Rural Market Insight: provincial real estate will be up and running in 2024

Wednesday, 7 February 2024


While our Primary Sector, quite literally, had to weather more than a few storms last year, it's worth noting key outputs from MPI's most recent Situation and Outlook report.


Looking back over the last decade, our food and fibre sector export revenue has grown an impressive 75 percent to a record $57.4 billion in the year to 30 June 2023. After years of consistent growth, MPI forecast export revenue to temporarily dip to $54.3 billion in the year to 30 June 2024, with exports predicted to achieve a record $57.7 billion in the year to 30 June 2025. The NZ Dairy sector’s contribution to the economy, at $26 billion in 2023, is by far and away the single most significant contributor to the country’s export receipts.

World commodity food prices in the 12 months to October 2023 were 14.5 percent higher than their five year average (October 2017 – October 2022).

The IMF expects global headline inflation to fall from 8.7 percent in 2022 to 6.8 percent in 2023 and 5.2 percent in 2024. Back here in NZ, recent economic data also evidences a slow-down. This has seen a significant sell-off on the five-year NZ swap rates, which bodes well for lower interest rate expectations later in the year. The cost of borrowed capital continues to have a very material influence on the rural property market, significantly more so than the ebbs and flows of the commodity cycle.


Dairy Market

The Banks' risk appetite and cost of borrowing for new dairy debt has significantly constrained dairy farm sales activity in the last five years. The lowest number of dairy farms sold in the previous ten years occurred in the calendar year 2023 (128) and 2019 (119). These results were 50% of what would typically be expected, reflecting the significant upswing in the cost of borrowing last year and the stringent limits on agri-bank capital in 2019. In response, the market has since seen a significant shift in favour of seeking independent bank funding advice and a more considered approach by farmers in meeting longer-term principal repayment obligations where surpluses allow.

We see 2024/25 being significantly more favourable for dairy farm sales, given the prospect of lower interest rates, improving on-farm profitability, and ongoing adherence to environmental standards. Meanwhile, dairy export revenue is forecasted to decrease by 7 percent to $24.1 billion in the year ending 30 June 2024. The medium-term outlook remains positive with the year to 30 June 2025 forecast to reach $25.5 billion.


Sheep & Beef

Sheep and Beef, specifically Hill Country, have been hit not only by the cyclone and high interest rates in 2023 but also by the absence of the ‘golden ticket’ of selling to forestry. This has all combined to dramatically impact Hill Country sales (200ha+), which are at their lowest levels in 20 years, even lower than the Global Financial Crisis from 2009.

The median price is still holding up at $12,000/ha levels (200ha+), but there is real pressure on that price expectation.

The level of reset expectation depends on the carbon market. Based on current interest rates and commodity outlook, actual farmer-to-farmer sales have buyer expectations back at five years ago levels ($8,000/ha+).



In summary, 2023 was a challenging year economically for NZ, and our primary sector was no exception. If decisions are being made on the forward outlook, not the past, we expect the market to reset and farm sales volumes to improve. We have yet to see any evidence that ‘waiting it out’ to pick the bottom of the market cycle has been that successful in recent years, as the 10-year graphs illustrate. Momentum is still very much in favour of our primary sector, despite all the farmer sentiment surveys to the contrary. Never underestimate the power of committing an offer to paper, particularly while everyone else remains on the sideline.


Our team of rural property specialists welcomes the opportunity to play our part in assisting buyers and sellers in setting themselves up for a brighter and more promising 2024!


Conrad Wilkshire, GM Rural for Property Brokers Ltd




Have a listen to our latest podcast episode on Property Perspectives where we delve into the latest rural market insights


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