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In issuing the report compiled by its Insights & Data team, Bayleys’ national director rural, Nick Hawken said while the dairying property sector is becoming more complex, the changing market conditions provide increased opportunity for buyers.

“Buyers of dairy property are being far more considered about what they are actually looking to acquire, but the range of opportunities available to buyers has widened,” he explained.

“While it’s always been an important factor, the quality of the assets is paramount in today’s market with buyers looking to capitalise on existing infrastructure and leverage past production performance to provide a pathway to growth.

“Expectations around environmental standards are continuing to add to the due diligence process for buyers and lenders, with good information being demanded.

“However, quality properties continue to attract interest, are still selling well, and the banking sector remains happy to lend on proven assets that have been well-managed.”

Looking at some of the core dairying regions, Hawken said there’s still solid interest being shown in the South Island – particularly for Canterbury properties with reasonable scale – and the Waikato market remains fairly stable, albeit with somewhat different dynamics.

“With the Waikato generally having smaller holdings, we continue to see neighbouring farmers competing and acquiring those smaller-sized assets to strengthen or future-proof their production with a larger platform,” he said.

“Nationwide, dairy property inventory has increased through spring which is giving buyers more options and the well-capitalised operators continue to be attracted to quality assets in premium locations.”

Hawken said dairy farmers are accustomed to farm gate price fluctuations and the need to adjust cost structures accordingly.

“Today, while the top line number is very attractive at around $9 per kilogram of milk solids for the 2022/23 season, it’s obvious that profit margins are being squeezed by rising on-farm costs and owners are having to adapt to interest rate rises.

“While rising interest rates are starting to add headwinds to buyer affordability, access to debt is expected to remain available for well-capitalised operations.”

“And although farm-gate pay-out projections remain strong, the Global Dairy Trade (GDT) has been trending downwards.

“With the Chinese economy tipped to grow again once rigorous pandemic restrictions are eased, it will be interesting to see if a corresponding uptick in China’s demand for our dairy products follows, although there will inevitably be some lag.”

Hawken also references the uncertainty in the broader New Zealand rural market around the way agricultural emissions are priced.

“The He Waka Eke Noa consultation process to establish a pricing regime for on-farm emissions has not resulted in a cohesive action plan, with policymakers and farmers still not aligned.

“This inevitably creates some unease in the market, however, farming life goes on and property continues to change hands.”

Real Estate Institute of New Zealand (REINZ) data for the 12 months to September 2002 shows mid-range pricing per hectare for dairy properties was in the $31k - $52k band.

Mid-range land area for dairy properties sold was 79ha – 187ha, and the total land area of dairy properties sold (excluding dairy support properties) was 36,586ha.

Bayleys’ rural sales’ team has broad experience through changing real estate markets and as buyers now have increased opportunity, Hawken said it’s important that vendors utilise a range of marketing techniques and opt to sell their rural property with an agency that has depth and breadth of network across the country.

“We have teams on the ground from the far north to the deep south, and our well-connected network – including professionals in sales, valuation, capital markets, and advisory – can add tangible value at every stage of the transaction process from start to finish.”

Click here to read the full report.