LAND VALUES

Southland Times, Issue 18855, 22 June 1920, Page 7

LAND VALUES

DANGEROUS INFLATION. BANK MANAGER’S WARNING. Dealing with land values at the annual meeting of the Bank of New Zealand Mr Harold Beauchamp, chairman of directors, stated that the buying and selling of land—especially farm land—had proceeded at a rapid rate, and prices of such land, which were thought a year ago to have reached very high figures, had mounted higher and higher. It was no doubt a matter of common knowledge that many transactions were 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 held the latest. The facility with which men possessing little capital had thus been enabled to purchase areas of land much beyond their ability to improve and work, had 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,’’ he proceeded, "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 ha\e 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 I lumiit that in some cases the results have seemed 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 have been 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 iiulefinitelj. 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 hands in 19 pi Prices for dairying land have run up to £l5O per acre, and we have heard reports that even £2OO per acre and more has been paid in some cases. \\ here the greater part of such purchase money remains on mortgage, imagine what would be the position of the mortgagor, thus heavily encumbered, in the event of a_ fall in the price of dairy produce of, say, 25 per cent. "It mav be 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 sav, 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 unless applicants, bj including other property in the security, can make the cover unquestionably amp.e it is significant that many shrewu and well-to-do people are to-day taking the utmost advantage of the present land boom to ,f üb ' divide ami realise upon their holding*.