REAL ESTATE.

Auckland Star, Volume LXV, Issue 10, 12 January 1934, Page 3

REAL ESTATE.

CAPITAL INVESTMENT. WARINESS OF INVESTORS. SOME OF THE REASONS. What are the prospects of investors again turning to property as a source of investment, either in the way of purchasing or as security for lending money? The question was put to a number of Auckland solicitors and land agents this morning. A recent message from Christchurch stated that property there is again commanding attention as an investment. In Auckland it is agreed that there are circumstances which might make this tendency general, but there are other circumstances which make people wary of property investment. The lower rate of interest from gilt-edged securities, like Government bonds and successful commercial enterprises, primarily tended to turn the flow of money toward property, which several years ago was regarded as a sound investment, and which to-day offers u slightly higher rate of interest. People to-day are investing in stock at a premium which on the previous standards of return is not justified by the dividends. They are prepared to accept a return of four per cent, or barely that figure, when some years ago five per cent was regarded as the basic rate of interest. This fact has kindled the dosire for investment in mortgages, but tho obstacles are lack of confidence in values and the uneasy feeling arising from the Government's policy of interfering with contracts. The sanctity of contracts, it was stated, has been destroyed by the successive amendments to tho legislation affecting mortgages, and there is anxiety lest this policy be perpetuated. The disproportion between rental values and rates, it is emphasised, is a deterrent to investment in city property usually regarded as sound. Economic circumstances here forced down rents, but there is no indication that rates will be reduced, as local body commitments have been increased by the higher exchange rate and other circumstances.

The opinion was expressed to-day that there would be no real return to investment in property until building received another fillip. This, it was thought, would come suddenly, in the same way as wool values had unexpectedly recovered. A return to more normal conditions would bring in its train a housing shortage, for building had been at a standstill for. several years. With a demand for houses and assurance thati the legislation of recent years would not be further extended, money wouid again be available for property investment.