The Melbourne land Boom.

Evening Star, Issue 7752, 25 October 1888, Page 2

The Melbourne land Boom.

The following article on 'The Present Aspect of the Land Boom,' specially written by an expert, appears in the ' Australasian Building Societies and Mortgage Companies' Gazette' : The enormous increase in the value of real estate in Melbourne and suburbs during the past three years is perhaps unprecedented in the annals of any colonial history, and it will be well at the present juncture to consider the causes and effects of the property boom through which we are passing. ■ Viewing the past from the vantage ground of the present, it is marvellous to conceive that so very few of the so-called long-headed, shrewd business men failed in years gone by to foresee the great value to which city and suburban property would rise.

That foresight need not have extended over a long range of years, for we find that city land in Carlton, which now realises L4O per foot, was sold by the Government, only in 1885, for L2 per foot—land that was within the city boundary and in a main outlet from the metropolis. Now, on the south banks of the Yarra, land which in 1884 was obtainable for L 5 per foot is now selling at LIBO per foot. To say the least of it, there must have been a remarkable want of foresight or a miscalculation of the probabilities of the future. Cases equally remarkable may be quoted of outside land, but they have gone up only on account of the metropolitan boom, whereas there is justification for the two specific cases before etated. The main causes of the boom have been: —l. Influx of British and European money. 2. Inordinate increase of the population in the metropolitan area. 3. The abnormal spirit of gambling characteristic of the Victorian people. 4. The activity of the army of estate and commission agents which has so suddenly sprung into existence. 5. The laxity of profitable investments for accumulated capital. 6. The scheming and contriving of syndicates in the manipulation of estates. 7. The great increase in the numbers who now deal in real estate in comparison with those who formerly had such transactions. 8. The general prosperity of the colony at large. All of these causes combined have caused the present boom. No one or two could have effected such results. The numerous arrivals from the other colonies have all settled in Melbourne, country towns have been depleted of their population, work has been plentiful, especially in and around the metropolis, each family arriving therein swelling the army of consumers and requiring the erection of one more dwelling in our midst—that dwelling in its erection contributes to the ramification of the various materials and labor required, and thus the ever-widening circle has touched almost every department of trade. Only now have English capitalists realised the fact that investments here are safe. The rate of interest at Home has been during the last year or two considerably lowered, and the ever-increasing accumulation of wealth in England has overflown our shores. The spirit of gambling has undoubtedly entered into real estate transactions. Hundreds of men who formerly speculated in mining now deal largely in land. They recognise the fact (and rightly so) that whereas on mining shaies the principal is frequently lost and squandered, the man who invests his money in land always has something tangible, and may reasonably expect some unearned increment, besides a great probability of a rapid local development.

Again, it is far more sensible that a man have his capital in an estate for which he himself holds the title, than that his money should be shnttlecooked by the bulling and bearing of the Mining Exchange. Apart altogether from these considerations, the fact cannot be ignored that more and greater fortunes have been made in land during the past three years, than ever were made on the goldfields. A few years back very few people dealt in land. Those who bought were satisfied with sufficient for their own personal requirements, now almost every man you meet is a land buyer on some scale; the artisans and tradesmen all have some Bpeo on ; every clerk and warehouseman in turn is directly interested in some syndicate or land company. Bankers and merchants, squatters and mine-owners, Ministers, and Civil servants, all vie with one another in the race for wealth by land speculation. Land agency has been a potent factor in the matter. It is to the land agents' best interest to keep the ball rolling, to send the prices up. Every time there is a turn over there is a commission. One case could be quoted showing that a property has changed hands five times, and the agent who has manipulated it draws an aggregate commission of L 1.200, whereas not one of his individual clients who has held the property, found the capital, and borne the whole of the risk, has made more than LI,OOO. The agent with unblushing assurance tells the buyer that there is a profit of a few pounds a foot in a piece of land, knowing all the time that he is putting him into it at the highest price yet obtained in the locality, and then the price so obtained is used as a lever to bring the other values up. The local agents are the best hands at sending up the values, for they are on the spot and know the owner of almost every allotment in the district. The small touters and so-called estate agents are a disgrace to the name. Ninety per cent, of them have not the faintest idea of their duties. Many do not know how to draw a contract or reckon the interest, will be most accommodating to the buyer, and sacrifice the vendor's interest to any degree so long as the commission is earned.

Hundreds of cases could be quoted where terms and conditions are altered, perusal fees struck out, npecial clauses and wrong descriptions inserted, aud the vendor has been landed in a law suit, all because the agent has forgotten, or ignored, the fact which should guide all his transactions—that is, that he is the agent of the vendor, and that the vendor's interest must be paramount. It would be a boon to society if every person professing to be a land agent were made to pass an examination on ' Smith's Contracts.'

Doctors are not allowed to play with men's lives without having due qualifications ; solicitors are not allowed to practise and handle men's titles without having first qualified themselves for their calling; and surveyors mußt undergo a course of study, and pass certain standards, before they can practise. Why, then, should any broken-down ne'er-do-well, who has nothing to lose, who requires no capital to start as an agent, and does not know his duties as such, be allowed to assume one of the most responsible positions in our midst ? It is high time that a law was passed to invalidate any sale of property unless the agent is specifically instructed in writing by the vendor.

Syndicating has been a fruitful source of profit, and has inflated values, more especially in outside land. If the daylight could be let into many of the syndicating transactions which have been carried on during the past three years, there are many who would find that their money had hung on a very slender thread, whilst many others would realise that they have been finding the money —taking the risk and liability of their part ners, while the partners take tfie profit. The syndicator takes his friend in figuratively and literally. He meets you in the street with knowing look, whispers he has a good thing, says he is taking a share, and so are Brown and Smith (who, by-the-bye, have not yet heard of it). You only have a few pounds to pay—no further call forsix months, before'which time he assures you it will be floated off into a company. He gets your consent, and cheque too, and goes straight to Brown, informs him that you are going in, and Smith also. Well, if Jone3 and Smith are in it, I will go. He then goes off to Smith, and tells the same tale, carefully wording his conversation so that none will suspect any wrong. So he goes his rounds. He has three good men, and ten shares to sell in all—the next man is informed that there are only one or two shares to sell, and the matter will be cloßed up, and so the whole ten are entrapped. Then comes the floating off—the bogus company—loo shares at LSOO each, and all the rest of it, displayed on a prospectus which does not disclose all the facts that it should. Perhaps thirty shares only are applied for by the public. The syndicate™ have to take the remaining seventy amongst themselves. They put up with that, for the profit on the thirty shares which have been got off is immediately appropriated, and the liability on the syndicators is reduced, and so the game is carried on,, Illegal transactions by the score are to-day being carried on under the cover of the Companies Statute, and the Hon. A. L. Tucker deserves the thanks of the trading community for calling the attention of Parliament to the matter, and asking for a Royal Commission on the subject.

Then the Saturday afternoon sales, or reported sales, the trotting up of prices at the auction, and putting up of dummy buyers are all abuses which are doing much to make. the situation unhealthy. Auctioneers are much to blame, and if they reported no Saturday afternoon sales except those on which commission was actually charged the evil would soon be Btopped. " But to com* to the prices as we find them. Will any sensible man Quietly reflect, and then say that this can still go on. Already we have in many places reached prices from which we cannot hope to receive any return for the money invested. Each suburb in its turn is having the boom. Numbers of placea .could be pointed ont where business sites, so-called, will not for years justify the erection of shop property. What is to be done with the high-priced land in the meantime ? Are those who are dealing in it strong enough to hold it without return ? One thoroughfare leading out of Melbourne extends seven miles from the Post Office, with a continuous array of business sites on both sides, and the average * price of the land is LSO per foot, and the lowest prioe L2O. At some portions of this there is very little population settled. Allowing one-sixth for breaks, cross streets, etc., and 20ft for each shop, we would have a continuous array of over 3,000 shops. This is in one direction only. Then there are the various cross streets, and all the other suburbs, with their shops. As regards house property also, the prices are now bordering on prohibition for building purposes. Many building sites realise up to L2O per foot, whereas Ll2 per foot for the well-to-do class is quite high enough, and L 6 per foot is a maximum price for a working man's house. When values exceed these prices sensible men do not buy, and prefer to pay a moderate rental for their requirements. Unless more care and moderation are exercised, those who are now doing their best to force values will bring on a crisis, and the supposed profit which they boast to have made, but which in many instances is merely paper, will vanish, and they will be worse off than in the beginning. Our colony is in a prosperous condition, capital is finding its way to us for investment, the mass of the people are almost certain to remain with us, for they cannot find a better colony in which to live, and all will go well if discretion is used and dealers in land will pause and ask the question : " Is the land intrinsically worth the price paid?" -■ •