Biggest trends

Margin compression slows activity

While there is an improved outlook for beef, margins on farm continue to be compressed for the red meat sector. Recent inflated costs on farm require rationalisation pending improved commodity prices, with the thin margins influencing the overall activity and affordability.

Environmental requirements add due diligence

Pastoral buyers are alert to changing environmental requirements and considerations. While more acute in the dairy sector, vendors should have quality documentation available to assist saleability, particularly for the higher value properties that may attract more scrutiny.

Lower levels of competing land use

Competing land use amongst the sub-sectors remains, but at lower levels of intensity. Dairy farmers continue to seek support land as part of their strategy to meet environmental standards, with less competition from fattening operators given thinner margins. Volatility in NZU carbon price and regulatory settings continue to constrain conversion of hill country to forestry.

Outlook for the next 12 months

Unravelled regulation providing confidence

The direction provided from central government halting certain regulatory compliance requirements impacting rural landowners will provide clarity going forward. As a result, there will be more confidence in the pastoral sector will strengthen.

Thinner buyer pool with increased options

Buyer willingness will remain heavily influenced by their capacity and affordability assessment. Market activity is therefore expected to continue to be associated with better quality properties, strategic acquisitions or where there is a perceived value gain as a result of more immediate motivating factors of vendors (such as age, energy, debt or up/downsize plans).

Ability to capitalise on opportunities will be tested

The reduction in competing land use (particularly from forestry) will continue to provide opportunity for buyers of hill country. After having been arguably priced out of this market in more recent times, those with an ability to see through the thinner margins of the current season(s) will be able to capitalise on options in the market.

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