Property report: Interest in dairy farms grows as payout forecast boosts confidence

There has been renewed interest in dairy farms following improved payout forecasts. Photo / Mark Mitchell

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Interest in New Zealand’s rural real estate market remains buoyant, with renewed interest in dairy farms following improved payout forecasts.

Speaking to The Country’s Jamie Mackay, PGG Wrightson’s North Otago, Mid and South Canterbury Sales Manager Calvin Leen said there had been a noticeable change following Fonterra’s latest payout lift.

“Since the forecast announcement, we’ve seen growing buyer interest, particularly in central Mid Canterbury,” Leen explained.

He highlighted a record-breaking sale in the region, where a property sold for $63,000 per hectare, surpassing the previous record of $61,000 per hectare in Hinds.

As a result, dairy support blocks, which have historically been scarce, were also attracting attention.

“They’ve been like hen’s teeth,” Leen said.

While inquiries had been limited over the past year, he believed the revised payout forecast was driving renewed confidence.

“We’ve had a couple of offers on properties that have been on the market for over 12 months, and they’re starting to stack up well in terms of value.”

Heading deeper into summer, Leen noted that South Canterbury had been experiencing increasingly dry conditions over the past month.

“We’ve had several 30-degree days recently, which has taken its toll,” he said.

He added that while recent rainfall of “14 to 15 millimetres” earlier in the week was welcome, more was needed - particularly further north.

In contrast to the dairy buzz, sheep and beef farms were still struggling in the current market.

Leen described buyer activity as “sluggish,” with limited interest in properties offering scale.

“Where buyers are engaging, they’re seeing value at 10 to 15% below where farms were trading per stock unit over the past 24 months,” he said.

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The arable farming sector, particularly in Mid Canterbury, was showing positive signs, thanks to increased land-use flexibility.

Many properties had secured consent for dairy support, boosting their appeal.

Leen referenced a recent substantial sale in Chertsey, where an arable property was purchased for a large-scale dairy support operation.

“The consenting process has added value and made these properties more sought after,” he said.

Overall, Leen expressed optimism for the year ahead.