Land prices unsustainable?

23 July 1999

Land prices unsustainable?

EXCESS liquidity and over-optimism are two factors which can bid up the price of land to unsustainable levels in boom times, reports the Financial Times.

The newspaper bases the contention mainly by reference to the rise of US property.

It cites the lending of US Federal Land Banks, which are quasi-governmental banks, as exemplifying the process in the agricultural sector.

It says these continued to lend heavily for farmland purchases “for years after farmland values had peaked”.

Lending criteria were relaxed because loans were guaranteed by the government.

• Financial Times 23/07/99 page 30