Farmland values took a bigger-than-usual jump in Manitoba during the first six months of 2006.
According to Farm Credit Canada’s semi-annual survey of farmland values, prices in the province rose by an average of 2.8 percent during the six months that ended June 30.
That’s the second biggest six-month increase in Manitoba in the past nine years, exceeded only by a 4.2 percent increase in the last half of 2003. During those nine years the average six-month increase was 1.3 percent.
However, an FCC official says the increase may not be as significant as it might first appear.
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Land market analyst Roy Hjelte noted that in the previous six-month period, land values increased by only 0.2 percent, well below the recent trend of 1.5 to two percent.
“I think that 0.2 percent was relatively low and now the market is playing a bit of catch-up,” he said. “If you put those two periods together you’ve got about three percent over the 12 months, which is in line with what’s been happening there.”
Hjelte said there was no particular change in the fundamentals of the Manitoba farmland market that would account for the 2.8 percent increase.
One positive factor was that while in previous years most of the strength in the province’s land market came from special crop areas, including beans and potatoes, the latest increase seems to be more widespread.
“Previously the increases seemed to be centred in some of the better land from Winnipeg right down to the border. Now it seems to be more spread out.”
Alberta, which has traditionally had the highest land prices on the Prairies, continued to lead the way, recording a 3.9 percent increase.
That’s up from 2.8 percent in the previous six months and slightly ahead of the 3.7 percent average of the four previous six-month reports.
The FCC report says there is strong demand for land in Alberta, with prices increasing markedly in the highly populated corridor from Lethbridge to Edmonton. Outside of that corridor, land values remained stable.
Demand for land continues to be driven partly by the strong economy, based on oil and gas activities and construction.
FCC says farmers living near urban centres are selling for high prices and moving further from cities to obtain a larger land base, all of which tends to increase the impact of urban development pressures on farmland values.
In Saskatchewan, land prices continued to rise at a modest pace, increasing by 0.8 percent during the six month period, in line with the rate of increase over the past three years. Land values in the province remain among the lowest in the country.
Grain and oilseed prices are a major factor driving land prices in the province, and they remained relatively weak during the first six months of 2006. There was some strength in oil field areas, however.
British Columbia led the nation, with land values jumping by 10.3 percent, following a similar increase in the previous six months.
Limited land resources in the Fraser and Okanagan valleys has resulted in strong competition, while a strong berry sector is supporting prices in the Abbotsford and Surrey areas.
Nationally, farmland values were up by 2.1 percent, with Ontario up 2.1 percent, Quebec up 0.6 percent, New Brunswick up 1.1 percent, Prince Edward Island flat and Nova Scotia up 2.9 percent.
The survey is based on a semi-annual appraisal of 245 benchmark properties across the country. Market value is estimated using recent comparable sales.
