Rural real estate agents are criticising a decision by the Federal Government to force them to try selling properties to Australians before offering them to overseas investors.

Their critique comes as a South Australian farmer, priced out by Chinese investors when trying to bid for a nearby farm, said this week's Federal Government changes would do little because overseas buyers were too cashed-up for locals to compete against.

Treasurer Scott Morrison announced on Thursday that Australian farmland worth more than $15 million would have to be marketed to prospective local buyers for at least 30 days before it could be sold to international buyers.

The new 30-day advertising clause becomes part of guidelines the Foreign Investment Review Board (FIRB) considers when assessing the sale of farmland.

Agent 'flummoxed' by changes

Danny Thomas from CBRE Agribusiness, Australia's biggest commercial real estate agency, said the laws already favoured local buyers and the proposed changes would not encourage more Australian investment in agricultural land.

"The government has already weighted things in favour of domestic participants and the recent changes have got me a little flummoxed," he said.

"I feel like that is cracking them on with a sledgehammer.

"The scales are already weighed heavily in favour of a domestic purchaser because they don't have to go to a third party, the FIRB, to get an approval to buy it.

"But a foreign investor with more than $15 million invested has to get that approval, which adds time to settlement."

Off-market transactions may feel impact

The United Kingdom is the biggest owner of Australian farmland, followed by China second and then the United States.

It is the latest regulation to be added to Australia's foreign ownership laws is as many years, with the Federal Government in 2015 lowering the threshold for scrutiny of farmland from $240 million to $15 million.

The new 30-day local buyers' clause could have a negative impact on property prices say some agents. ( Supplied )

Alex Thamm from Colliers International in Adelaide said the latest changes would impact private sales and possibly, prices.

"Some property owners prefer to transact off-market because they receive a good offer from a foreign investor, and now they are prevented from doing that if they have to take their property public," he said.

"Off-market transactions, a lot of the bigger deals, happen in an off-market manner and this has the potential to influence how those transactions are conducted."

Mr Thamm said it could also prevent farmers from receiving "opportunistic offers" from investors who identify a property they want and approach the owner, even if the owner has not considered selling it.

He also questioned what the reforms could mean for farmers looking to enter into joint ventures with foreign investors.

"In a situation where you are a passive investor from offshore who puts money into a business in order for that family or enterprise to grow, if it's as sizable investment, that potentially will have to become an on-market scenario," he said.

Too early to tell if clause will have impact on property prices

Mr Thamm said the 30-day local buyers' clause could have a negative impact on property prices, but that it was too early to tell.

"If you are a property seller and you want the best value for your property then you don't want anyone limiting your abilities," he said.

"It is putting another hurdle in front of the offshore buyer, and that is unlikely to have a positive impact on values."

Federal Labor agriculture spokesman Joel Fitzgibbon said the changes were pointless and send a bad message to investors.

"A farmer selling his or her land will always seek the highest bidder," he said.

"Therefore, they will advertise or seek interest both domestically and overseas. This makes no change whatsoever."

Mr Thomas from CBRE Agribusiness agreed, saying the most important factor for any vendor and agent was the price.

"The cash doesn't have a colour or nationality; from my perspective, and it doesn't from a vendor's perspective," he said.

Increasing regulation could offend overseas investors

Mr Thomas also warned that Australia's increasing regulation of foreign investment could offend overseas countries and force buyers to look elsewhere.

"We have got something they certainly want," he said.

"But we may be coming to the point where we may be becoming a bit arrogant about that, and thinking they will keep coming.

"If we continue to make it hard for them or frustrate them or make them feel like their money is not worth it then all of a sudden, countries that look less attractive might start to look more attractive."

Treasurer Scott Morrison and the Treasury Department have been contacted for comment.

Reforms will not stop foreign investors: farmer

Don Herrmann, from Frances in South Australia, said he wanted to buy a property across the border in Victoria to expand his mixed sheep, potato, and lucerne farming business, but could not compete against a Chinese bidder.

He said regardless of the changes to help local buyers get in first, he thinks it is still too difficult to overcome the big wallets of foreign investors.

"This won't make any difference at all; investors will just wait the 30 days then still buy it," Mr Hermann said.

"We would have loved to have bought the neighbour out to upgrade our farm but the Chinese were able to go far higher than what we could afford, or even above what it was worth.

"These multi-millionaires from China and Hong Kong don't care what they pay for it as long as they can get it."

Mr Herrmann said even forming a consortium of local landholders to bid for the property had not been an affordable option.

"You can't pay the prices they command," he said.

"I don't blame the farmer, he is after the best he can get, but it just wasn't viable to buy it.

"I just think there should be no foreign investment in local farm land. It makes it too hard for the locals."

Foreign investment 'an emotive issue' says agent

Mr Herrmann said the long-term risk was that it would push surrounding property prices up "higher than what is really necessary".

Mr Thamm from Colliers International said farmers who sold to foreigners often used the money to invest in more farm land, which helped the industry and community to grow.

"We have had a very long history of positive foreign investment in Australian agriculture, which has helped to develop large areas of our countryside," he said.

"Historically, we don't have that much to fear, but it has become an emotive issue."