Expect variability in 2024 southwestern Ontario land prices

Southwestern Ontario is home to some of Canada’s most productive farmland. In recent years, land values have climbed to dizzying heights with competition for top acres driving sales for some farms into the $40,000-per-acre range.

But some of the air was let out of the value balloon in 2023, says Ryan Parker from London, Ont.- based Valco Real Estate Appraisers & Consultants, which produces an annual survey of farmland sales in 11 counties in the southwestern region of the province. For 2024, he expects a high level of price variability as sinking commodity prices and interest rates pressure prices, but he believes good land in the right location will draw multiple bidders and command significant prices.

After two years (2021 and 2022) of 25 per cent advances in farmland values, 2023 delivered a more modest 10 per cent increase, notes Valco’s newest report.

“In the first half, or maybe even the first three quarters of the year, we were still seeing a lot of new highs on farmland values across the province. So it sure looked like we were going to buck the idea of land values tempering because of higher interest rates and lower commodities,” says Parker.

In the fourth quarter, however, the market did react and retreat. But following two years of 25 per cent growth, “I think a plus 10 per cent is a positive thing for the sector, and definitely shows the strength and the health of the sector,” adds Parker.

In this interview with RealAgriculture’s Bernard Tobin, Parker also looks at the factors that drive farmland values of $40,000 per acre and higher in Ontario counties like Huron, Perth and Oxford. In these areas, where productive soils grow high-yielding crops, there is also high livestock density and demand from dairy, swine, poultry and beef operations that creates stiff competition for farmland.

For 2024, Parker expects more variability and a wider range in farmland values as commodity prices and interest rates continue to impact sales. But a good farm in the right location will continue to be coveted by multiple buyers. “There is no doubt there’s still going to be a choice number of farms that that will likely set new highs this year.”

 

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