Taking Stock: Property values preclude young farmers

And it doesn't matter whether it is an inner-city apartment, a beachside house with outstanding views or a station in the mid-west of the state. The prices paid seem to be so enormous as to be unrealistic.

Yet reports of property sales at high prices are eagerly devoured by readers as if it were a voyeuristic obsession.

The readers are so taken with ogling those high prices because they might, in fact, be recipients of the largess as the money seeking property flows through the various levels.

And while a certain generation might be accumulating ever more wealth by the rise in the value of their property assets, whether home or investment property, their children and grandchildren are being increasingly squeezed out of the market.

That pressure is not for residential property alone.

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Residential property, by its nature, is only a place to stay comfortable and keep your books dry and does not add to the cash flow of Australia.

On the other hand, investment in a rural property of sufficient size aids in district employment, the production of agricultural products for export and an enjoyable lifestyle for the farming family.

With a lot of comment recently concerning the terrific demand for agricultural land, has anyone sat down and worked out the returns?

Does adding another farm to the family aggregation really work when the law of diminishing returns is taken into account?

It might be a feel-good acquisition. But without extra staff or machinery, infrastructure and inputs how will it work without extra stress?

And that is a good point to raise. As the land rises in value, more as an asset to be traded as a commodity rather than a medium to grow food for the sustenance of life. How does the desire to reach a minimum return on assets relate to the relative increase in property value?

Commodity prices may be high at the moment, but every cocky knows this can easily be undone, and input costs continue to increase.

To reach that perceived rate of return on investment, therefore, implies even greater use of inputs driving the land harder to reach that, sometimes elusive, return.

And while the pressure on the land is intense, be also aware that the notion of a high cash flow return adds pressure on the staff employed (if staff can be employed), the machinery in operation, the stock husbanded and the property infrastructure.

Consider also an increase in interest rates as another point of pressure.

And as property assets increase across the board, how does that benefit society?

Two big questions to be answered as industry, government, and social media struggle to make sense of the all-consuming interest in the property.

It does not matter whether it is agricultural land or residential real estate. The answer is still the same.

There seems to be little real value in 'one million dollars' because it trips off the tongue so easily that the amount gets lost in the wind.

It is not until property worth 10 or twenty times that price makes its mark as something worth talking about.

With agricultural land now viewed as a saleable asset rather than a place to grow food to sustain people, does the higher value placed on the ground lead to increased pressure to reach a decent level of return?

And just as it is now difficult for young people to buy the first home, so is it hard for a young person keen to work the land to buy their own farm.

It is an issue that really concerns Nikki Alcock, Greenland, and Bungarby, as she wonders how her four sons are possibly going to have the chance to buy their own farm.

Mrs Alock's husband Greg is a partner with his parents John and Jenny, in the family-owned Greenland Merino stud, and her children are already a fixture around the show ring and in the sheep yards.

Before the recent Federal election, she voiced her concerns and hopes for her family's future.

"For young rural Aussie's, purchasing your first family farm is increasingly becoming a dream rather than a reality with corporate and larger farms making land prices out of reach," she said and suggested explicit tax cuts for one to two years to help get the farm up and going or a reduction/ freezing of interest rates for the first three to five years or a grant to purchase stock might help.

"Just so you can get up on your feet."

"So many younger generations are disappearing out of agriculture because we can not get a start. But once you do acquire a farm, support payments for young families that are readily given to our city counterparts are non-existent due to the asset being too large, (assets rich, cash poor ) making daily life expenses increasingly difficult to meet.

"By having support packages for young families with sole farm incomes would mean paying off this huge debt a reality but going through this, the stress and anxiety is huge, and could possibly lead to depression and the feelings of failure for rural families trying to have a go."