The boom in the price of farmland-based assets in Canada over the past several years has been profound. The price of grains has boomed, so too has the price of farmland, which has risen at record double-digit rates.
But evidence that there is a slowing in the price increases arrived last week the latest RE/MAX farmland report, found here
According to RE/MAX vice president, Gurinder Sandhu, “The price of farmland in most Canadian markets has either held steady or increased this year following a period of strong year-over-year growth.” That is, after a couple of years of strong, record growth, prices in Canada are levelling out. “In Ontario the rate of increase of prices have definitely slowed over the last twelve months,” he says.
The news is not necessarily negative. There are many who suggest the market is taking a breather after record gains. Sandhu suggests there is broad confidence the new higher prices are here to stay. “This is an area where it is tough to find supply. What we are seeing is that farmers taking a long-term view. They are optimistic and see these prices as stable,” he says. This is a change from the late 1980s when a credit-boom led to a price bubble and crash.
Lending credence to the optimistic view is the clear resilience of the market. Despite lower crop prices, floods and challenging winter weather conditions the Canadian agricultural real estate market has held up well. This is a result of multi-faceted demand. “The most common buyer is an experienced farming families looking to add land,” says Sandhu. Demand is also coming from those looking for recreation properties. The emergence of new farmland-based securities companies is another factor supporting higher prices.
For more on the emergence of Canadian farmland-based investments see page pg. 43 of the latest WP, found here