FARM LAND MARKET

Ashburton Guardian, Volume 54, Issue 97, 3 February 1934, Page 3

FARM LAND MARKET

HIGH PRICES RETARD BUSINESS. AGENTS' DIFFICULTIES. to the "Guardian."} CHRISTCHURCH, This Day. Paradoxically enough, the rise in the value of sheep farming, products, instead of stimulating the farm property market, has brought conditions a gooll deal worse than obtained in the depths of the depression. Buyers and sellers, who six months ago had some sort of chance of agreeing, find themselves now poles apart, and the land departments of the stock and station agencies are having a quieter time than for three years. The last six months has seen a complete reversal in the situation. In the middle of last year, farm properties were generally valued by their owners at prices which were too high to show a return on the then extremely low value of wool, lambs, and sheep. Prospective buyers were willing to give a little more than the actual value of a place calculated on what it would produce, believing that bedrock had been reached and that any move in prices must be for the better. Vendors equally were prepared to accept a small sacrifice and take their money. Now, vendors are generally unwilling to sacrifice any of their price at all, and purchasers eye uneasily the sensational rise in wool, lamb, and sheep, wondering how long it will last. At any rate, they are not prepared to gamble on prices remaining as they are.

Owners' Values High. A general survey of the farm properties on agents' books shows that almost without exception the values set by owners are so high that even present prices would not make them a cheap proposition. In fact, except in very rare cases there are no really cheap properties to be picked up, even after three years of prices which, have meant loss to the owner. A reporter worked out with an agent yesterday the probable returns from a number of grazing runs on the agent's books, and in no case was the proposition a bargain, even on present prices. Some there were which would show a reasonable return to a buyer, if present prices were maintained, or nearly maintained, for some years, but the risk required to be taken made most of these places a very doubtful commercial proposition. One agent said yesterday that he was continually faced with the argument from buyers that there was no reason for supposing that at any tiino Britain might not go back on to the gold standard, and that the rate of exchange might not be lowered. This would immediately reduce the value of all farm products, and leave buyers unable to avoid, loss on their purchases. This statement the agent found himself entirely unable to refute except by arguing that with wool stocks in manufacturing countries, so low, and with this year's world-wide shortage of the staple so acute, stocks were not likely to be built up very considerably for three years. Wool, he considered, was safe for that time, but nobody could predict the movements of the lamb market. A Stumbling Block. The present high price, or relatively high price, for sheep, is another stumbling block in the way of the man wanting to buy a farm. A year ago, a thousand pounds would stock a fairsized place with good ewes. Approximately three times that amount is required now. The money needed for stocking up, therefore, eats away a very considerable proportion of the capital most buyers have at their command. Instead of a minor expense in the purchase of a farm, stocking has now become one of the most important. There is the added disadvantage that the purchaser generally would pay more for sheep on the farm than ho would for similar sheep in Addington, sheep bred to the country being more valuable as a rule. This is a point that the vendor has not been slow to notice.

Not a great many farms have been withdrawn from the market, but it has been the experience of all agents that owners arc not now prepared to make any sacrifice at all in meeting a buyer. Indeed, in a few eases even where the farmer bought at boom prices, the full purchase price is asked, with a little more for the owner added. These cases are rare, but they show that some farmers have developed an optimistic view. It has been estimated by one agent that discounting the devaluation of

money through Britain going off gold and the further devaluation of New Zealand currency through the higher exchange rate, values arc just about; equal to the average of the 15' years before the war. This means a reduction of something like- 60 per cent, on present values,' a reduction which the price of land has by no means fully shared. It is the thought of the possibility of this reduction that has made the prospective buyer so cautious in his estimates of the value of land. Plenty of Capital. There is actually plenty of capita! about for investment in land. One agent has on his hooks scores of men with amounts of about £ISOO to invest in farms. These amounts usually represent the savings of a thrifty farm worker who is anxious to buy a small place of his own, but with the price of sheep at its present level, the purchase of a farm becomes a remote possibility. One man, who is the fortunate possessor of cash totalling more than £20,000, has been looking for a big run for nearly two years. Until recently, he considered the situation too dubious to purchase, but the" last twD months have made him fight shy of what he considers to be too highly inflated values. He has decided to wait for two years. The Mortgagors' Relief Act is largely blamed by agents for the dullness in the property market. All maintain that the operation of the Act is keeping many places off the market that would otherwise be sold. .Mortgagees also are inclined to demand prices which will cover their commitments, but which would be an impossible hurdle to the buyer, even on present prices. So much money was lent on land during the height of the boom that many farms are kept off the agents' books through the mortgagee hoping against hope that he will eventually get his money back. One agent summed up the opinions of all the rest when lie said yesterday, "I would rather be selling land in the depths of the depression than now. A year ago there was some chance of getting vendor and purchaser to agree to terms, but there is none now. Vendors want too much, and purchasers are discouraged by the high cost of stocking up."