A BIG TASK.

Auckland Star, Volume LXVIII, Issue 303, 22 December 1937, Page 16

A BIG TASK.

CITY MORTGAGES. FIRST YEAR'S WORK. VALUES WRITTEN DOWN. 2400 CASES STILL ON IJST. At the end of a year in which the positions of large numbers of mortgagors have been investigated by the Mortgage Adjustment Commissions there still remains much work to be done before the task of mortgage revision in Auckland and in c.-ther parts of the Dominion is brought to completion. Beginning early in the year with a list of about 3000 cases, since increased to 4200, before it, the First Mortgage Commission set up in the city has dealt with "probably 500 cases, and a further 500 have been disposed of by the other two commissions appointed in the middle of the year when it was found that the task was too large for one authority. Besides this total of 1000 cases, about 800 others will have been settled when the commissions adjourn i.-week for- the holidays. Thus the list will be reduced to 2400 cases to be adjusted next year.

The -opinion that the work should be completed by September or October next ,was expressed to-day by Mr. J. Muncaster, secretary of the commissions, who said the rate of progress during the past half-year had been about 300 cases a month, including slightly more than 100 cases settled by agreement between the parties and struck off the list. Most of the properties involved were homes in the city and suburbs, and there were also numerous business premises. Inspections By Commissions. Experience as the year had progressed, he said, had confirmed the earlier indications that nearly two cases in every three set down came to a hearing, and the estimate formed in the first half of the year, that nearly two years would be required to complete the revision, was apparently fairly close to the mark. Other inquiries revealed that there had been substantial writing off of arrears of interest and also considerable reduction in the values of properties covered by mortgage. The commissions had obtained a comprehensive knowledge of properties and mortgage conditions in the city and suburbs,- and in recent months there were indications of an approach to what in time might be regarded as basic values. It had not been the aim of the commissions, however, to lay down a basis to which the decisions should conform, but each case had been decided on its merits after hearing the evidence and making an inspection. It had been an invariable rule to inspect the properties, and these visits had numbered from 12 to 20 a week for each commission.

Second Mortgages Written Off. Of second mortgages, It was learned, the commissions had had many under their' notice, and they were almost a daily occurrence. They were a survival from the time of high valuta, chiefly in the late 'twenties, and in some instances no interest had been paid for as much as five years. The rates of 7 and 8 per cent had long ceased to have any significance, and in many instance? both principal and accrued interest hid to be wiped out. Occasionally, where a mortgagor was found to be in a position to pay and the circumstances generally did not warrant complete cancellation of the liability, a second mortgage was -eonverted into an adjustable debt, but these cases were not numerous.

Comparisons of values between different district*, stated an experienced valuer, had indicated that the area of greatest strength was in the eastern suburbs of Mission Bay, Kohimarama, St. Helier's and Orakei, and there was evidence of a growing demand for sections in these districts. Building operations, however, though i fairly ' active, were restricted, largely in con- ' sequence of the Government's housing schemes. Rents and Building Costa. A paradoxical feature on which several authorities commented concerned the relationship between values and rents. Rents, it was pointed out, had advanced sharply during the year. A house for which fl would have been paid twelve months ago could be let to-day for 25/ to 27/6, yet'this increase had not so far given rise to any considerable demand for the purchase of house properties. One explanation was that the buyer, if he wished to dislodge a tenant, was required to obtain other accommodation for him, and another was lack of confidence. There was a feeling that values were and many people were apparently disinclined to put money into houses while the property market was in an uneasy condition.

"Values to-day are all at sea," was the outspoken comment of one authority. "Houses can be bought at a ridiculous value compared with the replacement cost, but the rise in prices and wages has not been reflected in the property market. In 1935 it was possible to build a wooden house in Auckland at from 12/6 to 15/ a square foot, but to-day the cost is from 18/6 to 22/6, and|the materials are often not of equal quality. This is affecting the attitude of investors towards new mortgages, and there is a tendency to ask for wider margins of security."