PALMERSTON NORTH - Uncertainty over the mega-merger of dairy companies may have a detrimental effect on dairy property prices, according to a report from a panel of real estate market experts.
In the latest quarterly market outlook survey of the rural market by Massey University's real estate analysis unit, 20 per
cent of panellists predicted a fall in dairy property sales volumes.
The reason they gave was the continuing uncertainty over the progress toward a unified dairy industry and the moratorium on new suppliers by New Zealand Dairy Group.
Panel member Bob Hargreaves said the moratorium would have the effect of lowering the value of the actual farmland in relation to the shareholding in the dairy industry.
"Farmers are not just buying into a dairy farm any more, but into the whole industry infrastructure," he said.
"There is a transfer of value going on, with shares in dairy companies becoming more valuable than the farms themselves. So where once you would have bought a dairy farm for, say, $1 million, now you are paying $900,000 and another $100,000 for the shareholding in the dairy company. In the future the farm may cost $800,000 and the shares $200,000."
- NZPA
