Farmland prices have returned to 2007 levels, according to figures provided by the Real Estate Institute of New Zealand.
The institute yesterday said that the effect on land prices of Fonterra's record 2007-08 milk price had finally disappeared from land values, with prices now back to 2007 levels.
But those lower milk prices, together with a strengthening exchange rate, had caused a sharp decline in farmer confidence, according to Rabobank's rural confidence survey, which was also released yesterday.
Falling property prices were not enough to stem growing pessimism, according to the Rabobank survey results, which indicated 49% of farmers expected the rural economy to worsen in the next 12 months while only 12% expected it to improve.
Real Estate Institute of New Zealand (REINZ) rural spokesman Peter McDonald said the median sale price of farms in June 2007 was $1.25 million with Fonterra's milk price $4.46 a kg of milk solids.
This June the median price was $1.15 million on the back of Fonterra's forecast milk price of $4.50 a kg for the coming season.
Otago recorded the largest increase in median price for farmland, rising from $847,500 for 26 farms sold in the three months to May, to $1,240,500 for 24 farm sales in the three months to June.
Nationally, fewer properties were changing hands, with Southland sales showing an appreciable decline due to fewer properties being bought for conversion to dairying.
Mr McDonald said in Southland just 21 farms changed hands in the three months to last June, compared to 113 for the corresponding period a year ago and 103 two years ago.
Nationally, this year just 285 properties changed hands in the June quarter compared to 665 for the corresponding period two years ago a 711 last year.
Rabobank rural New Zealand manager Ben Russell said the latest farmer confidence survey was the third successive survey to show a decline.
He said that growing pessimism was attributed to falling commodity prices, concerns about weakening overseas markets and economic conditions and the rising New Zealand dollar.
Dairy farmers were the most pessimistic, with 57% expecting the agricultural economy to worsen compared to 45% at the last survey, the fall coinciding with Fonterra announcing a 12% decrease in its forecast milk price for the coming season.
Mr Russell said sheep and beef farmers reported the sharpest lift in pessimism, 44% compared to 23% in the last survey, due to moderating beef prices and a strengthening exchange rate.
Meat company officials have said two-thirds of the higher lamb prices being enjoyed by farmers this season was due to a more favourable exchange rate which has appreciated from US53c at the time of the last Rabobank survey to US63c for the latest survey.
