The opportunity between earnings and land values

The 20-50ha rural property market offers a window of opportunity for buyers, backed by the strongest commodity returns in years.

After a period of genuine uncertainty, confidence has returned to New Zealand’s smaller rural property market.

Twelve months ago, few would have predicted the level of activity we’re seeing today across the 20 to 50-hectare segment. Stronger commodity fundamentals, improved on-farm profitability and a borrowing environment that remains historically accommodating have all contributed to renewed momentum.

The data from the last five seasons tells a clear story about where we’ve been and, more importantly, where we’re heading.

The 2025/26 season delivered 451 sales nationally for more than $701 million in total value – a 26% lift in total sales value on the previous season and comfortably the strongest result in three years.

Median values have recovered to $40,800/ha after dipping to $36,100 in 2024/25. Importantly, however, they remain below the $42,000+/ha levels seen in 2021/22 and 2022/23.

Put another way, land values have not yet caught up with what on-farm earnings are now telling us. That disconnect is where the opportunity sits. Those on-farm earnings are worth watching.

Lamb schedules have been at record levels through 2026, with farmgate pricing pushing past $12/kg and forecasts holding above $11/kg into spring. Beef has been equally impressive, with New Zealand farmgate prices reaching record highs through the first half of the year, underpinned by robust US demand and a favourable exchange rate.

On the dairy side, the 2025/26 payout settled at $9.70/kgMS, well above breakeven. The 2026/27 opening forecast of $9.25/kgMS, while down on this season, remains historically strong. For context, as recently as 2023/24, the midpoint was $7.00/kgMS.

Across sheep, beef and dairy, on-farm profitability is in a fundamentally different place than it was 18 months ago.

That improved cashflow gives buyers confidence and, critically, greater ability to service debt. It’s no coincidence that the strongest recovery in sales volumes has come alongside one of the strongest runs of commodity returns in recent memory.

“Land values have not yet caught up with what on-farm earnings are now telling us. That disconnect is where the opportunity sits.”

The interest rate environment adds another important piece to the picture. The RBNZ lifted the OCR to 2.50% in July, the first increase in three years, and there is an expectation of a gradual move back towards 3.00% over the coming year.

But perspective matters. We came from 5.50% just two years ago.

Fixed-term mortgage rates remain far more accessible than they were through 2023 and 2024 and, while the direction of travel is up, the pace is expected to be measured.

For buyers with strong cashflow behind them, the borrowing environment today remains supportive – but the longer you wait, the more that could change.

“For buyers with strong cashflow behind them, the borrowing environment today remains supportive – but the longer you wait, the more that could change.”

What makes the 20 to 50-hectare segment particularly appealing is the breadth of buyers it can accommodate. These properties can suit finishing, small-scale cropping and lifestyle with income. For people wanting to get onto the rural property ladder – and those with ambitions to own more land down the track – they can provide an ideal starting point.

A well-chosen property in this segment is a genuine income-producing asset. It can be the right size to run a beef cattle operation alongside off-farm employment, for example, without demanding a full-time farming commitment from day one.

Getting established on a well-located smaller property, building equity and demonstrating capability to a lender is how many successful farming businesses have started.

But that brings us to an important point for anyone looking to enter the market.

Rural property lending is a different world from residential finance.

Buyers who don’t understand the policies, metrics and expectations rural lenders work to can find themselves on the back foot before they’ve even made an offer.

Our strong advice is to build a good relationship with your banker early – well before you’re standing at an open day with a chequebook.

Understanding how rural lending works, what equity and cashflow positions banks want to see and how to structure your approach will put you in a far stronger position when the right property comes along.

“Build a good relationship with your banker early – well before you’re standing at an open day with a chequebook.”

The breadth of buyer demand is helping underpin the recovery we’re seeing in transaction volumes. As confidence builds further, competition among buyers is likely to increase. At 451 transactions, sales volumes are now closing in on the pre-correction mark of 493 set back in 2021/22. The market has found its floor, and the trajectory is clear.

For buyers who have been waiting for greater certainty, the combination of improving farm profitability, recovered transaction volumes and land values that remain below previous peaks presents a compelling window to take another look at the market.

Our advice never changes: get some advice. Whether you’re considering your first rural property purchase, looking to add to an existing operation, thinking about selling or simply seeking a second opinion, our rural team is always open to talking through the options specific to your situation and the opportunities in your region.

With practical advice, local knowledge and the backing of our True Team, we’re here to help you make informed decisions and achieve the best possible outcome, whenever the time is right for you.