Land prices plateau but remain strong
By Tom Collins
LONDON Farmland prices in Western Ontario are starting to plateau after years of drastic increases, but should remain high thanks to low interest rates, says Ryan Parker, an agricultural appraiser with Valco Real Estate Appraisers and Consultants in London.
Parker has compiled the Southwestern Ontario Land Values report for the last five years, which looks at the median farmland prices for 10 counties in Western Ontario. From 2010 to 2013, prices per tillable acre rose from 20 to 30 per cent each year. In 2014, it was up just 3.87 per cent. Huron, Lambton and Bruce counties saw decreases in median prices in 2014 over 2013.
“When you increase four or five years at 20 or 30 per cent a year, and then you have a drastic change in commodity prices like we did (in 2014), to still be able to hold that level, shows how strong this market really is,” says Parker.
Parker looks at median prices instead of the average as a way to remove outliers that may swing numbers too widely in either direction. The top-end price range for 2014 remained in the $20,000- to $25,000-per-acre range, while the bottom end increased across all 10 counties, he says.
Last March, Parker predicted Grey County would be the hottest market, as many Mennonites are moving into the area and increasing demand for land. He was right, as the median price rose 14.75 per cent in 2014 over 2013, the largest increase for any of the 10 counties. He expects Grey to continue to be the strongest market for 2015.
“As long as interest rates stay where they are, theres still going to be guys who are able to buy at high prices,” he says.