DOUBLED VALUES!

Evening Post, Volume CXIII, Issue 100, 30 April 1927, Page 8

DOUBLED VALUES!

LOWER HUTT LAND

STIMULUS OF STATE'S WORK IN SUBURBS RISE OF 100 PER CENT. SINCE 1925 An official rebuttal of a charge that the Government's auction sections at Lower Hutt are over-valued at £5 10s a foot discloses a higher level of prices for comparable private sales, and incidentally reveals the impressive fact that Lower Hutt land prices to-day are double what they were in 1925. For business frontages that ruled £30 a foot in 1925, £60 is now asked. A correspondent ("Homeless") contends that in fixing upset prices, based on £5 10s a foot, for land in what may bo called the auction area of tho Lower Hutt development scheme, the j Government is valuing too highly, and ho calls on the responsible Departments to prove the advertised statement that their upset prices are about 40 per cjent. below the prices asked and obtained for I land in the Hutt Valley not so favourably situated. Where (asks the correspondent) is the less favourably situated laud for which £9 53 a foot (40 per cent, above the Government's £5 10s upset basis) is obtained? The Department's answer to this question is given below. Land in Pretoria street is mentioned, and certain other interesting information of the advance of prices of private land in the Lower Hutt borough is given. TWO TYPES: "WORKER", AND "AUCTION." V The Government's Lower Hutt development scheme includes three' areas: (1) The industrial area, with which may be grouped the Government railways workshops area; (2) the auction area, a favourably situated part, where sections are being sold to the highest bidder, with upset or reserve prices as mentioned above; (3) the special workers' homes area, where workers (selected by a committee from among many applicants) become the owners of houses (•Government-built) on a payment of about 22s 6d a week, spread over about thirty-six years. The workers' homes area is situated between the other two. At 22s 6d a week these homes are claimed to be much the cheapest homes in Wellington. The fortunate selected applicants cannot sell within ten years except by surrendering to the Government any profit made on the sale; after ten years the owner of a Government workers' home may sell to his own profit. But anyone who, in the auction area, buys a section of land by virtue of being the highest bidder, is not hard bound by the ten years' restriction, and may, under pertain conditions, sell the land, or sell the land and home, if he has erected a house on it. This and other differences between the workers' homes and the auction sections have to be borne in mind, for the correspondent's allegation of high price is mado in respect of the latter, not the former. The Government's policy is that fair market valae should be obtained for the auction area, so as to help the workers' homes section to be charged for at a lower price. The allegation of "Homeless" is that not the workers' homes sections but those disposable at auction are over-valued. Another thing to be remembered is that the'auction sales figure in the s.chomo not: .only as a factor tending to reduce the worker's Home charges; but also as a factor to reduce the capital charges of the new Hutt railway when it is complete. The Department of Eailways hopes to secure some of the betterment of the land subdivision in order to help the Department to run the railway on an economic basis of service and self-support; the workers in the workers' homes area look for land at less than market rates; and both theso demands imply that failmarket rates shall be secured for tho auction sections. Tho responsible Departments say that £5 10s a foot is a fair average price for sections of a depth of 160 feet; but to reduce it would be to encourage trafficking by section-buyers, realising higher prices foi>thcm instead of for the State; and that the £5 10s basis, while economically justifiable, is relatively cheap when compared with private sales. THE CHARGE. The question was raised through the sending to tho Editor of "Tho Post" of tho following letter, signed "Homeless," and dated 22nd April:— "Being one of those who attended the auction sale last night of tho last block of sections auctioned by the Gov-ernment-in the Hutt Valley, I was very disappointed to find that the reservo prices asked for the sections were still too high for the average' working man to pay for land 011 which to build a comfortable home. "The advertisement advertising this block for sale specially stressed tho point that these sections were in close proximity to two railway stations, and would be offered at prices'about 40 per cent, below those asked for and obtained for land in the Hutt Valley not so favourably situated. To" my surprise, I found that the reserve prices were based upon £5 10s per foot, namely, £270 for a 50ft section. This would mean on a Government calculation £9 5s per foot was asked for and was being obtained for land in tho Valley not so favourably situated as these Govornment sections. "I should be glad to know where the land is that is not so favourable, and for which £9 5s a foot has been obtained for residential sites. On the strength of the advertisement appearing in.tho papers and offering this block for sale, I and others distinctly anticipated that this land would be put up with a reserve of about £200 per section-, which is as much as a worker can afford to pay. "When this scheme was announced; everyone thought that cheap land would be availablo on which to settle those looking for a homo, and whilo I will quite admit that tho better transport, facilities now being offered the Hutt Valley in this locality have the tendency to raise tho price of the land adjacent to the stations. I think tho price out of proportion to the benefits conferred. "Sections in Knight's road could have been bought -between two and three years, ago from £80 to £100, and owing to the reserve which the Government has placed on its land, it has set a standard on the value, so that nobody can get a section under £250, which is putting it out of reach of most of the working people." THE REPLY. "The Post" made known the purport of tho above letter to Mr. F. H. Waters, Chief Surveyor of the District Office of tho Lands Department, and to Mr. P. N. Martin,, Wellington District Valuer >of the Valuation Department. These gentlemen recalled the fact that the Minister had laid down as a matter of policy the differential treatment by the Government of land north of White's Line—where the auction area is situated, on the outskirts of Lower Hutt township—and land south of White's Line, where workers were to have homes at lower prices,, and where the special workers' home settlement,, including at present about 150 completed homos, has now arisen. The immediate question, uuced bj; the

letter signea " Homeless "is whether less favourably situated land is selling at 40 per cent, above the £5 10s per foot upset. To prove the affirmative Mr. Martin stated that £9 5s a foot has been refused for land in Pretoria street, where the highest price ruling before the Government's railway and subdivision scheme became established was £3 a foot. To show that Pretoria street land, for. which £9 5s a foot is retused, is less favourably situated than are the sections offered at auction by the Government on 21st April, Mr. Martin pointed out that the Government sections are about equidistant from the Waterloo and Woburn railway stations. To reach either of these two stations on the new Hutt railway, the buyer of the Government sections offered on 21st April (which are in the new streets known as'"Wilford, Kauri, and Totara crescent) would have to walk about 30 chains.. But the section-owner in Pre-' toria street would have to walk-53 chains to the nearest railway station (Melling, on the old line). Taking another instance for comparing the Government upset prices with prices paid for land much less favourably situated, Mr. Martin stated that £5 a foot had been, offered and had been freely paid for sections in a new private subdivision over 100 chains from Melling railway station. How did this compare with the Government's £5 10s a foot for land 30 chains from either of two stations. He added: "As a result of the establishment of the Government scheme (railway, and subdivision on town-planning lines) the value of land generally in the Hutt Borough has doubled since the last revision of valuations, which revision took place in. 1925... Exactly the same doubling of values, in the same time and for the same reason, has occurred .in P6tone Borough. Business places' in Lower Hutt Borough, for which the ruling . price at the time of the revision in 1925 was £30 a foot, are now held for £60, which is obtained. As a result of the Government scheme and town-planning, a new subdivision realised approximately £5 a foot,'as against £2 5s ruling before the scheme, and this subdivision is 46 chains from' Ihe Waterloo railway station. "With regard to Knight's road, 'Homeless' states that sections were selling there at from £80 to £100 'two and three years ago.' As' a matter of fact, as far back as 1917 prices in Knight's road approximated £150 a section for 20-perch sections. In 1921, 20 perches in the same block sold for £190. And the Government did not enter into the'present railway and subdivision scheme till 1924. "In Wilford street, nearby, sections only 125 ft deep are realising at the rate of £5 10s a foot, as against the Crown sections, opposite, with a depth of 160 ft, priced at the same figure; and these Crown sections have the further advantage of backing on to a lawn tennis reserve of almost 2J acres. In considering the Government upsets right through, regard must be had to playing areas, plantation reserves, and school sites, which have been provided for more liberally than in any previous subdivision in New Zealand. Already one school is almost completed on a block of five acres, and three'others are provided for." It is understood that, in some cases of subdivision, the total realised by the sections makes the price paid for the original block of land look very small indeed. But it has to be remembered that," on the average, the cost of subdivision is so considerable that the sub.divider, to be sura of any profit, expects to realise from the sections at least four times the price he paid for the original block of land. At a time when values throughout a borough are doubling themselves in about eighteen months, a subdivider, after meeting high costs, would expect high realisa-tion-figures,-'for he may not have.time, on a rising market to perform such" an operation more than once. The essence ofsubdivisional profits is not only high prices . for sections, but quick sale thereof, so as to avoid taxation, rating, and continuous "overhead." Delay in realisation cuts profits. Thus a fortune made on the rising side of the peak of values may be lost on the falling side.