GUELPH, Ont. — What has been a red-hot farm real estate market soon will be cooling, say two farmland price trackers.
James Bryan, an analyst in Farm Credit Canada’s strategy and agricultural economics section, told a May 14 conference on land use that the national average increase in farm land values last year was 19 percent.
In Ontario, it was 30 percent.
In Saskatchewan, land value in-creases were above average, be-tween 14 and 20 percent.
“Farmland has outperformed other investments,” he said.
Marleen Van Ham, a real estate appraiser at Agri-Choice Real Estate Appraisers in southwestern Ontario, concurred.
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She told the conference that per acre land prices have varied in the counties she covers from a low of $6,000 in Elgin and Haldimand to a high of $22,000 in Oxford and $20,000 in Perth.
“I think we are at a peak and prices could fall back by five or 10 percent,” she said.
Bryan said lower crop prices and inevitable interest rate increases will dampen land price inflation.
“I don’t think necessarily that farmland prices will go down,” he said in an interview.
“However, the rate of increase will slow down at least.”
Ham said extraordinary increases in Ontario land prices in the last several years have meant landowners are turning pastureland into cropland, cutting down bush lots and draining wetlands.
“I actually don’t think that these are good trends, but it is landowners reacting to what are historic prices,” she said.
Still, University of Guelph professor Alfons Weersink told the conference that urban expansion and other factors are reducing the amount of cropland.
Only eight percent of cropland is in Ontario and 80 percent is on the Prairies. He said the last agricultural census showed a four percent decline in cropland across the country.
“The amount of cropland de-creased even in Saskatchewan de-spite the commodity boom,” said Weersink.
