Southland, New Zealand, is showing remarkable resilience in dairy farm sales despite industry challenges. Colliers reports stable prices and continued market activity, bolstered by Fonterra’s increased milk price forecast and ongoing demand for dairy support properties.
In Southland, New Zealand, the dairy farm sales market is demonstrating unexpected resilience despite broader industry pressures. Colliers, a leading global real estate services and investment management firm, has provided insights into this robust performance. Luke van den Broek, Director of Rural and Agribusiness Valuation at Colliers, noted that Southland has been “punching above its weight” in the dairy sector, reflecting a strong local market amidst fluctuating conditions.
Market Overview
Colliers’ recent Southland Dairy Property Market Report highlights a notable trend in dairy farm sales. Despite a 28.7% decline in total transaction volume in the 2022/23 season, the market remains active. The report shows that 26 dairy farm transactions in Southland and West Otago totaled NZD 225,574,500 in the 2022/23 season.
Current Trends
The volume of transactions slowed in the 2023/24 season, with 21 confirmed transactions by the end of July, including 11 agreements reached in 2024. Despite this, sale prices have remained steady, reflecting a degree of stability in the market. The average sale price at the end of July 2024 was NZD 5,911,162, translating to NZD 34,435 per hectare, for farms averaging 181 hectares in size.
In comparison, the previous season’s average sale price was NZD 8,675,942 or NZD 32,993 per hectare, for farms averaging 277 hectares. This suggests that while transaction volumes have decreased, the value of dairy farms in Southland has held up well.
Market Sentiment and Future Outlook
The positive sentiment in the market is partly driven by Fonterra’s recent increase in the 2024/25 season forecast farmgate milk price to NZD 8.50 per kilogram of milk solids. Van den Broek expects this improved sentiment to stimulate market activity. Despite earlier negative sentiment and payout pressures at the start of the 2023/24 season, Southland’s dairy farm market has shown remarkable endurance.
Dairy Support Properties
The market for dairy support properties, particularly those with strong wintering capabilities and well-drained soils, remains robust. These properties are currently transacting for between NZD 30,000 and NZD 40,000 per hectare in the 2023/24 season. The high demand for properties with good winter grazing potential is attracting a wide range of buyers.
Southland’s dairy farm sales market continues to exhibit resilience, with stable prices and ongoing interest despite broader industry challenges. The region’s strong performance, supported by positive changes in market sentiment and milk price forecasts, underscores its significant role in New Zealand’s dairy sector. Colliers’ insights highlight the adaptability and strength of Southland’s dairy market amidst fluctuating conditions.
