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Farm sales are at a record low as rural properties flood the market.
Figures show there were just over 200 farms sold in the three months to February. That is only 5% of farms on the market. In comparison, two years ago over 700 farms were sold in the same period, equalling 20% of the market.
The median farm price has also dropped in the last two years. It is now just over $1 million - a far cry from the $1.75 million recorded in 2008.
It has meant farmers have lost equity and the banks' confidence.
Recent Reserve Bank figures show lending has fallen to a five month low.
Peter McDonald from the New Zealand Real Estate Institute says the banks are exercising caution.
"There is just not the availability of finance out there to make these deals stick together," he says.
However, banks ONE News spoke to disagree, claiming they have not tightened up on lending.
"If farmers are having a difficult season we will be trying to help them and support them through that," says Charlie Graham from the National Bank.
National, BNZ and Westpac all say purchasers need at least 50% equity in order to buy a farm. The average dairy farm costs about $3 million currently, so $1.5 million would be needed.
Farmers are hoping a Chinese company's plan to buy the failed Crafar farms and invest $1.5 billion in New Zealand's dairy industry will drive farm prices back up.
