Canadian Farmland At Record Values

on September 17 | in Ag News | by | with No Comments

From a news release

While Canadian farmland values posted serious year-over-year increases in most rural communities, lower commodity prices are expected to temper appreciation in coming months, according to a report released by RE/MAX.

The RE/MAX Market Trends Report: Farm Edition 2013, highlighting trends and developments in 17 rural communities throughout Canada, found that limited inventory levels—reported in virtually all agricultural centres—continued to contribute to strong upward pressure on the price per acre in 88 per cent (15/17) of markets examined. Peak commodity values and low interest rates created the ideal climate for expansion over the past 12-month period, spurring unprecedented demand for farmland.

“No real fallout has been experienced as a result of diminished commodity values so far this year,” says Gurinder Sandhu, Executive Vice President and Regional Director, RE/MAX Ontario-Atlantic Canada. “Yet, some moderation is likely, given several years of back-to-back record-setting gains. Some investment funds have already scaled back on purchases, still moving ahead but at a more cautious pace. We expect the trend to continue, with prices stabilizing at current levels. Demand, on the other hand, is expected to remain healthy for the foreseeable future, given the positive long-term outlook for global agricultural markets.”

To date, percentage increases in land values range from market to market, with the greatest upswing noted in Saskatchewan and Alberta. In the East, gains were strongest in London-St. Thomas’ Middlesex West area, followed by Windsor/Essex County and Kitchener-Waterloo. Only the Annapolis Valley in Atlantic Canada and the Fraser Valley in British Columbia reported that prices held firm year-over-year.

Cash cropping land continues to be most sought-after, with bare land in greatest demand (no buildings or residences). Tiled and irrigated land for specialty crops are also fetching top dollar. Premiums continue to be paid for tracts abutting or adjacent to existing farm operations. Livestock farmers are also getting into the cash-cropping business, with some in Western Canadian markets converting good pasture land to grain land.

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