Lower milk prices hit dairy farm prices but one Waikato property sells for more than $109k per hectare setting a new record

A total of 374 farms changed hands in the three months to November, which was 28 more than the 346 in the three months to October, but 40 less than the 414 farms sold in the three months to November last year, according to the Real Estate Institute of New Zealand (REINZ).

"Regional reports again confirm strong activity on quality, well located farms, with purchasers being particularly diligent in their selections," REINZ rural spokesman Brian Peacocke said.

"The consistent pattern around the country is that second tier properties are struggling to attract meaningful attention."

Prices appear to be holding up well with a median price per hectare of $29,834 for all farms sold in the three months to November, which was up 24% on the same period of last year.

However the lower milk price appears to be affecting the price of dairy farms, which had a national median price per hectare of $36,825 in the three months to November, compared with $43,299 in the three months to October and $40,023 in the three months to November last year.

Around the country the REINZ reported the following highlights:

• Strong sharemilker enquiry for first farm purchases in Northland, although uncertainty around next season's payout was a constraining factor.
• Some strong dairy farm sales in the Waikato where record prices have been paid for Tatua supply properties and selected Fonterra farms in the Morrinsville/Matamata district. Second tier properties are being overlooked even though they may present viable investment opportunities.
• Healthy enquiry for gold kiwifruit orchards in the Bay of Plenty.
• Strong enquiry for Taranaki dairy farms but limited interest in sheep and beef properties.
• Strong activity in Nelson/Marlborough's viticultural sector although adverse weather is affecting buyer enthusiasm.
• Steady values on the West Coast.
• Strong interest in Canterbury dairy farms and a solid market for sheep and beef.
• The market is slow in Otago with generally limited enquiry levels.
• Quality dairy units selling for up $46,000 per hectare in Southland and good beef and sheep properties making up to $1000 per stock unit. However purchasers are being increasingly cautious when making decisions.

More than $109k per hectare

Bayleys Waikato has reported that it sold 24 dairy and dairy support farms by auction in October, with one of them setting a record price of more than $109,000 per hectare.

Bayleys said the farm was a 69 hectare dairy unit near Morrinsville, which was milking 220 cows and producing 84,000kg of milk solids. 

It sold for $7.56 million to the owner of a neighbouring farm with a supply contract to Tatua.

Bayleys Waikato rural manager Mark Dawe, said farm values in the region were still being calculated using returns similar to Fonterra's record payout in 2011.

"I don't expect that trend to change in the immediate future," he said

Most of the buyers were old money families from the Waikato who had strong balance sheets on their existing operations and were looking to expand, he said.

Click on this link to read the REINZ's full rural market report for all farm types in all regions.