IMPOSSIBLE VALUE 9

Waikato Times, Volume 113, Issue 18930, 27 April 1933, Page 9

IMPOSSIBLE VALUE 9

(To the Editor.) Sir, —New Zealand real estate values are in the majority of cases simply “impossible,” and this applies particularly to properties which have changed hands or have been valued for mortgage purposes during the post-war period. Pegging exchanges, tinkering with interest rates , and juggling with controls and quotas and tariffs are only palliatives, futile expedients which under the law of action and reaction do more harm than good in the long run. None of these really help the property-owner who is struggling with a milestone of debt and seeing nothing better ahead of him for the rest of his life, but it is a mistake to think that this can be remedied by legislation. A contract to buy or sell, borrow or lend, is an agreement which can only be varied with the consent of both parties. There has been far too much State interference already. What is .required is prompt and general voluntary aotion by leaders and borrowers, and in this the State Advances and the Public Trust Office might give a lead. Failing prompt and decided action, devaluation will take its slow but inevitable course. Every time a property is sold, whether by order of the court or otherwise, the real market value will be decided, and incidentally the values of all adjoining properties will be affected. In view of this, what Is the use of hiding our heads ostrich-llke and Imagining that the values of real estate and the securities based thereon are inviolate? The Dominion will never recover its ■equilibrium until we face facts, and the two biggest facts we have ter face in our domestic policy are fictitious land values and the absurd cost of Government administration, both of which are the result of our own mental and moral laziness. The vital question for every lender to-day it: Am I prepared to write down my securities to real value l Every merchant fac>es this question annually in regard to stocks of goods. Why shirk the position in regard to land values? I know from personal ■experience what a bitter ( pill it is. Second mortgages to-day are not worth the paper they are typed on. First mortgages in many cases, require writing down from 15 per cent, to 30 per cent. Yet what lender has the moral courage to say to the borrower, “Let us face facts. That second mortgage is waste paper,” or “That first mortgage of yours had better ne written down by a fourth or a fifth. And why? Simply because every lender secretly nurses the fantastic hope that a miracle will happen, that ■ the world’s markets will recover, and that in some mysterious way the old values will return. Also, as is well known by all real estate agents, no man who is personally interested in a property is a sound judge of its value, and probably this curious psychological weakness is a further determining factor in the tacit refusal to write down property values and the securities based thereon. —I am ’ etU ” REAL ESTATE.