PGG Wrightson real estate agent Ray Kean said there had been interest in milking cows in the Strath Taieri valley around Middlemarch, but a lack of water for irrigation had thwarted plans.
Instead, farms had recently been acquired for dairy support, including a 550ha property at Macraes Flat bought to winter dairy cows and to rear young stock.
Mr Kean said farmers from outside the region had also been lured by the cheap price of land relative to areas such as South Otago, Canterbury and Southland, with $35 million worth of property changing hands in the past six months.
Other sales had been made to locals expanding their businesses.
"People who have sold their farms for dairy conversions have the money to buy quality sheep and beef farms and are finding these in the Strath Taieri for excellent value."
But prices are increasing.
A year ago, farms in the area were selling for $500-$600 a stock unit but they were now closer to $750/su, with some as high as $850/su, Mr Kean said.
A Southland sheep and beef farmer recently bought the Wandle, a 2500ha property carrying 21,000 stock units, from a local farmer who had bought it from New Zealand Deer Farms.
Mr Kean declined to reveal the price, but said the property, which has 1550ha of paddocks, 600ha of hills and 400ha that was retired, would be used to finish sheep, beef and deer supplied from the owner's other farms.
Some farmers in the region were moving more to deer from sheep and cattle.
"Much of the Strath Taieri basin and surrounding area has good soils and climate.
"Lack of water for irrigation is the only thing holding the area back from suitability for dairy farming."
If that issue could be overcome, Mr Kean said cows could eventually be milked in the region.
