Section Prices Rising Sharply

Press, Volume CIX, Issue 32274, 17 April 1970, Page 22

Section Prices Rising Sharply

(New Zealand Press Association)

ROTORUA, April 16.

Section prices appear to be increasing at twice the rate of prices for houses, says a report by the New Zealand Institute of Valuers.

The report was received at today’s annual conference of the institute in Rotorua.

In general prices were higher now than they were 12 months ago. “This has been brought about by the continuing effects of inflation, including a rise in building costs which averages 7i per cent since mid-1968,” the report says. “The number of sales of sections has decreased quite considerably, but the turnover rate for all house sales has gone up.” Many buyers were in the market for investment in property, but high returns on capital invested were expected. “In consequence the income derived from investment property governs prices paid to a greater extent than building plus land value, and rents are therefore rising.” Interest rates were also tending to increase. Mortgage money was moderately easy to obtain, but the interest on first mortgages was now 7 per cent to 8! per cent, although there was a limited amount available at 61 per cent on selected securities, the report said.

Second mortgages ranged from 9 per cent to 12 per cent, except in cases where a vendor granted a second mortgage to cover a shortage of cash. These comparatively high interest rates were effecting some control over rising prices. The future for property

looked very bright, and there was every indication of a continued rise in the value for most types of property, in line with increasing building costs and the growth of the country.

Auckland building costs were about 7 per cent more than the national average, and Wellington 20 per cent more. Christchurch was about 5 per cent below the average. Invercargill was now the cheapest place to build, being 8 per cent below the national average. Rural Sales Up There was a significant recovery in the market activity of rural property sales for 1969, the report said. The number of freehold farmland sales increased by 39 per cent compared with 1968. “This was the fourth highest during the last decade.

“The latest information indicates that the market activity has brightened again, and, now that the drought has broken, the volume of transactions 'is likely to be intensified during the autumn selling season,” the report said. However, the depressing effect of tiie drought and lowered lamb and wool prices on farmers’ cash surpluses would possibly inhibit temporarily any further increase in the volume and pricelevels of farmland sales.