Bargains in Houses

Sun (Auckland), Volume III, Issue 640, 17 April 1929, Page 8

Bargains in Houses

Money Plentiful; Yet Sales Sluggish

NEYEiv iu the history of Auckland have there been such s?old-tipped bargains in houses awaiting the middleclass purchaser.' Few bargain-hunters are operating, however, and although the Dominion is comparatively flush with monev, even sales by order of the mortgagee are hanging

HHHE housing market is at bedrock, and now is the time for the man who has put away a few hundred pounds to step in and buy. Those who have been saving strenuously for some years, striving to reduce domestic expenses so that the dream cottage of the future will become the real home of to-day, are now surrounded by opportunities of deals that they never could have imagined at the time they placed aside the first pound note of their modest hoard. Yet there is reluctance to buy. Until recently the prospective house pur chaser was faced with a second mort

gage on almost every property he inspected, and the potential burden, including rates, interest on his first and second, mortgages and the repayment of his principal, was less attractive than the steady payment of rent in an up-to-date suburb. Recently for a variety of reasons an avalanche of houses has enveloped the market, and owners’ estimates of values have had to be halved tefore sales could be effected. A modern house fully equipped with everything the young wife could desire —almost justifying the land agent’s advertisement—was put on the market lately. It had cost £2,500 to build a short while ago. The owner estimated it to be worth £2,400, but he placed upon it a reserve of £2,200. The place sold at a sluggish auction for £1,600.

This is typical. High-class houses are difficult to sell, and even among the middle-class bungalows and the workers’ dwellings the day of fancy values has gone for the time being. Houses which a year or two ago commanded £1,200 and

£1,300 have sold in recent weeks for anything from £9OO to £I,OOO, while again, houses that were erected at a cost of £9OO and £I,OOO have been sacrificed for the price of the first | mortgage. Yet with all this apparent slackness, money for investment is plentiful. Small men have nursed tidy bank balances, while in the bigger field of finance the banking returns are sufficiently expressive of prosperity. CONFIDENCE LACKING Confidence alone iu progressive enterprise is lacking, and thore is a steady stream of money into the channels of fixed deposits, where people prefer the steady and assured interest of about 4| per cent, to the prospect of 7 per cent, and 8 per cent, in securities embracing a small risk. This insistence to avoid progressive investment is aptly described by the Government Statistician, M*. Malcolm Fraser, in a review issued recently, in which he points out that, although fixed deposits are approximately 10 per cent, ahead of what they w*ere at the beginning of 1928, free deposits show an increase of only 2 per cent. “investors,” Mr. Fraser says, “still show a marked tendency to place their funds on fixed deposit, leaving their choice of employment to the banks, rather than embark upon the new enterprises which characterise a period of expanding business. . . . The ratio of advances to deposits is now lower than it has been for a number of years, iudicating that the anticipated expansion of business is not yet marked,” INFLUENCE OF POLITICS Uncertainty in the political future of New Zealand is mentioned by some business men as the herald of investing hesitancy; others view with consternation the attitude of Government mortgagors in taking upon themselves a burden larger than they can bear, living rent-free for a time, and then letting their houses slip back into the hands of the State.

The problem is of to-day; its solution is for to-morrow. Good houses are well within the reach of modest investors who aspire to having their own homes. Terms never will be more attractive to them, for sooner or later confidence Will return, and the market will begin to rise. And once the flood of money has started from the huge store of funds now accumulated in the banks and other commercial institutions, the pathway to progress and prosperity will be covered rapidly by a sympathetically ascending scale of values. The lack of confidence in house property investments —so real and withal so anomalous —is indeed difficult of explanation. In Auckland, at least, the present position is unprecedented.