LAND VALUES,

Rangitikei Advocate and Manawatu Argus, Volume XLV, Issue 12084, 22 June 1920, Page 5

LAND VALUES,

On the above subject the Chairman of the Bank of New Zealand at the annual meeting said :-* In several of my past addresses, I have referred to the high prices paid in this Dominion for country lands and pointed out the danger of basing land values upon current prices ruling for produce. Similar warnings have been uttered by others occupying responsible positions, but so far they have gone unheeded. The bnving and selling of land—especially farm land —lias proceeded at a rapid rate, and prices of such land, which were thought a year ago to have reached very high figures, have mounted higher and higher. It is no doubt a matter of common knowledge that many of these transactions are carried through on a very small cash payment, nearly the whole of the purchase money being represented by a mortgage, or a series of mortgages, of which the last vendor holds the latest. The facility with which men possessing lictle capital have thus been enabled to purchase areas of land much beyond their ability to improve and work, has been a potent factor in putting up the price of land against the buyer who really has adequate means to carry out his undertakings. Now, making the fullest allowance for the productivity of the soil and our wonderful climate, I am still of opinion that sooner or later this country will suffer severely through the absurdly high rates at which, to satisfy the earth hunger that is existing, country lands have been changing hands within recent times. It may be argued—in fact, is argued by some people—that buyers are justified in giving such prices when they take into account the returns they have received from the soil during the past five years, and 1 admit that in some cases the results have sewmed to warrant the prices paid. But, with the existing prospect of dearer money and the certainty of a decline in the purchasing power of the countries that ha7e beon devastated by the war, it is neither wise nor prudent to base land values upon the assumption that the late boom prices for our produce are going to continue indefinitely. Many cases have come under our notice where the price recently paid has been double, and in some instances treble, that at which the property had changed handß in 1914, Prices for dairying land have run up to £l5O per acre, and we have heard reports that even £2OO per acre and more has bean paid in some cases. Where the greater part of snch purchase money remains on mortgage, imagine what would be the position of the mortgagor, thns heavily encumbered, in the event of a fall in the price of dairy produce of, say, 25 per cent. It may oe that a mortgage does not occasion a farmer the same concern as it does a business man, for I know of some farms on which no fewer than five mortgages were current at the same time. Needless to say, that class of security does not commend itself to us. Indeed, with the object of checking speculation, this and other Banks in New Zealand are refusing advances to customers to enable them to buy land at these inflated prices unles? applicants, by including other property in the security, can make the cover unquestionably ample. It is significant that many shrewd and well to do people are to-day taking the utmost advantage of the present land boom to subdivide and realise upon their holdings.