Farm debt rose to $58b at June 30, according to the Reserve Bank of Australia, up $7.2b, and equivalent to around $420,000 a farm.

But Australian Bureau of Agricultural and Resource Economics estimates that since the drought began in 2002/03, there have been fewer rural property purchases.

"Rising land prices and lower incomes as a result of drought has reduced investment in land purchases," ABARE said in its 2008 financial performance review.

But Rabobank's rural general manager, Peter Knoblanche, said that looking at the books, farmers were still borrowing to make property purchases.

"In areas where things are going OK, farmers are progressively developing their properties," Mr Knoblanche said.

"In Queensland there is certainly no lack of it - it's quite aggressive there.

"There has been no pull-back on that side.

"We are also seeing a lot of development in dairy properties, and many of the cropping properties are seeing quite strong development as well."

ABARE estimates that although average farm debt has increased since the mid 1990s, broadacre farms (those over 40ha) and dairy farmers have been able to maintain around 85pc equity in their farms because of increasing land values.

The higher the equity, the higher the potential to borrow for purchases, Mr Knoblanche said.

But he cautioned that if farmers were operating in an area where there was continuing drought, then they were a lot less likely to be buying properties.

The National Australia Bank is finding minimal difference in where the loans are going.

NAB's agribusiness general manager, Khan Horne, estimates that the debt is being used a lot more for working capital.

"There has been a strong run for carry-on finance and for working capital for this coming crop," Mr Horne said.

He said there was a lot of finance being used for machinery upgrades and capital investment, especially due to the shortage in labour.

"There is a lot more investment going back into the land," Mr Horne said.

"It's twofold though. Farmers are continuing to expand.

"We are still seeing large-scale properties in the market moving."