It has been a reasonably slow end to the 2017/2018 selling season for the Canterbury dairy farm market, following a relatively active start in spring 2017. You can see the most recent Canterbury sales on the map below and an updated graph of our Canterbury Dairy Farm Index (and download your own copy).
We have seen some strong sales in the most keenly sought locations from predominately local farming families, however we have also observed that there has been far fewer transactions of larger scale operations which suggests that the buyer pool for these properties has reduced.
The Overseas Investment Office (OIO) have delayed decisions and as a result, overseas buyers have effectively had their hands tied. On the back of this, there is a concern that the impact of restricted liquidity will put pressure on values. Foreign capital has underpinned demand in the dairy industry over recent years and the sheer weight of capital to purchase larger farms may be a challenge for local buyers.
There has also been an increase in the number of ‘Tier 2’ and ‘Tier 3’ properties being listed with very few sales. It is now likely that these properties will be withdrawn from the market until spring. With a greater number of listings and vendors having more realistic expectations, coupled with the smaller pool of buyers, the gap between higher quality and poorer quality properties is likely to widen further next season.
Other market factors which are still evolving and the outcomes of which are yet to be understood, such as Mycoplasma bovis, are only adding to uncertainty and in some cases causing issues with transactions getting across the line.
In the interim, we consider that prospective local buyers are now somewhat holding back in order to get a better sense of market direction, whilst the vendors are still trying to achieve a strong sale.
We consider the market has largely adopted a wait and see approach with regard to how things play going forward and during winter. The only exception to this being prime land where potential purchasers would not want to let opportunities slip by or whereby a neighbouring farmer influence may exist.
For more information, please contact;
Ryan Bratty, Registered Valuer
+64 27 4631 1077 | Ryan.Bratty@colliers.com
Jack Powell, Registered Valuer
+64 27 485 6562 | Jack.Powell@colliers.com
Tim Banks, Valuer
+64 21 199 4599 | Tim.Banks@colliers.com