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Rural market poised to make a slow recovery

01 Nov 2016

ruralvalue brings together the expertise of QV’s South and North Island rural valuers into a distinct unit who provide rural advice and solutions to enable customers to make decisions that will help them grow their businesses and rural New Zealand. 

Spring 2016 overview

Rural confidence is low after the collapse of the global dairy markets, but recent dairy auctions have taken steps towards recovery with increases in the last five out of six Global Dairy-Trade auctions. While the price move is a recovery; it has a long way to run, with an expected but slow price recovery to levels well below the record pay-outs of recent years. These lower prices have dented confidence in the agricultural sector and lead to a softening in the dairy property market but pastoral values remain firm on previous levels.

Fonterra’s announcement of a rise in the forecast pay-out to $5.25 plus an expected dividend of 50 cents a share will increase the total pay-out to around $5.75 a kg milk solids.   This price is above the breakeven point for most dairy farmers. With the prospect of a more positive outlook and reduced supplies, the prospects look brighter for the dairy sector moving forward.  Based on historic data an improvement in the dairy sector will invariably impact positively on other market sectors. This is in spite of a current low lamb price of approximately $80 per head which is well below the $100 per head predicted at the start of season.


There has been a level of consistency in returns to sheep and beef farmers over the last five to six years. A few outstanding years in terms of returns to dry stock farmers as well as several moderate to good years has meant sales volumes of dry stock properties have increased steadily and land values have followed. 

Breading and fattening units

There is good interest in both breeding and fattening units across the North Island. Broadly dry stock farms are selling for between $4,000-$13,000 per hectare or $600-$1,200 per stock unit.  Some steeper breeding units have sold for under $600 per stock unit however this is not the norm, with most at the lower end of the range selling for $600-$700 per stock unit unless very steep, run down or with significant weeds problems.

Manuka honey

Manuka honey prices have increased steeply over the last couple of years.  Big players in this market have purchased what would have been considered very low quality land, because it has established Manuka or land suitable for establishing Manuka. This land use is now under-pinning the market in areas that were considered remote or less desirable.


The dairy market across the region is mixed.  Strong dairying districts such as Waipa, Matamata, Morrinsville and Tirau are seeing no discernable decrease in values with farms trading between $58- 65,000 per hectare. These rates have remained reasonably consistent since 2013 despite the low returns available over this period.   Farms with lower quality soils, location, contour or infrastructure are experiencing low demand; longer sales periods and sale prices 10%-15% lower than would have been achievable at the peak of the milk solids pay-out three seasons ago. Marginal dairy farms in some locations have seen very low demand and at $13-17,000 per hectare, some purchasers have decommissioned the cowshed and returned the farm to a dry stock use.     

Chris Coakley

ruralvalue Registered Valuer based in Hamilton

Mob: 027 698 3438


There has not been an abundance of established dairy or pastoral blocks sales but what sales have occurred indicate that properties are selling at or slightly above 2015 market levels.

Economic hill country properties are selling between $600 - $800 per stock unit or $3,500 - 8,000 per hectare.

Economic dairy properties appear to be selling in a range of $35 - $50 per milk solid or $35,000 - 50,000 per hectare.

The introduction of apiarists to the hill country market has seen competition increase for bush and scrub blocks. These blocks were traditionally valued at unproductive levels but now appear to be selling at or just below productive pastoral properties.

Richie Guy

ruralvalue Valuer based in Palmerston North

Mob: 02102349617



Our analysis of fifteen farm sales having occurred since the 2014/15 peak indicates land values have fallen by approximately 12-15%, however, tier one properties are still selling well.  It appears that this market has become disestablished from the arable and pastoral markets with regard to land value and we are frequently monitoring the added value of specialist dairy improvements. 

Throughout spring the number of properties on offer has been scarce and below what we would have anticipated, a sign that rural lending institutes remain supportive to existing clients.  On farm operators remain resilient with the outlook for many being optimistic; a result of Fonterra’s forecast update of $5.25 per kilogram of milk solids announced on 21 September.  Since the four consecutive increases in the Global Dairy Trade price index occurring through August/September, we are aware of three dairy farm sales fetching $50,000 plus per hectare. 


The arable market is very strong at present with a number of recent property sales turned over at/or above the market peak.  This market is predominantly driven by; economies of scale and compliance with ECan’s Land and Water Regional Plan.  Now restricted to nutrient management rules outlined in this new planning framework, for many operators business growth once achieved through land use intensification is now becoming a question of land intensification.  Hence, this market is dominated by adjoining owner purchasers.

Given the low static return in growing cereals, our sales indicate large operators are seeking adjoining/near adjoining land with good irrigation infrastructure, long term water permits (or reliable scheme water), and large acreage to spread fixed production cost.  Recent sales indicate good land to be worth $54,000 - $57,000 per hectare in Mid-Canterbury.  Dry land properties are also desired if scheme water is available or if water can be supplied from adjoining land under the same ownership.  

Todd Howden

ruralvalue Valuer based in Christchurch

Mob: 0279164345


Dairy farm values appear to be around 10% below the peak of 2014 and are selling anywhere from $26-$36 per kgs milk solids or $26,000 – $40,000 per hectare (Land and Buildings).  

Pastoral value levels have firmed by up to 10% over the same period and are generally heading in a positive direction with harder dry hill country selling for $750 - $850 per stock unit and better finishing properties selling for $1,000-$1,500 per stock unit.

Corporate buyers are being selective and are looking for size and scale.  There is some farm enlargement to existing farms, with some properties being subdivided or split to complete sales. Dairy farm vendors have to be patient as there are few purchasers around at the moment.

Ian Harvey

ruralvalue Registered Valuer based in Dunedin


Dairy farm prices have eased back around 10-15% on levels established in the 2014 season due to low sales volumes with limited demand. However, better dairy support blocks and pastoral sales are not showing any reduction in both price and demand. Demand for wintering blocks and local expansion are current driving forces behind many dry stock farm purchases in Southland and part of South Otago.

There has been some movement in high country properties in Southland and Central Otago recently after a long period of inactivity.  Four pastoral grazing properties are currently going through the sale process, but are as yet unconfirmed. These range in price between $14-20 million. These prices are well below the pre-2008 levels when there was strong interest for these types of properties from international buyers. There appears to be renewed interest for these properties as the vendors asking prices become more aligned with buyer expectations.

David Paterson

ruralvalue National Manager and Registered Valuer based in Dunedin


ruralvalue currently has 29 rural valuers  with a blend of youth and experience that sets us apart from competitors. The senior members of our core rural value team are General Manager Richard Allen, National Manager David Paterson and senior valuers Ken Taylor, Ian Bunt, Ian Harvey and Chris Coakley.  For more information about ruralvalue click here, or call us on 0800 778 725


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