Dairy farm values still at 2014-15 level
The dairy recovery has failed to lift the value of farms from their highs of 2014-15, when milk prices were at their peak.
Land values were being increasingly affected by demands for better water quality, says Rural Value, an arm of Quotable Value.
‘‘Sales volumes over the summer season have been lower than previous years in many farming sectors including dairy and sheep and beef, and this has impacted on rural property values as the market is relatively subdued,’’ said Rural Value general manager Richard Allen.
‘‘Farm owners are facing a number of compliance changes including fresh water management, environmental impact controls such as levels of nitrogen, as well as proposed changes to IRD’S farm expenses rules. All of this has created uncertainty in the rural land market and this is now being reflected in values, particularly in the dairy farming sector which have continued on a downward trend and are now back to 2014-15 levels in most parts of New Zealand,’’ he said.
Allen said councils were taking a tougher stance over environmental issues. ’’This is something we will have to know a lot more about. We are now starting to put our guys through sustainable management courses.’’
In 2013 the median price per hectare for a dairy farm was $33,254, but this jumped to $45,105 in 2015. By the beginning of this year a hectare of dairy land was worth $39,642. Prices vary considerably according to region. In Waikato, above average properties have been achieving prices from $50,000-$70,000 per hectare, with lesser quality ones fetching less than $40,000/ha. In Otago, farms are selling anywhere from $26,000 to $45,000/ha.
Rural Value Hamilton valuer Nick Birdsall said auctions of dairy farms outside of the council’s nutrient management area increased sharply at the end of 2016, with strong interest continuing from adjoining owners.