Increases in milk price forecasts were welcomed but buyers knew they wouldn’t improve cashflows because most of the benefit would not come through till October, Real Estate Institute rural spokesman Bryan Peacocke said.
Nationally, the median price for dairy farms sold in the three months to November 30 rose to $47,385/ha on 45 sales, from $40,716/ha in the three months to the end of October (17 sales) and from $35,554/ha on the November period in 2015 (42 sales).
That was a year-on-year median price gain of 33%, institute figures showed. Its Dairy Farm Price Index, which unlike the median figure adjusted for differences in farm size and location, rose 4.1% on a year ago.
There had been some very good dairy farm sales in Waikato, though there had not been many listings of second and third tier properties to test that part of the market, Peacocke said.
In the greater Waikato and Waipa region, confusion stemming from the regional council’s Healthy Rivers regulation was affecting the market for sheep and beef and dairy support farms.
Dairy farms were not affected because they had detailed nutrient records, largely through Fonterra’s efforts, but the same could not be said for other farm types and there might be implications for farm buyers who wanted to increase stocking levels or change the land use.
Good quality Taranaki farms were selling strongly but the general tone remained cautious. It was early in the dairy selling season in Southland but there was evidence of a 5% to 10% gap between vendors’ and buyers’ expectations. Buyers were generally local.
A pattern of the dairy farm market was that there weren’t enough top-end properties to cater for demand and many of those potential buyers would not buy second or third level properties, Peacocke said.
At the bottom end of the market there were indications vendors were starting to take the best price offered. They were farmers under some pressure because of the milk payout levels and thinking that a pick-up in prices offered a good time to sell.
Elsewhere in the rural market, there were really good sales levels of finishing and arable farms in Canterbury at very strong prices and also good volumes of sheep and beef farms in Otago.
The sheep and beef property market had a “quiet confidence” about it and people were prepared to trade. In Northland there weren’t enough good farms being offered to meet demand.
A strong horticultural block market had been highlighted since the end of November by a sale of a Gold variety kiwifruit block in western Bay of Plenty at $800,000/canopy ha. It was only three or four years since Gold blocks were at $500,000 to $550,000/ha, Peacocke said, but he cautioned the very top prices were going only to outstanding and very well located orchards.
Nationally, the median price for finishing farms for the November period was $29,791/ha (106 properties sold), up from $26,834/ha for the October period (72 sales) and from $24,409/ha for the November 2015 period (86 sales). That provided a year-on-year rise of 22%.
