Dairy Farmland Prices and Return Expectations in New Zealand

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Conference Proceeding
17th Pacific Rim Real Estate Society Conference, 2011, pp. 17 - 19
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Using transactional data of New Zealand dairy farms over the period of 1981 to 2009, this paper investigated the relationship between dairy farmland prices and farmers’ return expectations based on the present value model. In short-term dairy farmland prices were positively correlated to farmers’ income expectations but negatively related to total return expectations. In long-term dairy farmland prices were significantly influenced by the growth expectation from farmers for both income returns and capital gains. It is debatable whether the current high growth expectation on New Zealand dairy farms is sustainable.
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