INFLATED LAND VALUES.

Taranaki Daily News, 19 June 1920, Page 5

INFLATED LAND VALUES.

EFFECT OF FALL IN PRICES. A SERIOUS WARNING. Bank of New Zealand, made the followMr. H. Beauchamp, chairman of the ing remarks at yesterday's meeting:— 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 buying and selling of land—especially farm land—has proceeded at a rapid rate, and prices of such land, which were thought a year ago to have readied 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 tlie purchase money being represented by a mortgage, or a sories of mortgages, of which the last vendor holds the latest. The facility with which men possessing little 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 w'oll- - climate, I am still of opinion that sooner or later this oountry 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 I admit 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 tho 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 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 hands 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 been paid in some cases Where the great er part of such purchasemoney remains 011 mortgage., imagine what would be the position of tho mortgagor, thus heavily encumbered, in the event of a fall in the price of dairy produce of. say, 25 per cent. It may 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 sam« 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 Now Zealand are refusing advances to customers to enable them to buy land at these inflated prices unless applicants, by including other property in the security, can make the cover unquestionably ampin. 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.