Cash Surplus Drives Strong Sales in Canterbury's Dairy Farm Market
The latest quarter has seen a marked increase in the sale of dairy farms in Canterbury, with seven properties exchanging hands for an average of approximately $14.6 million each. This uptick in sales activity is largely attributed to the rising milk price, which is forecasted to hit $10 per kilogram of milksolids, injecting new vitality into the local rural real estate market.
According to the latest data from the Real Estate Institute of New Zealand (Reinz), the province affirmed its position as the nation's leading dairying area, boasting higher median prices and larger farm sizes compared to national averages. The median price for Canterbury dairy farms reached $55,000 per hectare, surpassing the national median of $45,165 per hectare.
Shane O'Brien, Director and rural spokesperson for Reinz, explained that Canterbury's productivity, supported by extensive irrigation and large herd sizes, justifies the premium prices observed in the market. He noted that most transactions involved local buyers, often family-owned businesses seeking expansion, rather than corporate or overseas investors.
Moreover, the market's dynamics have been shaped by various economic conditions, including high-interest rates and relatively low product prices in other farming sectors, such as sheep and beef. While the dairy sector thrives due to lean production costs and strategic financial management, other agricultural segments face challenges due to market conditions and climatic adversities.
Nationally, a total of 315 farms were sold in the last quarter, marking an increase of about 70 properties from the same period last year. Despite a general decline in the median price per hectare for all farms to $28,710, the dairy industry continues to exhibit strong confidence, evidenced by an increase in both dairy and dairy support farm sales.
O'Brien anticipates cautious buyer behavior towards land conversion to forestry, influenced by evolving rules on overseas investment. However, the traditional sheep and beef market remains slow-moving, pending an increase in product prices and a reduction in interest rates to rejuvenate market dynamics.
