Rural property bonanza builds

Prices for premium properties are skyrocketing and experts tip that confidence will flow into all sectors of the market.

A constellation of factors have fallen into place to make the winter market - which would normally cool like the weather - red hot.

Winter rain and a prospective spring season has meant buyers have sprung from all sides with both family farmers and corporate foreign investors (largely from China) eyeing top-shelf assets.

High commodity prices for livestock and crops have lured corporate investors with an eye to returns while a myriad of other positive forces are contributing to the surging market.

But opinions are divided on just what the crucial factor is.

"We are talking record prices across the state," said Colliers director of rural and agribusiness transactions Richard Royle.

"The premium market is hotly contested from within Australia and offshore," Mr Royle said, adding that market activity was split evenly between foreign investors and family farmers.

"High security of water might be expensive, but corporate buyers will pay to get it. They're willing to spend up to get higher production, and higher returns.

"(The market) is really shifting towards a corporate environment - they understand the risk - but they also understand the rewards.

"Water is the key at the moment, but the premium demand is flowing through to other properties."

Landmark Harcourts real estate sales manager (corporate) Phil Rourke said "long-term security and capital growth of the property" was the driving factor.

"I don't think commodity prices are a great influence in the big picture," Mr Rourke said.

He said the low Australian dollar, which was driving foreign investment, wasn't outpricing locals.

"Locals and foreign investors are after two different types of properties. To compare dry sheep equivalents, (DSE) foreigners are looking for more than 25,000 DSE, farmers that are expanding are looking for 10,000 to 20,000 DSE."

Mr Rourke said the value of average rural properties would experience flow-on growth from the premium market.

However, Herron Todd White director and rural valuer Scott Fuller, Dubbo, offered a more reserved forecast for typical rural real estate assets.

"I would be hesitant to say it's a sellers market. Generally it's been steady as she goes," Mr Fuller said.

"Yes there are some strengths in the market for larger scale properties, but the backbone of any market is always the farmer to farmer sales.

"Most of the positive cash flow has gone into debt reduction but that is just beginning to change," he said.

"Most of NSW had steep growth from 2003 to 2008 but then values softened a little and have been bumping along steadily since then.

"There is a definite increase in positive market sentiment which is a reflection of the ongoing favourable cash flows from beef, sheep and farming enterprises, but this has not translated to increasing values just yet."

RuralCo national real estate manager Andrew Adcock said "properties which have been sitting on the market for two to three years are now starting to be snapped up".

He said there had never been a better time to sell.

Mr Adcock said family farmers' presence in the market remained strong, making up more than 50 per cent of buyers, despite the increased international interest.

Colliers' Mr Royle said "we are not in the peak of the market yet... Australian land prices on a world scale are still cheap and with improved farmgate prices on offer now, properties will be worth more".

He said more properties would be offered as more farmers reached retirement age and Chinese investors became more proficient in negotiating Australia's real estate system.

"Australian families already understand the assets and they're quicker to transact. The Chinese are looking at a hell of a lot but they are just too slow and are missing out," he said.