THE big competition for farmland that has pushed grazing property prices to record levels in many regions has come primarily from existing producers looking to expand.
They're confident in the ongoing strength of livestock markets courtesy of growing global demand for red meat, and have faith in continued productivity improvements.
Those two factors are the key long-term drivers of agriculture property price growth and beef is a standout achiever on both fronts.
This from Elders' head of agribusiness investment services Mark Barber, who said the red meat industry was in great shape and that was being reflected in livestock property prices.
The predicted post-drought increase in properties coming onto the market has not eventuated, he explained at a recent Elders virtual field day.
That speaks largely to how people view the potential future prosperity of Australian livestock.
"The last 20 years has seen red meat become one of most successful stories in Australian agriculture," Mr Barber said.
"Output has grown by 34 per cent and exports by 44pc. That is staggering and a real testament to ingenuity of industry to deliver productivity growth and quality.
"We've seen strong demand for our red meat in the face of significant crises and there is optimism that demand will continue to grow. This is an important part of the asset value story as well."
Mr Barber reported grazing and mixed farming sales were strong, with plenty of inquiry right across the Elders network but little stock coming onto the market.
People had decided to hang on post-drought.
The drought has also had an impact on the demand for the types of properties people are now wanting to acquire.
"In particular we are seeing strong demand for higher rainfall properties as producers look for more resilience in the face of climate variability," Mr Barber said.
The current market situation had been building, and accelerating, for some time, he said.
Farm cash incomes are on an upward trend overall - albeit with some season-related volatility. That was translating into some solid property prices.
Mr Barber referred to Rural Bank data showing Australian farm values have recorded 20-year compound average growth rates of between 6 and 8pc.
But the real energy, he said, was in the five-year growth rates, which are up to 15.5pc.
"We have to take into account those values exist because of the earning potential of the properties," Mr Barber said.
"There is some exuberance creeping in but if you look at forecasts for continuation of strong (commodity) prices, the market is mostly acting rationally."
What underpins land price appreciation over time is commodity prices, first and foremost, he said.
"Liquidity is important and that's where we have seen low interest rates play a part in that they are creating favourable lending markets compared to commodity prices," he said.
"But interest rates are likely now fully priced in; they are not likely to contribute much to any future rise in property prices.
"Any future rises will be relying on commodity prices and future rates of productivity growth."
Foreign Investment Review Board approval data is showing reasonably solid activity but no real uptick at the moment.
"The real competition for land is coming from incumbents - family farms wanting to expand in this sector," Mr Barber said.
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