The Real Estate Institute says it is concerned that overly cautious local lending is causing farmers to lose out to overseas investors.

REINZ president Peter McDonald said farm sales had only shown a small increase.

There were 210 farms sold in the three months to March - a rise on the 205 sold in the February period but still well down on the 717 sold during the same period in 2008.

It had been a strong year in 2008 but not a standout, he said.

There were a lot of people wanting to sell good, reasonably-priced farms.

"There's plenty of buyers out there and a lot of these properties have actually had contracts on them but they've fallen through because they haven't been able to finance them."

McDonald said he had been made aware that Natural Dairy were fielding "numbers of calls" on a daily basis from farmers wanting to sell.

Hong Kong stock exchange listed Natural Dairy (NZ) Holdings plans to try to raise $1.5 billion to fund an acquisition spree in New Zealand

Overseas investment would compete with young farmers, he said.

"If it did come to anything it would be to the detriment of our farming families and young farmers that are growing through the system and trying to buy their own properties, wouldn't it?"

The prospect for the payout next year looked good, although farming returns on investment were only about 2-3 per cent, he said.

"[Farming's] certainly not a short-term thing and I think if there's $1.5 billion worth of Chinese money comes over here [it would] only be a matter of time before they realise that there's not the return in it."