Real Estate
34 THE NZ FARMERS WEEKLY – farmersweekly.co.nz – April 1, 2019
Activity strong in the north 12-month regional outlook
MOST North Island regions will maintain strong economic growth this year but most of the South Island will be weak, Westpac Bank says its in regional outlook. The strongest area in the country will be the southern North Island while Canterbury will be the weakest. Northland and Auckland will improve on their lacklustre performance while Taranaki and Southland will weaken. “Unfortunately Canterbury remains in the doldrums,” the report by regional and industry economist Paul Clark and chief economist Dominick Stephens said. “In recent times New Zealand has been an economy of two halves. “The southern portions of each island have been absolutely fizzing, propelled by successful agriculture and tourism industries as well as population-induced building booms. Activity in Canterbury and Auckland was much slower and some neighbouring regions felt the chill. Laggards Northland, Waikato and Nelson/Marlborough/West Coast have picked up in recent quarters. Gisborne/Hawke’s Bay, Otago and Southland are still among the strongest performing regions but are losing momentum and their lead over the rest is diminishing. “At the national level, the economy lost steam in late 2018 but we expect it to regain momentum in 2019.” However, Government spending will be felt across the country so the outlook is broadly positive for most regions. “There are a number of rural regions of New Zealand currently doing very well and we expect that to continue in 2019. “True, some are already losing
These shaded maps provide a summary of current and future economic growth by region over the next year.
12-month regional outlook Current
Regional outlook
Weak
Marlborough/West Coast region should continue to pick up in coming quarters off the back of rising house prices. It should also be buoyed by rising farm gate incomes. Farmers and growers should benefit from still favourable prices for horticultural, dairy and grapes.
Strong
Next 12 months
Taranaki has been the steadiest of the dairy areas with consistent sales at solid prices.
12-month regional outlook These shaded maps provide a summary of current and future economic growth by region over the next year.
Source: Westpac
Regional outlook
Weak
Farmers and growers should momentum and that may Current benefit from still favourable continue this year. Others, such prices for dairy, meat, forestry and as the Bay of Plenty, have built horticultural products. quite a head of steam and are Waikato expected to roll through 2019 in Waikato is likely to perform fine form. strongly over the coming year “But many of these regions are overheating and we do expect they as firms continue to establish Paul Clark themselves in the area. will cool in time.” Regional & Industry Economist The regional boom in many+64 9 336 5656 Rising farm gate incomes are likely to help. Farmers and places is driven by sustainablepaul.clark@westpac.co.nz growers should benefit from success in export industries like still favourable prices for dairy agriculture. products. But the second driver – Bay of Plenty population growth, construction Bay of Plenty is likely to perform and rising house prices – is not strongly over the coming year sustainable. as firms continue to establish themselves in the area and activity How’s your region doing? through the port of Tauranga Northland climbs. Activity in Northland is Rising farm gate incomes expected to pick up in coming quarters off the back of rising farm should provide some extra support, with farmers and gate incomes.
Strong
growers likely to benefit from still favourable prices for kiwifruit, avocados and dairy products. Gisborne/Hawke’s Bay Gisborne/Hawke’s Bay is fizzing but won’t stay that way forever. Over 2019, we expect to see the economy lose some momentum Dominick Stephens though it will remain one the Chief Economist 9 336 5671 strongest +64 performing regions. Activitydominick.stephens@westpac.co.nz should be buoyed by the ongoing success of the horticulture and agriculture sectors. REGIONAL ROUNDUP | 5 March 2019 | 2 Taranaki/Wanganui-Manawatu Activity in this region is likely to remain strong. Rising farm gate incomes should support spending in the region with farmers and growers set to benefit from still favourable prices for dairy products. Nelson/Marlborough/West Coast Activity in the Nelson/ Next 12 months
Canterbury Canterbury is expected to remain in the doldrums for some time to come as the postearthquake rebuild continues to wind down but that’s not to say that the economy will stall. Rising farm gate incomes should provide further support with returns to farmers reflecting favourable prices for dairy products. Otago Otago has been fizzing in recent years but that is not likely to last forever. For now, activity in the region will continue to be buoyed by rising house prices, strong construction activity, tourism and the success of its agricultural sector. Southland Southland has been an outperforming region in recent years but won’t stay that way forever. However, activity should still be buoyed by ongoing success in the region’s dairy and meat producing industries.
Sold signs elusive in Waikato dairy sector Paul Clark Regional & Industry Economist
Alan Williams alan.williams@globalhq.co.nz JUST a third of a large number of Waikato dairy farms marketed during the spring were sold. Sales volumes have eased distinctly compared to the same time in 2017 and last year, Real Estate Institute rural spokesman Brian Peacocke said. The dairy farm market is also difficult in Canterbury, where only two sales were registered in the last seven months. There were also limited sales from a good selection of properties available though two larger properties changed hands at strong prices. Taranaki has been the steadiest of the dairy areas with consistent sales at solid prices, Peacocke said. Nationally, the total number of
farms in all categories sold in the year to the end of February was 1472, down 3.6%, on a year earlier. Grazing farms sales rose 11.6% but other sectors dropped, dairy by a hefty 24%, finishing farms nearly 6% and arable farms by 4.2%. Finishing farms transactions have helped provide market momentum in recent months but prices have eased from a median $30,656/ha in the February threemonth period last year to $29,587 for January this year and further to $28,872 for the latest February period. That was a year-on-year decline of 5.8%. Grazing farms made up 34% of total sales in the February period ahead of finishing farms at 29%, dairy 15% and horticulture 10%. Grazing farm sales prices also slipped year-on-year, by 10.4% to $9700/ha from $10,295 in the
+64 9 336 5656
paul.clark@westpac.co.nz January three-month period and $10,827/ha in February last year. Conversely, though dairy farm volumes have fallen away, prices have improved over the last year, indicating better-quality farms are selling. The median price has risen 4.6% year-on-year to $35,807/ha, from $34,238/ha though there was a fall from the latest January period figure of $38,642/ha. The institute’s Dairy Farm Price Index fell 8.6% January to February but for the year the gain was 8.4%. This index adjusts for differences in farm size and location, which the median price does not do. The index is regarded as the best guide to the market and its equivalent measure of all farms sales shows a gain, compared to the fall on a median price measure.
Dominick Stephens Chief Economist +64 9 336 5671
dominick.stephens@westpac.co.nz These decisions were based on Across all farms, the medianfrustrations on a number of issues price for the February threeincluding labour, compliance and months was $22,462/ha, down REGIONAL ROUNDUP a| 5year March 2019 | 2 cost increases squeezing margins. 18.4% from the $27,523 Regional highlights included earlier. However, the institute’s strong demand for greenfield sites All-Farm Index rose 12.9% after in Northland suitable for kiwifruit allowing for the differences in development. farm size, location and farming The province also had good type. The horticulture median inquiry for beef properties and price for the February period was there is continuing evidence of $164,176/ha, up from $160,618 second-tier dairy farms changing in January but well below the to beef. $254,722/ha in February last year. Canterbury and Otago ware Peacocke said farmers are experiencing constraints in benefiting from good products bank lending – with Otago dry returns in beef, lamb, grains and stock sector prices back by 10% horticulture and improved in to 15%. Global Dairy Trade prices. Some finishing and grazing “For some farmers, however, farm vendors in North and South these returns have been Canterbury have unrealistic price insufficient to change decisions expectations and restrictions on to exit the rural industry, as irrigation schemes are having evidenced by the high number a negative impact in North of farms on the market in recent Canterbury. months.”