SENTIMENT has improved and the number of transactions has increased in key rural markets this year but, with the supply of properties on the market still outstripping demand, prices are likely to have stabilised, rather than risen, says Tim Lane, valuer Herron Todd White's head of rural.
The oversupply of properties on the market, which has worsened due to factors such as a two-year drought in Queensland and some parts of NSW, is likely to be offset in part by recent changes such as the signing of the Chinese, Japanese and Korean free trade agreements, a falling dollar, lower oil prices and a pick-up in transaction numbers, Mr Lane said.
"A lot of the pain has already been taken in terms of fair value adjustment from the peak of the markets in 2008-9," Mr Lane told The Australian Financial Review.
"A lot of that reversion has occurred. By location and by activity, the trend line will start to level out. There may be small positives, flat or small negatives, but overall, I would not expect there to be the significant rate of downward adjustment we've had."
A key boost to sentiment has come from the renewed interest in food production by wealthy buyers from both overseas and at home to meet the needs of a rising Asian middle class.
In July, Australia's richest person, Gina Rinehart, snapped up a 50 per cent stake in two Western Australian cattle stations in a bid to capitalise on booming food exports to Asia.
Last week, media-buying legend Harold Mitchell and partners doubled their cattle-producing land holdings by leasing more than half a million hectares from Aboriginal pastoral companies, also in WA.
Prices nationally have come off in recent years.
Queensland's median broadacre price has seen five straight years of decline to just over $1000 per hectare, its lowest since 2005, Herron Todd White figures show.
The rising Asian food demand, free trade agreements, falling dollar and generational change that is seeing a new wave of owners take over make others even more enthusiastic about the end of a decade of losses or below-inflation price growth.
"In the last few months we've had what you'd call the perfect storm of upward pressure on land prices," said National Farmers' Federation chief executive Simon Talbot.
However, conditions vary by region and demand for properties varies according to individual assets, said Sam Triggs, the rural property sales manager for Inglis Rural Property.
"Whether it's cattle, sheep, cropping or broadacre, there's a market for that if it's yielding well," Mr Triggs said. "There is interest both locally and offshore. That's more NSW and Victoria. It's not so much in Queensland."
But even in Queensland, purchasers were on the lookout, Mr Lane said.
"Buyers are being astute, selective, looking to well-developed, fully operational assets in more secure locations climactically," he said. "Those are selling if they are priced appropriately."
Herron Todd White will publish its next price indices in February.
While the NSW market has been stronger overall than Queensland, the state saw the median price slip last year and was also unlikely to see an uptick, Mr Lane said.
"I would be surprised if it is an upward movement."
In WA, where the all-state median price fell in the past two years, sentiment has also been rising and this is leading to more transactions.
Also, earlier this year, Mrs Rinehart's fellow iron ore billionaire, Andrew Forrest, bought the Harvey Beef Group and added two large WA cattle stations to the Minderoo Station he bought for $12 million in 2009.
But the increasing number of deals is unlikely to show it has flowed through to prices yet, Mr Lane said.
"Confidence will start to shift to the better," he said.
"[But] there's still an overhang of supply relative to demand across most commodity classes and regions."