Land Values

Manawatu Times, Volume 60, Issue 133, 8 June 1935, Page 12

Land Values

Recently two visitors to this Dominion remarked that our land values were too high. One was a banker, the other a potential settler from Britain. The views of these gentlemen received widespread publication through the Press. To those of us with some practical knowledge of New Zealand farming conditions the thought comes as to just what reliance should be placed on the impressions of such transient visitors. “Land values are too high” has become something of a parrot cry. The mere phrase is rather tiresome. The value of a piece of land is subject to many factors. The purchase of land is a long-term investment. Interest rates have a very great effect on land values. The mere difference between an interest rate of 5 per cent, compared with one of 6 per cent, is reflected in almost a 20 per cent, difference in the value of a property. Then, too, come the productivity and the expenses necessary to gain that productivity from various types of land. These vary enormously from one country to another and even from district to district. Not only the natural fertility of the soil must be taken into account, but also the readiness of its response to treatment. In the Waikato the writer has visited a farm where six ewes per acre were being carried. Topdressing made this possible. Yet along the roadsides the non-top-dressed pastures would not have carried a wether per acre. The natural soil was not actually fertile, but it responded wonderfully to treatment. Last of all. we come to the matter of prices. Generally, farming critics cannot see past the prices of the day. Should prices drop to half, many seem to think that land values should be chopped in half. Yet experience should have taught us, as a nation of farmers, that prices are ever-varying. Some average level must be assumed upon. To do this involves some difficult considering. Take butter-fat as an example. For the past three years it has averaged 9d per lb. If we take a ten-year period it has averaged 14d per lb. Should w t c take a 20-year period it brings our average up to .17d per lb. Uuon what level should wc reasonably assess a dairy farm’s value to-day? To do so upon the assumption that butter-fat will always remain at 9d per lb. would be enormous. These remarks apply equally to sheep property. None can truly forecast the future of the wool and meat markets. Wc can but make a guess and our guess is as likely to be right as is that of any visitor, expert or otherwise. Most certainly there are cases where the price of land is too high, basing the returns upon any reasonable assumption as to the future course of prices. But merely to say that land values are too high, because farming docs not pay when prices are at record low levels, is not of any practical value. The mortgage legislation has been wisely drafted to allow of a five-year period before final writing down is made. By that time the course of prices should have settled to a level that will possibly be maintained for 10 or 20 years with but minor variations.