared to 19 in August last year and 17 in August 2007. The overall total of 51 farm sales was dominated by 29 grazing farm sales, the same as in July, although these have dropped down from 79 sales in August 2008 and 81 in August 2007.

The REINZ said calving and coming out of the wintering period contributed to a seasonally quiet period for the rural real estate sector.

REINZ rural spokesman Peter McDonald told The New Zealand Herald, the fact there were no dairy farm sales in August "in itself is not of concern".

"We expect August/September to be slow. With the good prices at the last two Fonterra powder auctions, raising prices by 50 per cent over the past three months, and with Fonterra hedging against the impact of the high dollar, there's a quiet feeling of confidence returning to the dairy industry," Mr McDonald said.

"As a result of this, we would expect to see some action by October/November, with farms coming on the market and people registering their interest with agencies," he said.

"The fact the season ended with the average national price of $44 per kilogram of milk solids and more than $32,000 per hectare was a good result that has set the scene for a good quarter ahead."

Mr McDonald said he believes the rural market is as much driven by banking policy as it is by payouts.

"Banks have a strong hand to play in the rural market. I hope we will see a little more thought go into bank lending with a greater emphasis put on good budgets rather than on equity," he said.

The median farm sale price in the three months to August was NZ$1 million, compared to NZ$1,742,500 in August 2008. However, the drastically low level of sales in August 2009 make the median price much more volatile than when there were three times as many farm sales last year.

Dairy farms have recently been selling at a median price of between NZ$3 million and NZ$4 million.

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