March 20, 2024

Waikato Market Update - Quarter One 2024

Find out what's going on in the Waikato Market. From dairy and pastoral to regulatory changes, there are a multitude of events and updates that are worth keeping an eye on.

In summary, volatile is the word which best describes the present outlook within the wider agricultural sector.

The long awaited El Nino hasn’t delivered the anticipated dry conditions, yet forecasters are still projecting this to occur through into Autumn. Global dairy trade auctions remain on a positive trajectory due to a slowdown in global milk supply, while pastoral returns remain suppressed, especially in the sheep sector. While not unusual, economic commentators have mixed opinions on whether the recent negative non tradable inflation (domestic inflation) data will lead to the continuation of elevated interest rates. Capital availability appears to be good, however, to date confidence remains subdued.


Returns within the red meat sector are being significantly impacted by cost inflation and low values for sheep meat. Sheep meat prices have been heavily impacted by low demand from China, while climatic conditions within Australia have resulted in high export numbers. Beef prices are slightly below last season and have performed well in a challenging economic environment.

Farm working expenses remain elevated with Beef and Lamb NZ indicating that throughout New Zealand farm profit before tax is likely to decrease 31% this season. Once adjusted for inflation, the sector is experiencing the lowest levels of profitability in 15 years.

The Northern North Island, which includes the Waikato, has fared better due to a higher percentage of cattle, however as shown by the below graph, farm working expenses continue to rise, while on farm surpluses are forecast to be limited this season on the back of profitability squeezes from both directions.

Farm Expenditure vs Economic Farm Surplus

No. of Sales Nationally (400 Ha +)

Real Estate Institute Data (REINZ) throughout New Zealand provides an overview of the current state of the Sheep and Beef market with sales volume significantly lower than we’ve seen during the past 10 years.

Demand for Sheep and Cattle farms at present is low, with some farms being marketed over multiple seasons, with limited interest. Data indicates days to sell continues to rise with agents indicating potential increases in listings for the spring market.

Forestry & Carbon

12 months ago, we discussed the fact that of properties within the Waikato over 200 hectares, 55% had been purchased for a Forestry / Carbon land use. That equated to 7,500 hectares of land.

In many instances farmers were taking advantage of strong pricing for more marginal land, and moving to properties in more desirable areas, with higher quality core resources such as contour and soil type. This transfer of capital underpinned the broader pastoral market.

During the past 12 months the carbon market has stalled, with Emission Trading Scheme auctions (NZU’s) failing to meet the reserve prices. Oversupply has been blamed for the lack of demand, however confidence in the pricing mechanism has also come under scrutiny with the previous government having ignored advice from the Climate Change Commission, and subsequently announced a review of the ETS and forestry sector. While this review has been canceled by the new government, this appears to have created further uncertainty.

In early 2023 a number of tropical cyclones caused significant damage throughout the upper North Island and East Coast of New Zealand. These events have crystalized the risks for foresters to develop, hold, insure, and manage fibre forests and carbon forestry investments.

Confidence has been impacted, and as a result, the number of farms to be converted to a forestry / carbon farming land use is down significantly.

“Agents are reporting low and more risk adjusted demand, with limited potential buyers.”

NZU Carbon Price & Equivalent Forestry Land Values


Dairy farm sales to date this season have followed a similar trend to last season, with a similar number of transactions up to Christmas. Properties which have sold have typically been higher quality assets, with lower quality farms remaining unsold.

Typical sales volume within the Waikato

Volume is down on 10 year averages, and tracking just behind last season, at this point in time.

With the exception of the 2020/21 season which was typified by a large tranche of tier three assets transacting, values remain stable. The uplift indicated is likely due to higher quality farms transacting, with few tier three assets having sold to date.

Average Farm Sale Price ($ / Ha)

Within New Zealand, data analysed by Property Advisory provides guidance on the volatility in key dairying markets, with Southland showing decreases in value throughout the past two seasons, while Waikato and Canterbury have remained relatively stagnant. Post Christmas sales in Southland have seen a number of smaller, higher quality properties trade and Canterbury has a very low volume of sales. Westland sales are occurring, but are largely transacting within a very tight range.

Yield (%)

Our data indicates that high quality assets retain value during periods of reduced confidence, while second and third tier assets are more volatile. Purchasers are having a stronger focus on return for larger, more capital intense assets. In particular, a number of larger Tier III assets have come under financial pressure and have transacted at levels that offer strong yields and low benchmarks.

We note the value of larger scale / lower quality assets have yet to recover from 2017 Overseas Investment Act rules, which largely forbid foreign buyers, due primarily to the limited availability within the market of capital for such large scale assets. A number of properties of this type have now resold having been purchased 10 – 12 seasons ago and have shown limited to no capital growth over this period.

Looking ahead to the 2024-25 season, commentators are anticipating a milk price of $8.50/kg MS, which together with increased capital availability may result in a more buoyant market.


With the change of government, there has been considerable speculation in respect to environmental policy and what changes will be implemented.

How will this potentially look?

Further agreements as part of the coalition documents include proposed cutting of red tape in respect to irrigation, aquifer use, flood protection schemes and improving on farm reporting requirements to be more cost effective.

Proposed changes are intended to provide more practical solutions to environmental management and simplify the process of freshwater management, which has been subject to rapid change in recent years.

In the interim, Freshwater Farm Plans (FWFP) are now a legal requirement. This applies to horticultural property over 5 hectares, or farms over 20 hectares. These plans will be required within the Waikato in a staged approach dependent on catchment.

These requirements vary from that contained within Plan Change One – Healthy Rivers, which is still subject to appeals, however we anticipate that once the Healthy Rivers Plan change is formalised, one plan will be utilised to achieve both objectives.

“Purchasers have become increasingly aware of potential environmental liabilities and land use limitations.”

We recommend any clients looking to market farms to get ahead of the game, with potential buyers now undertaking more detailed due diligence than we’ve seen in past years.

Property Advisory Ltd. are dedicated local experts specialising in rural and agribusiness property valuations. We provide in-depth analysis, strategic advice and accurate valuations to help our clients make well-informed decisions. We’re passionate about our work, and we genuinely enjoy the problem-solving and creative thinking that each project requires. Every Property Advisory client receives the same level of dedicated service, from straightforward valuations to complex assessments.

Find out how we can help you maximise the value of your business and property.

Contact Us

Our latest news
and insights