Farm prices and sales volumes have collapsed in the last two years as the withdrawal of easy bank lending has dried up farmers' appetites for capital gains, fresh figures show reports interest.co.nz. The slump in the number of transactions is expected to ripple out through the rural and provincial economies, given the surge in lending and activity through 2006 to 2008 helped drive spending on coastal and provincial residential property. The national median farm sale price was NZ$1.045 million in the three months to February, down 40 per cent from the NZ$1.75 million seen in the three months to February 2008, Real Estate Institute of New Zealand figures show. There were 11 dairy farm sales in February and 34 in the three months to February, which is down 78 per cent from the 158 seen in the three months to February 2008, which was seen as the peak of the dairy boom. A sharp drop in the forecast Fonterra payout and a much more rigorous approach to farm lending by banks has triggered the collapse. REINZ President Peter McDonald said there were "still reasonable levels of inquiries for all types of farms, but they do not seem to be resulting in completed transactions."
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