Grey-Bruce farmland values still rising

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Grey and Bruce counties led Ontario increases in farmland value during 2018, judging by data published Monday in Farm Credit Canada’s (FCC) benchmark Farmland Values Report.

Although the Ontario average sale price increased only 3.6 per cent, farmland sales during 2018 in the FCC region that includes Grey-Bruce showed a 7.6 per cent increase, well above the national average at 6.6 per cent. The agency estimates average value per acre in the region at $9,049 among transactions that ranged in price between $5,100 and $16,700 per acre.

Canadian farmland values have increased continuously since 1993 but recent annual increases have become “less pronounced” than they were during a period of rapid escalation between 2011 and 2015, FCC’s 28-page report says. A federal government crown corporation based in Regina, FCC is the nation’s largest farm lender with a $36 billion portfolio of agriculture-related investments.

A statement from Chief Economist J.P. Gervais timed to coincide with the farmland values report described a 2018 marketplace that included fewer transactions generally and remains consistent with “a tight supply of land available for sale and a softening in demand.”

Not surprisingly, softening farmland demand reflects softer markets for many farm commodities and signs that farm income has begun “levelling off,” Gervais said. Although FCC commentary doesn’t include direct reference to Grey-Bruce, it’s consistent with a national trend that highlights “strong demand for lower value land.”

The strongest areas of land price growth in the province reflect upward pressure from large, intensive livestock operations, urban buyers and an imbalance between high demand and limited supply, the report says. Dairy farmers show a reduced appetite for land acquisitions, FCC research indicates. The report also warns farmers to “exercise caution . . . especially in regions where growth rates for farmland value significantly exceed farm income growth.”

All of this is consistent with analysis by London, Ont.-based appraiser Ryan Parker who released his 2018 report earlier this year studying farmland transactions in 11 counties of southwestern Ontario. A partner in Valco Consultants Inc., Parker found during his 2018 research that land prices rose 13.77 per cent and 7.80 per cent in Grey and Bruce, respectively.

That was well above the regional average increase of actual sales’ transactions that Parker shows at 3.6 per cent. Since 2010, Parker has published annual land sales analyses tracking the remarkable rise in median farm land values that, only recently, has shown signs of slowing.

Parker found land values in Oxford, Elgin and Kent counties averaged slightly lower in 2018. Despite Oxford’s sale price decline last year of just over one per cent, however, it remains the province’s highest priced, farmland market at just over $20,000 per acre, judging by Parker’s data.

Canada’s most costly farmland, however, is to be found in British Columbia where FCC research estimated average land prices in 2018 in the Okanagan region at $97,903 per acre in a price range between $8,000 and $148,800. Alberta prices ranged between $1,900 and $14,100 per acre. In Saskatchewan the range per acre was between $600 and $3,300.

Quebec showed the largest average land price increase at 8.3 per cent. That reflects strong demand in the eastern regions of Gaspesie-Appalaches, where land prices rose 17.7 per cent, and in Chaudiere and Saguenay-Lac St. Jean, 13.3 per cent, respectively. In Quebec, Montérégie and Laurentides recorded the costliest land sales at $16,170 and $13,000 per acre, respectively.

Nova Scotia actually saw a decrease in average land values by 4.9 per cent. In Newfoundland-Labrador, there were too few transactions to calculate a trend.