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Farm sales slowest in years

Farm sales slowest in years

Honesty and openess by these two real estate agents, shows just how quiet the rural real estate market is.

With so many properties on the market, and so few selling it must be very hard to get a feel what true values really are.

With commodities strong for wool, lamb, mutton, beef, venison, velvet and dairying, it is not  income that is holding these sales back.

Poor historical profits that have been created by cost issues, and too high a debt are restraining many farms, and until there is an adjustment little will change.

The adjustments will come when the banks tight financial controls bite, and some farms are sold at reduced levels. New farmers will enter at sensible capital values, that will be determined more by the farms productive value, rather than its speculative worth.

Two real estate agents say it would take nearly six years to sell the Waikato's farm inventory of 296 farms if sales continued at the current rate. In their Rural Agent blog, Stuart Gudsell and Sharon James, real estate agents at the Te Awamutu branch of PGG Wrightson, said on the market there were 134 dairy farms, 128 grazing farms, 19 finishing farms, eight cropping farms, three horticultural blocks, two specialist livestock farms and two forestry blocks.

Real Estate Institute of New Zealand figures, quoted by the pair, show the Waipa district was the only district in the Waikato to sell any farms in August, with two sales reports The Waikato Times. September saw two farm sales in the Waipa district, one farm sale in the Matamata-Piako district and four in the Waikato. In October, one farm sold in each of the districts of Matamata-Piako, Otorohanga, Taupo and Waipa. Prices ranged from just under $1 million to just over $3 million.

In the July to September quarter, 100 lifestyle blocks sold in the region, but 1296 remain on the market, which the agents estimate would take just over three years and three months to sell at the current rate. They said if no more rural properties were listed in the Waikato it would take 299 weeks to sell every listed farm and 170 weeks to sell every listed lifestyle block. Lifestyle block sales in the Waikato have again decreased when compared with a month earlier. Total sales for October were 23, compared to 33 in September and 44 in August.

"Needless to say, this is not the direction the market traditionally tracks as we progress through spring to summer," the pair said in their blog. "Cautious optimism is being felt in two of the Waikato's districts; Otorohanga district has achieved its first farm sale (finishing) in five months, and Taupo (grazing) in six. However, with only four farm sales in the entire Waikato region for the month of October, this optimism is perhaps premature.

Dairy farmers, while promised a good milk cheque with the lift in milk commodity prices, were still retiring debt following a couple of bad years and suffering from fallout from the global recession – as were the typical buyers of lifestyle blocks who didn't have enough confidence or cash to invest.

We welcome your help to improve our coverage of this issue. Any examples or experiences to relate? Any links to other news, data or research to shed more light on this? Any insight or views on what might happen next or what should happen next? Any errors to correct?

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Sounds like the RE mob have finally come to understand they are partly responsible for their own lack of sales...way too much hype from them about recovery and good times returning...far too little honesty about why the bubble is dying, even if the RB and the banks are flat out trying to pork some life into it with more cheap credit.....

The sooner the banks are forced to end the game and take the losses...the sooner we can get down to honest valuations and some activity. So to all RE agents...stop fecking around and start dishing out the truth...if  tits want to get bubble prices, just walk away...refuse to list them. That will get some action. And put the word out to buyers on which properties have the banks in a hole. 

All this tells me is that in today's market the price expectation of 296 farmers for their land is too high.

The farmers reckon that the buyers are cheapskates who don't know a good deal when it spits in their face, and that the buyers should feel honoured to be donating wads of cash to the backbone of the country because it's the least anyone can do, seeing as how we all owe them a living.

Bugger, looks like my plan to escape to the seaside is a few years away.  I just wana point out here that the Waikato and central north island is rapidly becoming a desert. I dont think its been this bad around here ever this early. And the wind blows...the sun rain forecast.

Hi my cute little friend, How much rain did you get at the weekend? we got 20mm but others got 30mm. Saved my bacon. Still going to bail out of stock, ewes have gone bulls in two weeks, Lambs next week. Nearly had a frost twice this week getting as low as i degree whatever you do in life avoid Horticulture especially grapes, they are  for idiots.

My accountant told me today to go get a proper job, I said  "after you".  I like lossing money it saves tax and stops me feeling guilty about all the people struggling to make a living out there.   But wow are children expensive when they grow up or at least on the way. My daughters braces are on, Im looking at 12k for a hostel for my other daughters 1st year at Uni, looking at studying Physics. what will she do with a physics degree?I suggested cooking like her mother.  My daughter in London is still on 'Pocket money", my daughter in California gets 'an allowance'  at 23 and I haven't even started on my wife.  I feel destitute. I really need  a new tractor but keep having to put it off. My present one was made in 1958 but I guess it still goes well. Andrew

Gosh I hope you are referring to me..... Rain well, none zippo zilch actually, and the damn wind is blowing.

Haha, I new it was a good idea not to have too many kids. Mine have growed up and gone, and of late have been supporting themselves. Which is just as well, coz farming certainly  wont pay their bills. Had a drive around the waikato today, it doesnt look so flash. The maize is barely holding on, crops are pathetic, everything needs a good drink.

I know a guy who has a good drystock property near Hamilton, great house, all the trimmings. Could have got 5 mil for it 3 years ago. Agent valued it at 2.2mil, with the aside that it probably wouldnt sell for a few years anyway. What I was concerned would happen, is really happening. Bubble poof boom.


And yes Andrew I am bailing out of stock too. Lambs next week, some grazing heifers have already gone, fat heifers to the works. What pees me off is this is summer country, this is when I make money. What the hell is happening? Of course the thousands of acres of trees in the middle of this Island that have gone in the last 5 years couldnt be it could it?

Yes belle you,definitely not Wolly, Ive been on the phone to my Aussie mate in Argentina and I pick his mannerisms up so quick.

 Talked to a friend who's selling, he met today with agents and trustees. Last valuation was over 2 mill they hoped for 1.4 agent doubted 1.1mill. They hope to get 1.2 to 1.3, free draining, summer safe too.  We are very prone to wind the last week of colder temperatures and no wind has given us a couple of weeks. A few days of westerlies and it will be back to were we started.  The buyers for farmland are very cagey and the banks are only lending $15 including livestock. I always thought that farmers pay as much for land as they can borrow according to that theorem  prices will keep falling for a while yet. As long as these prices for lamb and cattle hold at least some round here will make a profit this year.

Belle, I must add that if interest rates climb then 'all bets are off'. I suspect there is some cross subsidie going on at present, with some of the heavily indebted farmers getting some relief.

Andrew if interest rates go up, the whole shebang goes up in flames. Actually I think the whole thing is up in flames anyway. My bank manager reckoned they are waiting for Crafars and CHH and a few other biggies to clear, then they are going to let loose a whole heap more on the market. Except, this is no secret. We all know this. Including prospective buyers. So apart from the dumbass Wang who is paying or trying to pay way over the odds, everyone is waiting for the party at the bottom. And the everyone stated is actually a very small number. Coz very few have money left to spend, cos its already spent. But once again we all here know all this...

Belle, I bet the banks are taking a bath on running Crafars, what do you think they are lossing?

Seems to me there is going to be some great buying opportunities out there if the anocdotal stuff here is acurate. This is a very unusual set of circumstances, with record high product prices and low interest rates and a falling market. Usually it would be off to the races at this point. Aj, no wonder things are so dire up in the HB if everyone has the kids still getting "pocket money" at 23!

SS, my 23 year old is a special case, she would rather just stay at home, she's a late starter but a great kid. Im being patient. She hasn't decided what to do, last idea was tropical disease , that would cost me more, so I wait. Her strength is in maths, go figure. She is studying in California but unable to work with her visa. She has 5 months to decide before her visa runs out. Hopefully she will come back home.

  You are right about the strange times, they feel a bit surreal to a lot of us so everyone is very cautious, and those bank capital ratios have changed which makes a big difference.

 I think our interest rates climbing will break the camels back, were to from there I know not. Europe is a mess and the States is no better. Our prices are strong in markets were they will be lucky to avoid depression levels of unemployment and growth. The general feeling around here is that these prices wont last, lets hope they do.

It comes down to confidence in the end, like always.

Who knows Andrew, some of those farms will now be pretty dry. But I hear you can still make money with buying PKE and grain. They should be getting some good cheques.

Aj, I shouldnt speak to soon. I have two much younger daughters and they are already concerningly easily,  charming their dad into concessions.

As for the product prices im extremely confident as to their sustainability based on whats happening in the market place and remember the $NZ will collapse in a heap if the doomsday senario plays out. I agree though with Belle that interest rates are the big unknown and significant rises would put extreme pressure on. All bets would be off then!

Talking to a rural serviceing field rep today from up country abit and he says everyones sitting on their chequebooks even with the upturn in prices. He recons they are waiting till the money's in the bank in the autumn before making and decisions.

Or SS they have tax to pay early in the new year, from principle that banks made them repay.

Its certainly a catch up year for many for sure. I think if we've learnt anything from the last few years it would be to pay off debt where possible, so that can only be a positive. For those without significant debt which remember is a fair proportion of sheep and beef cockies they will be faced with the choice of either donating to Bill English or investing surpluses back into their properties in the form of fert or development before balance date.

I am not against repaying debt SS. Now that there is no capital gain, to get debt down is doubly hard. Paying principle, pay Bill English too. Its not a concept that farmers are familiar with. We used to use capital gain to gain equity.  This is close to my heart right now, it was voluntary, and its nice to owe less...but I reckon I might have to up the mortgage again to pay the tax! Damn. Two steps forward, one step back.

Belle, Im sure Bill will welcome your contribution gratefully. I hope you get some welcome rain so that you can cash in on the upturn this year as well. That, in my opinion is the key, to be able to string together a number of solid years like our dairy cousins. Not, as you say two steps forward, one back. Things are looking a picture down here but there are some horror stories of guys tailing 60-70% and significant ewe losses. Its hard to come back from that in a hurry, if at all.

Can we get some $/ha rates on those two farm sales?

The best agents realise they're wasting their time if they're talking up the market to their clients and promising sales levels from 2 years ago. The skills that the good agents have at the moment is that they are able to realign their clients price expectations to the current market. Very different skill from whats required to sell in a booming market.

Would be interesting to know if there is any interest for that land in China, try renting it for a %fee. So we will know if the chinese story is real. The real problem is that at these exchange rate levels farming is not profitable in NZ... the cost is to high by historical standards of both labour and credit. 

Belle, watch thePKE. Ive a friend who is a consultant and some of the PKE quality is terrible I thought he said %44 non digestible but it was %44 digestible and an ME of only 9.2. Worse than poor hay.



there is no bottom to the market around here yet. Steeper coastal country talk is as low as $250 a stock unit. Last week nothing sold had two farms tendered and one auction. I think its the banks worried about how much they could lose if they just pull the plug. If these prices stay up for the next 18 months I would expect to see buyer interest return.

That steeper coastal stuff is woth a lot less than $200 a stock unit. I can still make more money at the bank than buying at $170/su coastal.


The main problem is that high stock prices make the cost of entry very high, thus land prices must be further discounted to create an acceptable return on capital.


 I think that people are starting to remember that farming is high risk and so demands high returns.


I have also heard recently of a sale that fell over here in the HB. The regional bank manager said "yep that should be ok", the buyer took that as a yes, went unconditional, paid his deposit. Then heard back from the regional guy that the head boffins in Wellington had said no, lost his deposit.



Stevel - I agree that stock prices are out of kilter.  Spoke to a sharemilker recently, who has just sold his dairy herd for $2100 a head.  I cannot see how cow prices can be viable at that price if banks are only valuing them at $1400 for security purposes. Word is that they will come down with a bit of a thump in the New Year.  If that happens, some dairy farms may start to move.

Andrewj & SS - Ahhh......the way some daughters can twist their fathers round their little fingers ;-)  Mind you sons and mothers can be no different! :-)

Two dairy farms and a drystock farm in the Central Plateau went to auction recently - not a single bid on any of them, and it was rumored that the banks had put the pressure on to go to auction.  Who wants to buy a dairy farm if you have to pay $1800+ per head to stock it?

Love to know what Fonterra paid for its large scale dairy farms in Brazil, anyone know anything or is it all top secret?


 Although the $ is high we are getting historically low interest rates, with all the debt out there we may be better off with the low interest rates.

Andrew, While Fonterra is rather open about the costs etc of it's farms in China the reverse could be said about the farm(s) in Sth America. Don't know why that is. Could make a guess, but it is always something that has intrigued me as to why the difference in openess.

Andrewj: Not all South American countries are the same, now Brasl is a tough one when it comes to investment and finding out the actual/final cost that was payed could be a bit hard. Some others are easy, for example you could easily know what Fonterra payed for Soprole in Chile


Hi everyone

Thanks for the reference and comments about our blog article. Would you mind correcting the tag for Stuart, it should be Stuart Gudsell.

You may also find this article of further interest which includes a graph showing the total New Zealand farm sales since 1996, average number of farms sold over that period 2,246 per annum, and current year to end September, 694.

Sharon James

In an era of farm consolidation, how are those numbers relative? I mean, if say 10 smaller farms are now one, then 9 must have 'disappeared' from the potential sale list?

This might be a silly question, but, .. If it's a desert in the Waikato, why aren't they using the Waikato River for irrigating farm land like they are using the Rivers in Canterbury?


my friends tell me they would rather have Herpes than a coastal farm. At least you can get rid of Herpes

try chirpies - it's easier tweeted.

And Herpes is hard to explain to the wife after some overtime in the woolshed with the Rousie. Not that all Rousies have herpes but my single shepherd is a lot more wary after his last escapade with a  rousie in the shed after work.

chuckle - yes, there's two meanings to 'Picking Up', eh???

I gave him some fatherly advise. I mean the warts should have been a dead giveaway.

AJ, I don't think you can get rid of herpes, but I would imagine that it is alot eaiser to manage than a coastal property, or a costal property with debt attached, that would be like having herpes AND warts!  

CO, I'll have guess. I think from memory that a few years back Fonterra tried to get into Brazil and develop a factory for Bio-medical uses,it was voted down by farmers. You dont think they are doing it anyway, do you.?

I understand that they have/had a 'demonstration' farm over there.  I'm in the UK at present so didn't attend the AGM and don't have my 'stuff' handy to check back on.

Shareholders were given the China farm as a fait accomplai, so in regards to the Brazil farm...............................

CO, its a pretty big 'Demonstration' farm.

The olds sold their farm in the south waikato in 2005 for around $3M.  The old man kept telling me he sold too early and should have held it for a few more years.  It sold again a couple of months ago for the same money.  He now reckons the writing was on the wall and he knew it all along.

Yes, everyone always knows and knew absolutely everything well before it happened, even when they didn't.

Understandable, considering the only alternative is for them to be honest for once in their lives and admit they were clueless imbeciles who had no idea what was going on or what they were doing.

Funny listening to my local radio station real estate ads. The local RE firm claims they had a "record month". They neglect to explain that it was a month of record high listings and record low sales.


A friend of mine is a dairy farmer and he is very cautious about repaying extra principal (still making his normal principal repayments) from any surplus this right now.  He said he is almost better to hold it it in cash. 

His reasoning being that in tough times the banks will come knocking asking for principal repayment.  If the payout is down and the surplus is low/non-existent, without anything up your sleeve then things will get very messy. Those that repaid extra principal now won't be able to respond to the request.   He thinks that even though those that repay more now might owe less by repaying now, the banks will still ask for additional repayments...  

He is foreging the difference in interest received on his cash and his mortgage to provide himself with this cash reserve.

I am interested in farmers/rural advisors comments on this.

Poor dairy farmers. But at least they can count on the fact that the government will always bail them out with tax dollars, no matter what the circumstances. Especially a National government.

You have a fool for friend there ahuhyeah.....he's clearly been too busy milking to see the problem....even Suze Orman would scream "pay the bloody mortgage off you fool".....

It's mortgage fodder like your friend that bank bosses just lover ever so much!

No doubt that is the long term intention Wolly, he will be doing that for the next 30 years - I think he ws talking about some medium term cashflow management solutions to the inevitable ups and downs of a business that has a fair amount of its profitability related to when it rains etc.  It would be fine if he a had say a $200,000 flaoting component to his mortgage, which he could pay off and draw on as required, but the impression I got was that his loan was pretty much all fixed.  Caveat - I do not know how rural lending is typically structured I did not quizz him in depth at the time to confirm my assumptions - we were literally running down a mountain and kind of needed to concentrate on footing. 

Real estate agents are feeling the pain. They desperately  need to generate sales. They need prices to come in line with buyers expectations or 'no sales'. My real estate friend tells me he would be happy to sell farms at 500k, selling nothing is hurting. There is pressure from the agents to talk prices down in the hope that strong sales and the 'good old days' will return.

Andrew, I concurr.....

The problem the "honest RE agents " face is that there are still the "pie in the sky" agents which in order to get the listing promise the vendor the moon.They get the listing but never make the sale(the logic behind this confuses me)

A local farm which i had a crack at buying 18 months ago ..........................My offer about$1.2m.....passed in at auction subsequant offer was $1.4m.......vendor wanted in excess of $1.6m(about the gv at the fell through.vendor got "sweet Talked by rival Re Agent and changed camps...

Now 12 months later farm still on market no sale likely and the current market value would be lucky to be $1m and the $1.4m buyer is long gone.

"They're the backbone of the country!"


Anderew, you are spot on, re your agent comments. For the last 18 months the market has been deflating and this trend will continue for maybe another 18 months. Who knows how long this recorrection in land values will take. The mind set of both vendor and agent have to line up with the purchasers, not easy, then off course there is the good old bank manager, he to, has to fall into step.
A farm I sold, as agent, 2008 for $4.3m re sold last year $3.1m and now would be lucky to get $2.8m, now there is, a whole lot of pain and mind set change, to get to that result.

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Days to the General Election: 35
See Party Policies here. Party Lists here.