Changes to land use regulations and volatility in carbon credit pricing are putting pastoral properties back on the acquisition table for sheep and beef farmers according to the latest sector report from Bayleys Insights, Data and Consulting team.

REINZ data shows the total land area of pastoral properties sold for the 12 months ending 31st March 2023 nationwide was 131,384ha, down 24 percent on the same time last year.

Bayleys’ national director rural Nick Hawken said given the speed of interest rate increases and land use regulation changes, ii is not surprising activity in the pastoral market has contracted.

However, with large chunks of pastoral land now effectively off-limits for afforestation for offshore buyers, there’s now more opportunity for sheep and beef farmers to better compete for hill country land.

“Buyer activity for hill country conversion to forestry started to slow in spring 2022, initially influenced by restrictions which tightened up the conversion of farmland to forestry by offshore buyers,” he said.

“Additionally, while some forestry conversion activity is expected to continue, we anticipate this will be less aggressive given the recent ministerial inquiry into forestry slash following the significant weather events this year on the North Island’s East Coast.

“Government-led recommendations are expected to have a more controlling influence on land use which will effectively put traditional food and animal fibre producers back in the buyers’ arena for pastoral land.”

Hawken said while competing land use among the farming sub-sectors remains, with dairy farmers seeking good pastoral land as part of their strategy to meet environmental standards, the sheep and beef farmers he spoke to at the recent Fieldays event remain philosophical about current market conditions.

“Like the rural property market, farming is cyclical with market dips and surges just part of the deal and there was a fair bit of shoulder shrugging over the economy among farmers at Fieldays.

“New Zealand has some of the world’s most efficient farmers and they’re not averse to change, but with speed bumps in the wider economy impacting real returns, and compliance thresholds being adjusted, farmers are having to be even more prudent and invest in areas that enhance productivity that is sustainable.” With the food and fibre sector continuing to power the economy as our top export earner, Hawken said innovation and diversification will play a bigger role in the pastoral sector.

“The anticipated reduction in competing land use from forestry would provide opportunity for those buyers who have arguably been priced out of this market in more recent times – such as those wanting hill country for breeding operations, and entrepreneurial operators with vision.

“Coming into spring, buyers will likely have more property options to consider in the current market but buyer willingness will continue to be heavily influenced by affordability assessments and long-term usage strategies.

“We’d expect to see continued buyer activity for better quality properties, land for strategic acquisition, and land that has been consented for alternative use.”

Hawken said vendors should ensure they have quality documentation available to assist saleability, particularly for higher value properties that may attract more due diligence scrutiny.

“Motivation to transact will start to be tested and we’re likely to see some pressure where intergenerational stewardship of land ends as family priorities and goals change, or where debt loading is a factor.

“On-farm margins are being compressed, however vendors who do not have time-sensitive motivating factors to transact are likely to remain resilient to price adjustment pressure.

“Everyone is wanting to see an easing of inflation, costs, and the price of debt so the market can adjust and find its new level.”

• For Bayleys full Rural Insight pastoral market sector report see bayleys.co.nz/insightsanddata/rural