Further signs that New Zealand's dairy sector is in deep trouble emerged from the Real Estate Institute of New Zealand's (REINZ) latest farm sales data, which showed only 12 dairy farms were sold in January, down 75% from a year ago.

Total farm sales fell 43% to 73 in January from December, and were down 63% from a year ago.

Grazing farm sales in January fell to 37, down 40% from January 2008. Arable farm sales crashed 89% to 5 from 46.

"One of the factors having the greatest impact on turnover is the fact available cash is at a premium," REINZ rural spokesman Peter McDonald said.

"(A)s a result, there is a notable trend away from auctions and tenders, where cash up front is required, in favour of sales negotiated around the table," McDonald said.

The median farm sale price for the three months to January 2009 was NZ$1,525,000. This was down 15% from the same period to January 2008, although the median price is very volatile in these figures because of the relatively low number of sales.

"There are good indicators the value of farms will continue to hold up, and we believe it's just a matter of time before new interest rate levels results in a return of buyer interest," McDonald said.

"While dairying has been hit by the reduced payout, at NZ$5.10 it is still good compared with payouts prior to last year's spike. One of the factors helping to keep farm prices up is the fact that on farm costs, such as fuel, fertilizer and feeds along with interest rates are down, so farmers' bottom lines are not too badly affected," he said.