The rising cost of interest rates has already had a significant impact on farm sales and rural real estate, with many struggling to crack the "sold" sign.
On Wednesday, the Reserve Bank raised the OCR by 75 basis points to 4.25 percent and forecast it to peak at 5.5 percent next year, while also predicting a further rise in inflation and a recession beginning in April.
Conrad Wilkshire Property Brokers' Rural GM told REX Today buyers have already been taking a step back as they look to absorb on-farm costs and the cost of borrowing money.
"If it continues down this current path, I think it's going to weigh heavily on farmer's and grower's minds as to the cost of finance and the marginal return of scaling up a business by adding more land," Wilkshire said.
In the South Island from August to October, he said the early spring sales were 44 percent down on the number of sales from last year.
There were 49 fewer farms sold over that 90-day period which he called a significant decrease.
In the Waikato, sales were also down 57 percent at the same time last year.
However, farm values were holding up across the board.
"There's no doubt things like He Waka Eke Noa and what's going on with some of the regulatory issues there and labour constraints are all factors, but in our view, the farmer borrowing costs are certainly factoring into decisions as to what our next steps are going to be."
This article was produced in partnership with Property Brokers and TodayFM.
Listen to the full interview with Conrad Wikshire and REX Today above.
