By Tom Collins
LONDON — Median farmland prices continued to plateau last year, with the same expected for 2017.
That’s according to Ryan Parker, an agricultural appraiser with Valco Real Estate Appraisers and Consultants in London, who has compiled the Southwestern Ontario Land Values report since 2010.
This year’s report, which looks at the price per tillable acre, includes Waterloo and Wellington for the first time. The median average sale price of farmland rose 5.88 per cent from 2015 to 2016. That’s up slightly from 5.34 per cent the year before and 4.17 per cent the year before that. The three previous years saw crazy average price increases from 18 to 28 per cent.
The report recorded about 530 farmland sales last year across 12 Western Ontario and Southwestern Ontario counties. The highest median price for farmland last year was in Oxford County at $19,000 per acre. The lowest median price was just over $7,000 per acre in Grey County.
Since 2010, the median average sale price per acre has risen 111.55 per cent, with most of that increase occurring between 2010 and 2013.
The prices are plateauing mainly due to low interest rates and lower commodity prices, Parker says.
“The majority of buyers are larger progressive buyers,” said Parker. “They are capitalizing on their existing equity position to be able to buy more land and that position continues to stay in a really good spot with low interest rates and available capital.”
Parker looks at median prices instead of the average as a way to remove outliers that might swing numbers too widely in either direction. The top end price range for 2016 was $25,000 to $26,000 per acre in Perth and Oxford counties.
The biggest sale price increase last year was in Waterloo at 24.58 per cent, but Parker says the number of sales in the county are too low to conclude anything.
“There’s so few sales that the numbers are almost automatically skewed,” he said.
Three counties (Perth, Lambton and Grey) saw a decrease in farmland sale prices but the decreases were low enough that it could just be a blip instead of a trend, said Parker. He said that most counties will see fluctuating prices from five per cent increase to five per cent decrease per year over the next couple of years.