SUM - Summerset Group

[Bjauck]

...

I guess what im saying is that the risks to the company are govt legislation and property prices. Govt being the biggest one, as the investment will be fair value ones the growth has run its course (therefore any change in property market can only offer a neutral investment [opportunity cost] or a positive one here [good investment])...

Yet another residential property market warning:
New Zealand housing market crash warning issued by international ratings agency Moody's
http://www.nzherald.co.nz/nz/news/ar...ectid=11837842

[dobby41]

Yet another residential property market warning:
New Zealand housing market crash warning issued by international ratings agency Moody's
http://www.nzherald.co.nz/nz/news/ar...ectid=11837842

Haven't they done that before? Many times?

[Bjauck]

Haven't they done that before? Many times?

Not just them.
Back in March:
Auckland affordability a credit negative - Moodys
http://www.mortgagerates.co.nz/artic...ve-moodys.html

and Fitch have warned us, although perhaps not so adamantly:
http://www.stuff.co.nz/business/prop...s-agency-Fitch

IMF, The Economist have said NZ's housing is the most unaffordable in the World.

Each time the response is similar: We are not like other countries. This time we will be safe again. Our Banks (well, mostly Australia's Banks I guess because most of our money is wrapped up in housing!) have been stress tested.

It seems a bit like the story of the boy crying "Wolf!" and we know how that ended.

[dobby41]

It seems a bit like the story of the boy crying "Wolf!" and we know how that ended.

But it's different this time
Much of what they say is true and it is a matter of timing and extent of a fall.
Or maybe just a flattening (which would affect those expecting (and relying on) capital gains to see their 3% return and negative cash flow improve).

Some people will get very caught if they have to sell but most just sit tight if they can.

It is different this time, I think. Unfortunately because of that it is hard to see what will happen.
There seems to be more overseas money than before and we don't know how it will react.

[Beagle]

We are not the most expensive in the world. As reported on CNBC this morning Hong Kong is trading on 18 times medium household income.
Medium household income according to the department of statistics in N.Z. is ~ $73K.
I think (and I am going off memory here), the average house in N.Z. is somewhere around $550K, obviously Auckland is a lot higher.
National average is about 7.5 times national medium household income. Perfectly fine when interest rates are close to 50 year lows.
REINZ data shows nationally our market is tracking just fine and all the talk of Auckland crashing is just that, talk, it simply isn't happening.

[Bjauck]

We are not the most expensive in the world. As reported on CNBC this morning Hong Kong is trading on 18 times medium household income.
Medium household income according to the department of statistics in N.Z. is ~ $73K.
I think (and I am going off memory here), the average house in N.Z. is somewhere around $550K, obviously Auckland is a lot higher.
National average is about 7.5 times national medium household income. Perfectly fine when interest rates are close to 50 year lows.
REINZ data shows nationally our market is tracking just fine and all the talk of Auckland crashing is just that, talk, it simply isn't happening.

Hong Kong is part of China. So it is not the most unaffordable independent country I guess. I presume Manhattan is less affordable than NZ too. Hong Kong has millions of people on several small islands and a small patch of land. Auckland is sitting on a median home at 10 times median income. Auckland region has about a third of NZ's population. Hong Kong has less than 1% of China's population. I agree, maybe , if interest rates stay low, the clock could keep on ticking, all else being equal (constrained construction and supply, high immigration and investor demand continuing at current rates)

[Beagle]

A spokeswoman for Summerset said it was delighted caregivers would receive better pay.
“The settlement is fully funded, which means no impact on company profitability but will mean that staff will be better paid and we will be able to attract more staff to the industry, which we believe will enhance the level of care we are able to deliver.”

[couta1]

A spokeswoman for Summerset said it was delighted caregivers would receive better pay.
“The settlement is fully funded, which means no impact on company profitability but will mean that staff will be better paid and we will be able to attract more staff to the industry, which we believe will enhance the level of care we are able to deliver.”

See my post above Roger re nurses and activities staff, it is only fully funded for caregivers. This ruling will cost the company, but to what extent is unknown until the nurses and others get their increase. A nurses hourly rate will go up around $4-$6 i estimate at this point.

[Bilbo]

We are not the most expensive in the world. As reported on CNBC this morning Hong Kong is trading on 18 times medium household income.
Medium household income according to the department of statistics in N.Z. is ~ $73K.
I think (and I am going off memory here), the average house in N.Z. is somewhere around $550K, obviously Auckland is a lot higher.
National average is about 7.5 times national medium household income. Perfectly fine when interest rates are close to 50 year lows.
REINZ data shows nationally our market is tracking just fine and all the talk of Auckland crashing is just that, talk, it simply isn't happening.

Hi Roger. From what I know about you from your other posts, I'm surprised by the above sentiment. I would have expected a more cautious outlook from you. If housing were a share or bond, would you buy it on fundamentals and market outlook (interest rate rises coming, immigration to be slowed, possible change of government?) Rental return of 3% if lucky, before costs (property management, maintenance, rates, insurance etc), which from my experience drops returns to sub 2%. Price supported by low interest rates which can really only go up from here (inflation figures just released show inflation now above 2%) and demand. Once the demand is suppressed or supply increased, price rises can not continue (all else being equal - wages etc). Just look at the lack of price growth in the ChCh market now that supply side of the equation is addressed.

It may take some large external catalyst for Akl prices to crash (fall +20%) but at best I can see a long sideways (5years+) period coming with little potential for upside.

[777]

From stuff who got it from NBR.

No tax paid by retirement Villages

http://www.nzherald.co.nz/business/n...ectid=11841788