While BC and Alberta are leading the nation in terms of rising house prices, Saskatchewan is by far the the runaway leader among Canadian provinces for farmland valuations..That’s despite rising interest rates and softer agricultural commodity prices, according to a new report by Farm Credit Canada (FCC)..Farm values rose 17% in Canada’s Breadbasket from July 2022 to June 30 of this year, compared to 6% in Alberta and just 1.8% in BC, according to FCC analyst Corbin Chau. That compares with 14.2% for Saskatchewan for all of 2022 and 10% and 8% rates in Alberta and BC, respectively, during the year..Canada’s overall rate was a robust 12%. The most important factor influencing prices is supply as opposed to demand — or lack thereof..“Even if higher interest rates are slowly eroding buyers' purchasing power, limited availability of farmland for sale is generally still pushing prices higher,” he wrote. .The national average growth rate in dry land values for the first six months of 2023 stands at 7.7%, while the most recent 12-month annual increase is slightly lower than the preceding 12-month calendar year, he added..And despite a 4% jump in borrowing costs, farm cash receipts are expected to rise 6.6% this year, according to StatCan projections, reflecting higher crop yields, and is the highest since 2013..The bottom line is farm land demand is highly variable depending on geography, climate conditions such as drought and availability. .The BC numbers were skewed by a small pullback in land values across the south coast, offset by steady or slightly higher increases in other areas of the province. After a year of steady increase in Alberta, demand was offset by lower availability..Quebec placed second to Saskatchewan over both the six and twelve-month periods while Ontario showed the most variability, particularly in the southern regions of the province..A limited number of sales in the Atlantic region restricted FCC’s ability to report an average rate. However, it expects to leverage sales data for New Brunswick, Nova Scotia and Prince Edward Island in its annual report. .“High interest rates, elevated farm input costs and uncertainty regarding future commodity prices characterize the current environment. It’s no surprise to have farm operations exercise caution,” Chau wrote..“Yet the balance of demand for farmland relative to the supply available is pushing land prices higher. It would be prudent to expect farmland value appreciation to slow until the uncertainty over the economic environment vanishes.”
While BC and Alberta are leading the nation in terms of rising house prices, Saskatchewan is by far the the runaway leader among Canadian provinces for farmland valuations..That’s despite rising interest rates and softer agricultural commodity prices, according to a new report by Farm Credit Canada (FCC)..Farm values rose 17% in Canada’s Breadbasket from July 2022 to June 30 of this year, compared to 6% in Alberta and just 1.8% in BC, according to FCC analyst Corbin Chau. That compares with 14.2% for Saskatchewan for all of 2022 and 10% and 8% rates in Alberta and BC, respectively, during the year..Canada’s overall rate was a robust 12%. The most important factor influencing prices is supply as opposed to demand — or lack thereof..“Even if higher interest rates are slowly eroding buyers' purchasing power, limited availability of farmland for sale is generally still pushing prices higher,” he wrote. .The national average growth rate in dry land values for the first six months of 2023 stands at 7.7%, while the most recent 12-month annual increase is slightly lower than the preceding 12-month calendar year, he added..And despite a 4% jump in borrowing costs, farm cash receipts are expected to rise 6.6% this year, according to StatCan projections, reflecting higher crop yields, and is the highest since 2013..The bottom line is farm land demand is highly variable depending on geography, climate conditions such as drought and availability. .The BC numbers were skewed by a small pullback in land values across the south coast, offset by steady or slightly higher increases in other areas of the province. After a year of steady increase in Alberta, demand was offset by lower availability..Quebec placed second to Saskatchewan over both the six and twelve-month periods while Ontario showed the most variability, particularly in the southern regions of the province..A limited number of sales in the Atlantic region restricted FCC’s ability to report an average rate. However, it expects to leverage sales data for New Brunswick, Nova Scotia and Prince Edward Island in its annual report. .“High interest rates, elevated farm input costs and uncertainty regarding future commodity prices characterize the current environment. It’s no surprise to have farm operations exercise caution,” Chau wrote..“Yet the balance of demand for farmland relative to the supply available is pushing land prices higher. It would be prudent to expect farmland value appreciation to slow until the uncertainty over the economic environment vanishes.”
