Valuers’ ‘duty’ on farmland inflation

Press, 25 February 1986, Page 3

Valuers’ ‘duty’ on farmland inflation

Wellington reporter

Land valuers have a duty to point out to their clients the nature of the real world in which they live, according to the Under-Secretary of Lands and Forests, Mr David Butcher.

They had a deep responsibility to point out to their clients that the main reason for personal and business financial stress was the inflated property prices of the last 10 to 15 years.

They should also point out that artificial controls on interest rates had been followed by inflated property prices, he said. Artificially controlled interest rates, heavily subAMP assets

Provisional results for 1985 released by the AMP manager for New Zealand, Mr John Dingle, In Christchurch, revealed that A.M.P. Society in New Zealand had increased policyholder assets by 20 per cent to J2500M during the year. Total income for AM.P. life insurance business increased by 23 per cent to SS6OM of which Investment income was S3OOM, M increase of 50 per cent on 1984 results.

sidised interest rates and excessive land prices had inflicted nearly fatal damage on much of the vital pastoral farming sector.

Mr Butcher said it was often overlooked that these bad policies had also robbed small savers of much of the real value of their savings. Artificially controlled interest rates had meant that some of the poorest people in the country had been subsidising heavily some of the richest people. The removal of interest rate controls had been a boon to the small saver.

Negative real interest rates, or interest rates below the level of inflation, had promoted the

notion that land buyers should borrow as much as possible, with inflation taking care of their debt in a couple of years, he said.

That had now changed dramatically, with land values falling and real interest rates high. Even by the end of 1983, land values had been starting to fall back from thenpeak.

Adjustment being made

by the rural sector was financially painful to many farmers and agricultural servicing industries, Mr Butcher said. The cause of the pain was the level of assistance which had had little relation to the marketplace. In 1986, the rural property market should adjust reasonably smoothty-