Farmland prices up 83 p.c. in 10 years

Press, Volume CXI, Issue 32587, 22 April 1971, Page 10

Farmland prices up 83 p.c. in 10 years

(Neu) Zealand Press Association)

PALMERSTON NORTH, April 20. The average value of all rural freehold properties over 50 acres had increased 83 per cent between 1960 and 1970, said Mr A. Ward, reader in agricultural economics at Massey University, in Palmerston North today. '

He was delivering a paper entitled “Land Values and Inflation” to the annual conference of the New Zealand Institute of Valuers.

“In contrast, dairy farmers’ incomes were about the same in 1970 as they were in 1960, and sheep farmers’ average income in 1970 was less than that received in 1960,” Mr Ward said. “Allowing for inflation over the period the real incomes of both groups have fallen substantially. There is thus no obvious relationship between land values and the current profitability of farming.

“Land prices are seemingly immune from the cost-price squeeze that has led the Government to introduce emergency relief measures. “There exists the paradox of an industry—faced with falling real incomes experiencing a sustained rise in the value of its major fixed input. How can we resolve this apparent conflict?” he asked.

Many complementary influences tended to ensure that land values would continue to appreciate. “Within the rural property field we find anticipation of capital gain a potent force. Farmland close to urban growth centres is appreciating at a greater rate than are the more remote hillcountry properties. “Future land values will be determined in the short-term by the fiscal and monetary policy of the Government.

“To the extent that the price justification scheme and the stabilisation of remuneration legislation is effective, we should expect inflation, including land values, to be reduced. "Rather than comment on either of the two schemes, I would simply state that I do not expect land values to fall. “In the longer run, the land values will depend on the terms of trade and market access.

“If the E.E.C. negotiations are concluded so as to deny this country reasonable market access to the enlarged Community, then land values will fall along with many other prices,” said Mr Ward.