Friendships are set aside as neighbours fight at auction for scarce farm land

It's the unspoken rule that friendships are parked outside for one of the biggest financial decisions either will ever make.

"In the cities when you are bidding for a property you will never see the other people again," western Victorian farmer Mick Roche said at a farm auction in late July.

"Here, our neighbours are our friends, most times they are the only people we will see for days at a time.

"I am a bit jumpy to be here to be honest.

"I know how much they want and need that extra land, but so do we."

Mr Roche was fresh from winning the tussle for a handy sized chunk of farm land at Great Western between Ararat and Stawell back in July.

One of the remarkable trends of the farm price spike is that it is being largely driven by family farmers and not by corporate investors.

Interest rate rises are being watched closely but are coming from a long back way back, farm land experts say rising input costs like fuel and fertiliser are as much a consideration today.

Only a return to dry seasons and the dreaded end of the La Nina run is expected to see the price spike flatten out.

Agents say some farmers avoid public auctions and choose other marketing campaigns like expressions of interest because they want to avoid watching their neighbours at war.

Some of these neighbours buy expensive machinery in partnership and join forces for labour-heavy jobs around the farm.

They can share the school runs or sporting practice pick ups.

Only a few people were at the public auction at the Ararat's Colonial Lodge Motel on July 29.

Mr Roche had backing from an investor as he and his neighbour fought over an unremarkable 217 hectare (537 acre) block.

Bidding began between the two at $3500 an acre and Mr Roche's final offer of $5050 an acre won the day.

Not a big piece of land but it was a perfect size to add on their existing farms.

"Today farming is all about scale, you need to have that extra land to keep going," Mr Roche said.

He planned to catch up with the neighbours "after the dust had settled".

His experience has been repeated all over Australia in the past few years as good seasons and good prices have pushed land values into record country.

Family farmers have seen these good times as the prime time to expand their holdings even at the risk of saddling future generations with increased debt.

Record low interest rates helped fuel the farm price records at the start of the boom.

Most agents say the high prices will continue with confident farmers still waiting for the opportunity to bid for their neighbour's land if it should come on the market.

Agents at PPHS Real Estate expect more medium sized properties will flow onto the sales market in the next few years.

The real estate and livestock agency, located in the border region of south eastern South Australia and western Victoria, is planning ahead for the next wave of farm sales.

In recent years, the national rise in rural land prices and demand was evident in its patch as well with most sales being purchased by neighbouring or local buyers expanding their enterprise.

But like our earlier auction winner, Mr Roche from Great Western, competition has been fierce for add-on blocks and not just the stand alone farms.

Agents say some ageing farmers have sought to "cash in" on the current high prices but still did not want to leave their farm.

So they have been looking closely at leasing and a large number have been sub-dividing off their farmhouse and selling their dirt.

The "get big or get out" mantra still rings true for many.

Ray White Rural South Australia says it has never seen the demand for farm land as high as this past year.

It has been "an exhilarating ride for sellers", agency principals Geoff and Dan Schell said

"We continue to see enquiry from corporate and family farming enterprises, both foreign and domestic, but it's the family farming businesses that have had a major impact on sale prices as family's look to expand their thriving operations," the pair said.

Nutrien Harcourts SA/NT real estate manager Andy Edwards the fundamentals remain positive for continued growth, albeit potentially not at the double digits we've seen in recent years.

Values are being driven by a lack of supply.

"There is still simply not enough property coming to market to meet demand," Mr Edwards said.

So agents expect neighbours and close friends will continue to slug it out through the spring sales.

That same afternoon after that Ararat auction back in July there was a full house at the Burrumbeet Soldiers Memorial Hall for another public farm auction.

That auction saw a stunning $10.7 million paid for about 1000 acres of grazing country held by the McCartney family at Yentrac for more than a century.

It was a district record farm price courtesy of competing neighbours.

But Elders auctioneer Sean Simpson pointed out most of the people in the hall weren't interested in buying their neighbour's farm, they were equally happy to see them "sent off" with a good sale result.

"They have been in the area a long time and have looked after the land, people want them to do well," he said.

"They also want to get some idea what their own land might be worth as well."

A long-time Burrumbeet local, who did not want to be named, agreed.

"We're all here to show our faces and support them (McCartneys) and we are happy they did so well, but I'm just as glad it didn't come out of my pocket," the local farmer laughed.