Until relatively recently, we considered the buyer pool and demand for dairy farms had reduced. Factors contributing to this has been a lack of liquidity through an absence of overseas buyers, a significant reduction in bank appetite for lending, uncertainty around how environmental rules and regulations could impact farming systems which all resulted in lower farmer confidence and fewer transactions.
An increase in the number of confirmed dairy farm sales throughout Canterbury appears to indicate a willingness from buyers to act and increase offers to levels that means sales are occurring. This is likely influenced by the yields on well-run dairy farming businesses appearing very sound relative to long term averages after a reset in farm values, low interest rates and a shortage of quality dairy farm listings.
Real estate agents report vendors who may have previously wanted to sell dairy farms are now withdrawing their properties due to improved returns.
We are also starting to see interest in Canterbury dairy farms, from non-traditional sources of capital including syndicates, sale and leaseback arrangements and international entities taking a minority interest in proven larger scale farming companies.
All of these factors mean currently, we consider proven dairy farming operations with up-to-date environmental compliance, low to moderate irrigation costs, an adequate standard of housing and farm buildings to be relatively well received if offered to the market.
Click here to access all our research on the dairy property market in New Zealand, and see the most recent dairy sales maps for Canterbury and Southland.