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There were 4 dairy farms sold in October, down from 5 in September and 15 in October 2007, due partly to banks being reluctant to provide the necessary lending, the Real Estate Institute (REINZ) has said.

News of Fonterra's increased payout for the 2009/10 season early in November was welcome, but bank lending policies would determine whether this flowed through into farm sales, REINZ said.

The comments came as the REINZ released figures which show there were 79 farm sales nationwide in the month of October, up slightly from 75 in September. However the level of sales remained low despite rising from 51 sales in August. Sales are down from 114 in October 2008 and 216 in October 2007.

"The new payout is extremely welcome news." REINZ President Peter McDonald said. "(I)t will change a lot of people's budgets, encouraging greater confidence, but to date banks have been reluctant to show their hand and as a result, a lot fewer farms have been sold this year than you would usually expect at this time of the year," McDonald said.

Fonterra increased its 2009/10 payout last week from NZ$5.10/kg to NZ$6.05/kg. The move is expected to inject up to NZ$1.25 billion into the economy.

There were 4 dairy farm sales during October, down from 5 in September and 15 in October 2007. Overall farm sales figures were dominated by 40 grazing farm sales, down from 67 a year ago.

However McDonald said market sources suggest there is a strong interest in dairy farms, "although it is still early in the season".

The REINZ releases rural figures for three month periods and interest.co.nz divides out monthly sales numbers. In the three months to October the median farm sale price was NZ$875,000, almost unchanged from the three months to September. The median was down from NZ$1.5 million in the October period last year.