Retirement village operators

[Ggcc]

How was She destroying housing market ? Want to know your thoughts ...
Come on DYOR and you will see a few labour policies put into place to do what bull said.

[troyvdh]

Dear bull...your comment about J destroying the housing mkt.Frankly are you mad !.
A huge amount of the nations capital is associated with residential housing.
I believe NZ inc relies on milk powder...tourists....and property prices.
Mate are you familiar with a chap called Bernhard Hickey ?
He wrote a very interesting about this last year.
cheers.

[nztx]

Dear bull...your comment about J destroying the housing mkt.Frankly are you mad !.
A huge amount of the nations capital is associated with residential housing.
I believe NZ inc relies on milk powder...tourists....and property prices.
Mate are you familiar with a chap called Bernhard Hickey ?
He wrote a very interesting about this last year.
cheers.


Bernhard or Bernard ? ;)

The earlier might be Robbo's version of scorched earth that they by mistake tend to
aim for, while thinking they were aiming at a swarm of mysterious pies in the sky,
but usually only resulting in shooting holes in both feet ;)

[Walter]

House prices were and are grossly overvalued. It was the number one issue for New Zealanders not that long ago. Labour has got many things wrong, but falling house prices is not one of them.

[bull....]

Dear bull...your comment about J destroying the housing mkt.Frankly are you mad !.
A huge amount of the nations capital is associated with residential housing.
I believe NZ inc relies on milk powder...tourists....and property prices.
Mate are you familiar with a chap called Bernhard Hickey ?
He wrote a very interesting about this last year.
cheers.

she destroyed the housing market for ordinary people in NZ.
many nz people used housing as a get ahead vehicle and to save for retirement
even recent law allowing big business to be able to claim int deduction on rentals but not ord folk eg kpg is another example of j destroying peoples lives and hopes to get ahead and sending a market into the hands of big business only

hipkins recent comments about helping people get ahead again should include int deduction again as this has always been traditional way in nz to get ahead ... time will tell if he is full of sh.t

[dobby41]

He has said he does not want to do things to bring house prices down. He also wants to increase housing supply. I guess these are easy things to promise but difficult to deliver, However to mention them in his speech may give hope that specific policy will be produced to both maintain prices whilst encouraging investment in new housing.


The housing stock has increased recently at the fastest rate in a long, long time.

Not having policies aimed at bringing the cost of housing down isn't the same as helping house prices increase, nor actually stop them from continuing their decrease for a while yet.

[nztx]

The housing stock has increased recently at the fastest rate in a long, long time.

Not having policies aimed at bringing the cost of housing down isn't the same as helping house prices increase, nor actually stop them from continuing their decrease for a while yet.


The "not having Policies" part was probably enough to describe things reasonably well :)

[dobby41]

The "not having Policies" part was probably enough to describe things reasonably well :)

If no policies then no problem surely?
I thought you guys blame Labour's policies for everything, now you say they don't have any?

[troyvdh]

dear bull.
We are on different planets here.You say "ordinary people'...are you serious ....are you taking the pee.
Do you honestly believe that having a staggeringly world beating country of house price appreciation is something to celebrate ????!!!!!
Do you believe a sustainable economy should be reliant on house price increases !
This will be my last post on this thread.

[nztx]

If no policies then no problem surely?
I thought you guys blame Labour's policies for everything, now you say they don't have any?


If no policies many problems seen ? or not ? ;)
Have policies .. looks like more problems ;)
Or solve problem make them up on the fly or better still shoot from the hip ? ;)
If it all turns bad or get caught out, why not try to flush it down the twyford ?
then try to deny the whole episode even occurred .. or there were ever any issues

imagine the Property market linked to the sector is a fly on the wall
but wait there are more coming in through the window. Got one, walk away
problem solved. But wait there are many more, so issue not fixed.
Time to get flame thrower out. Problem thought to be fixed.
Wall burned out but still more flies. Give up .. can't have got the right ones :)

[Bjauck]

removed interest deduction for property owners which caused many to sell and many others not to buy which helped contribute to a housing crisis as investors left the market for long term rentals
RB and labour caused an artificial boom in house prices by printing to much
now people will get destroyed in housing by the rate rises caused by this

anyway some hope is returning as witnessed by retirement stocks rising the last week odd as the leader of this madness has gone

During the Covid fall in in interest rates, Certainly Labour could have put a cap on residential mortgage lending and the LTV easing should not have gone ahead. In NZ especially that was an invitation for a residential land price bubble and hey presto! It happened. From April - December 2020 LTV restrictions were lifted. The RBNZ/Government waited too long before tightening LTV.

https://www.rbnz.govt.nz/regulation-and-supervision/oversight-of-banks/standards-and-requirements-for-banks/macroprudential-policy/timeline-for-loan-to-value-ratio-restrictions

[Bjauck]

The housing stock has increased recently at the fastest rate in a long, long time.

Not having policies aimed at bringing the cost of housing down isn't the same as helping house prices increase, nor actually stop them from continuing their decrease for a while yet.
That is true. Although if prices are falling it probably means that his policies will be stimulatory to arrest the fall?

[nztx]

That is true. Although if prices are falling it probably means that his policies will be stimulatory to arrest the fall?


how could they, if they are mostly are pointing in the opposite direction, along with economic conditions ? :)

There could be not one sale & could that be interpretted in how many ways ?

[bull....]

dear bull.
We are on different planets here.You say "ordinary people'...are you serious ....are you taking the pee.
Do you honestly believe that having a staggeringly world beating country of house price appreciation is something to celebrate ????!!!!!
Do you believe a sustainable economy should be reliant on house price increases !
This will be my last post on this thread.

of course a economy shouldnt be overly reliant on housing for growth as a big % of GDP , but it is in NZ due to lack of policy to encourage small business to grow to big business.
house prices will rise over time due to inflation so cant stop that but correct policy can stop run away prices.

[alokdhir]

of course a economy shouldnt be overly reliant on housing for growth as a big % of GDP , but it is in NZ due to lack of policy to encourage small business to grow to big business.
house prices will rise over time due to inflation so cant stop that but correct policy can stop run away prices.

https://www.nzherald.co.nz/nz/brings-tears-to-my-eyes-family-consider-selling-after-2500-monthly-interest-rate-rise/LGT6FRARRZAELKHDWVHJJYDIHE/

As per U current govt policies responsible for this kind of pain ? Really ....IMO policies of all the historic govts including Nationals have equal role to play to make only way to save is property syndrome which is most imbibed in NZ then anywhere else ...it was so easy to leverage your credit rating with Banks to take as much loan as possible on even interest only mortgages as property was only up kind of investment over a reasonable period ....almost everyone was on this gravy train thus making the prices unrealistic compared to even higher per capita countries ...I fully understand most here are big " Landlords " and they get offended or threatened when someone tries to bring some sense into one sided market . Even U as PM of NZ wud have taken strong steps to WEAN away people from investment property craze ...RBNZ always requested Govt to take policy decisions especially against property market so that they can do their job with smaller rate hikes to control inflation etc ...as housing market was the biggest source of expanding money supply ...they needed Targeted policies against this particular asset class for obvious reasons . As we are over dependent on property for our wealth thus we feel most pain with rate hikes too ...it took 50-70 years to create this mindset ...it will take sometime to correct it ...this shud be helping Shares and productive assets long term . I fully support this change ...though understand it will cause some pain in the interim ...but its the right way to go for long term good of NZ

[bull....]

last mth performance

RAD 27%
RYM 13%
OCA 10%
SUM 8%
ARV -3%

whats up with arv ? opportunity for catch up or something wrong ?

[Bjauck]

... As we are over dependent on property for our wealth thus we feel most pain with rate hikes too ...it took 50-70 years to create this mindset ...it will take sometime to correct it ...this shud be helping Shares and productive assets long term . I fully support this change ...though understand it will cause some pain in the interim ...but its the right way to go for long term good of NZ Older home owners and investment residential property owners vote in much greater proportions than non-owners and younger folk. As Ardern discovered you need to tip-toe around their vested interests to win the Treasury!

[alokdhir]

Older home owners and investment residential property owners vote in much greater proportions than non-owners and younger folk. As Ardern discovered you need to tip-toe around their vested interests to win the Treasury!

I fully understand your point and politics of it ...maybe younger folk need understand that they need participate more in politics if they want their plight understood better ...no point in just complaining on blogs etc

[dobby41]

That is true. Although if prices are falling it probably means that his policies will be stimulatory to arrest the fall?

It would be unwise to expect that - as I said, he said there wouldn't be policies to exacerbate the fall rather than have policies to stop it.
A falling housing market is good overall - in the long term.

[bull....]

retirement sector stocks moving higher again today. amazing how jacinda leaves and a more down to earth fella like hipkins arrives and says some positive comments around property and the sector begins to takes off. will it continue guess we will see as the yr unfold's.
eithier its a oversold bounce or a geniune bargain time ?

[Bjauck]

It would be unwise to expect that - as I said, he said there wouldn't be policies to exacerbate the fall rather than have policies to stop it.
A falling housing market is good overall - in the long term. I am well past expecting delivery of any promise made by a politician from no matter which side. Sure my interpretation of what was said was just one possibility.

At risk of counting the number of angels on a pin-head, I think Hipkins managed to respond to the question in a fairly non-committal way:“We've already seen a shift in house prices from the peaks that we were seeing. I guess to reframe your question, we're certainly not going to be doing things that aim to bring house prices down.” So if prices are already dropping, If Hipkins does anything at all in response, it would probably need to be price stimulatory in order for house prices to stop falling.

Of course he has tried to give himself a free pass, because he could say the aim of his housing policy was to increase supply of residential land or new housing etc. However if it causes prices to fall or continue to fall then he could respond that that was not the aim of the policy. He presumably does not want to scare away too much the powerful electoral clout of existing home owners and property investors?

[Aaron]

Haven't read the article yet but easier to find later if I post a link.

https://www.stuff.co.nz/business/property/300770425/honestly-i-just-dont-know-why-i-did-it-our-oldest-population-is-losing-money-by-buying-into-retirement-villages

At a guess a story about a bunch of people finding out they made a decision/contract that they don't like now and want the gummint to fix it.

[bull....]

looks like the oversold bounce has stalled. arv failed to bounce must be the new dog ?

[bull....]

fbu saying weather caused building issue's jan/feb - wonder if these retirement stock building operations suffered too

[alokdhir]

looks like the oversold bounce has stalled. arv failed to bounce must be the new dog ?

Not dog mate ...New Cat ...as it's called Dead Cat bounce ....:p

But yes ...FBU announcement has brought all RV stocks down ...even SUM

[Bjauck]

fbu saying weather caused building issue's jan/feb - wonder if these retirement stock building operations suffered too
Climate change will affect many sectors of the economy.

[Balance]

So Ryman swallowed hard and go for a big CR.

How long before the others join in the CR - first come, best dressed!

[winner69]

fbu saying weather caused building issue's jan/feb - wonder if these retirement stock building operations suffered too

ARV had to evacuate one in Auckland last storm

SUM having a few problems this time around

[ValueNZ]

So Ryman swallowed hard and go for a big CR.

How long before the others join in the CR - first come, best dressed!

Does make you wonder why they hadn't done it sooner, down 31% YTD and 61% from its peak... Not the greatest sign of competent management IMO. Ill be sticking with Oceania for the long-term.

[bull....]

Increase in houses for sale on Trade Me fuels record price fall

https://www.stuff.co.nz/life-style/homed/real-estate/131238904/increase-in-houses-for-sale-on-trade-me-fuels-record-price-fall

why there starting to raise cash .... panic ?

[Greekwatchdog]

Increase in houses for sale on Trade Me fuels record price fall

https://www.stuff.co.nz/life-style/homed/real-estate/131238904/increase-in-houses-for-sale-on-trade-me-fuels-record-price-fall

why there starting to raise cash .... panic ?

You talk drivel. You read a headline and think the worse. Go do some real work and study the financial records then work out if they stopped spending and sold balance they would clear there debt pile. RYM had too, they finally admitted it. The other 3 are quite safe. I suppose if they feel obliged too fine but as far as I am concerned they don't need too.

[bull....]

You talk drivel. You read a headline and think the worse. Go do some real work and study the financial records then work out if they stopped spending and sold balance they would clear there debt pile. RYM had too, they finally admitted it. The other 3 are quite safe. I suppose if they feel obliged too fine but as far as I am concerned they don't need too.

time will tell , if house prices keep falling sharply im picking a retirement operator to go to the wall

[X-men]

U are a ramper bull....u should be banned on this site

[Leemsip]

I like hearing Bulls point of view.
Got some good points here. These companies are wedded to house prices. Seeing some epic falls in house prices off the crazy COVID peak and we have seen the first cap raise this week. Wont be the last IMO.

Hard to invest in this space right now....

[Rawz]

Bull shouldn't be banned, but rather change his name to Bear. Never seen someone see the worst possible outcome in every situation in the economy.

He is a permabear- an investor who consistently acts in the expectation that the value of stocks and shares will fall

Nothing wrong with that. need them to balance the permabulls like, alokdhir :t_up:

[justakiwi]

Bull, like so many others who like to fear-monger about this sector (OCA in particular) might understand the property side of things, but they have made it very clear that they do not understand Aged Care. Neither does the general market. All of these major providers are here to stay and all of them will do very well over the long term.


I like hearing Bulls point of view.
Got some good points here. These companies are wedded to house prices. Seeing some epic falls in house prices off the crazy COVID peak and we have seen the first cap raise this week. Wont be the last IMO.

Hard to invest in this space right now....

[alokdhir]

Bull shouldn't be banned, but rather change his name to Bear. Never seen someone see the worst possible outcome in every situation in the economy.

He is a permabear- an investor who consistently acts in the expectation that the value of stocks and shares will fall

Nothing wrong with that. need them to balance the permabulls like, alokdhir :t_up:

Rawz ...I thought u knew me better ...permabull ...still better then permabear ...But to explain Bull's position ...he is not permabear in all stocks ...he actually liked the results of STU and FBU inspite of they not being flashy to say the least ...reasons many know why

Me is permabull !!! yes maybe in some stocks at any particular time ...I wrote in mid Oct that market will soon switch to growth theme over value/ yield and large caps over mid/small caps for safety thus chose KFL over HGH / GNE / OCA / STU / WHS / HLG / FBU / .....

FPH below $ 19 was my best buy but over $ 26 ...I even wrote not bullish anymore as already reached my yearend target ...then MFT below $ 70 became my best buy and it still is ....KFL below $ 1.30 and MFT below $ 70 my top holdings and still lots to go for them ...maybe super long runway ahead ...:t_up:

I still think KFL is the way forward to play this market safely ...U can get tax efficient dividend or DRP depending on your needs ...it converts the great large caps growth stocks capital appreciation into yield very tax efficiently ...no need keep hunting for yield for stocks like STU etc and get caught in some dividend traps

Which companies will do well in " higher rates " environment ....large caps not small caps like STU etc

RYM is and shud be in trouble ...they got so greedy and sure signs of pathetic management decision ...they will pay $ 134 million penalty for paying back foreign loan ...they agreed to such terms ??? Really !!! They deserve to go bust ...Bull is right here

[bull....]

Rawz ...I thought u knew me better ...permabull ...still better then permabear ...But to explain Bull's position ...he is not permabear in all stocks ...he actually liked the results of STU and FBU inspite of they not being flashy to say the least ...reasons many know why

Me is permabull !!! yes maybe in some stocks at any particular time ...I wrote in mid Oct that market will soon switch to growth theme over value/ yield and large caps over mid/small caps for safety thus chose KFL over HGH / GNE / OCA / STU / WHS / HLG / FBU / .....

FPH below $ 19 was my best buy but over $ 26 ...I even wrote not bullish anymore as already reached my yearend target ...then MFT below $ 70 became my best buy and it still is ....KFL below $ 1.30 and MFT below $ 70 my top holdings and still lots to go for them ...maybe super long runway ahead ...:t_up:

I still think KFL is the way forward to play this market safely ...U can get tax efficient dividend or DRP depending on your needs ...it converts the great large caps growth stocks capital appreciation into yield very tax efficiently ...no need keep hunting for yield for stocks like STU etc and get caught in some dividend traps

Which companies will do well in " higher rates " environment ....large caps not small caps like STU etc

RYM is and shud be in trouble ...they got so greedy and sure signs of pathetic management decision ...they will pay $ 134 million penalty for paying back foreign loan ...they agreed to such terms ??? Really !!! They deserve to go bust ...Bull is right here

the aged care side matters little. there property developers mainly and property developers do go bust in a bad cycle

[iceman]

U are a ramper bull....u should be banned on this site

Disagree. His views are welcome, as are anybody else's views.

[bull....]

Bull shouldn't be banned, but rather change his name to Bear. Never seen someone see the worst possible outcome in every situation in the economy.

He is a permabear- an investor who consistently acts in the expectation that the value of stocks and shares will fall

Nothing wrong with that. need them to balance the permabulls like, alokdhir :t_up:

there's an old saying prepare for the worst hope for the best

[alokdhir]

the aged care side matters little. there property developers mainly and property developers do go bust in a bad cycle

Fully agree ...property is their main stay not aged care ...they thrive on property appreciation as they actually dont sell property only occupation rights thus capital appreciation remains on their books ...

[Balance]

Disagree. His views are welcome, as are anybody else's views.

Why do people get so worked up over posters posting their views?

Imperative on a site like this to know the nature and motivation of any poster before granting them credibility, surely!

[bull....]

Fully agree ...property is their main stay not aged care ...they thrive on property appreciation as they actually dont sell property only occupation rights thus capital appreciation remains on their books ...

exactly its like mcdonald's there not really a burger outfit they are considered more a real estate company

[Balance]

Bull, like so many others who like to fear-monger about this sector (OCA in particular) might understand the property side of things, but they have made it very clear that they do not understand Aged Care. Neither does the general market. All of these major providers are here to stay and all of them will do very well over the long term.

You may know a lot about Aged Care but the RV sector is about property first, property second and aged care third from an investment consideration point of view.

[justakiwi]

I rest my case.


the aged care side matters little. there property developers mainly and property developers do go bust in a bad cycle

[thegreatestben]

I read that as the aged care side matters little in terms of share performance. Obviously it has social value and provides a service and no-one (including bull) is saying it doesn't.

I also value bull's perspective; it provides balance and healthy perspective to bolster your own opinion rather than oppose it.

[justakiwi]

I accept that the RV sector is primarily a property sector - but it is actually a multi-faceted sector. The problem is, you, and others think of Aged Care and only see the extreme end of "care." RV's provide graduated levels of "care". Independent living villas provide site security, assistance with gardening if required, RN call bells for emergencies, and optional extras such as meals. Independent and supported living apartments provide their own specific level of "care." Care suites and care beds are at the higher level of care need, providing personal cares, more intensive nursing cares, and, in the case of care suites - continuity of care for life.

All of this is "Aged Care" - which is what you fail to understand and appreciate. We have already discussed often, the value of a progressive care model - and the disadvantages of a facility such as the Fletcher Building village - with villas only, and very limited care assistance.

I do appreciate that for traders, the RV sector is probably not an attractive option. But for those with a long term investment strategy, the current and future demand for all these levels of Aged Care is huge. I really don't know how many times one needs to say that. No government will ever take on Aged Care themselves. The NGO's and small private facilities are struggling and cutting costs already. Barring a miracle, in 10-15 years, they will no longer be a viable option. Which means the bulk of NZ's aged care services will be provided by the RV sector providers. There ​is no alternative.

It's not rocket science.




You may know a lot about Aged Care but the RV sector is about property first, property second and aged care third from an investment consideration point of view.

[alokdhir]

I accept that the RV sector is primarily a property sector - but it is actually a multi-faceted sector. The problem is, you, and others think of Aged Care and only see the extreme end of "care." RV's provide graduated levels of "care". Independent living villas provide site security, assistance with gardening if required, RN call bells for emergencies, and optional extras such as meals. Independent and supported living apartments provide their own specific level of "care." Care suites and care beds are at the higher level of care need, providing personal cares, more intensive nursing cares, and, in the case of care suites - continuity of care for life.

All of this is "Aged Care" - which is what you fail to understand and appreciate. We have already discussed often, the value of a progressive care model - and the disadvantages of a facility such as the Fletcher Building village - with villas only, and very limited care assistance.

I do appreciate that for traders, the RV sector is probably not an attractive option. But for those with a long term investment strategy, the current and future demand for all these levels of Aged Care is huge. I really don't know how many times one needs to say that. No government will ever take on Aged Care themselves. The NGO's and small private facilities are struggling and cutting costs already. Barring a miracle, in 10-15 years, they will no longer be a viable option. Which means the bulk of NZ's aged care services will be provided by the RV sector providers. There ​is no alternative.

It's not rocket science.

All here including Bull / Balance and me fully understand your points ...but as things stand today RV is mostly valued for the property on their books ...the day they start actually transferring property to buyers ...that day they will be truly valued for aged care services they provide ...and then their market caps will truly represent how good they are in that ....

[Balance]

All here including Bull / Balance and me fully understand your points ...but as things stand today RV is mostly valued for the property on their books ...the day they start actually transferring property to buyers ...that day they will be truly valued for aged care services they provide ...and then their market caps will truly represent how good they are in that ....

As has been written - MacDonalds make its real money from real estate, not from selling hamburgers. The hamburgers are a means to the end.

Likewise, aged care (fortunately) or else as JAK wrote, no investors would put money into the sector as there’s bugger all money to be made from looking after the aged. Sad but true.

[justakiwi]

That is not what I said.

They are already making money out of "care" - you just choose not to recognise that the property side of the business is also aged care.

You people need to get your heads around the fact that care is a spectrum of assistance - not simply the picture in your heads of dribbling old folk, who need help wiping their bum. Your stereotyping is clouding your ability to truly understand what these providers are providing.




Likewise, aged care (fortunately) or else as JAK wrote, no investors would put money into the sector as there’s bugger all money to be made from looking after the aged. Sad but true.

[Leemsip]

I sort of dont care about anything but the share price. The market (and some folks on here) not understanding the full nuance of these companies is entirely the point. Folks are going to pull back on these shares as the property market drops, rightly or wrongly, as everyone links them to the property prices.

Number go down. Sell and wait for some momentum in the other direction.

Otherwise you are in that tricky position of saying "Im not wrong, it is the market that is wrong".

[Leemsip]

Also recommend not taking any advice from me as I am consistently near last place in the sharemarket comp... lol

[alokdhir]

Also recommend not taking any advice from me as I am consistently near last place in the sharemarket comp... lol

That shud make them listen to me more ...but Do they ? ...lol. :p

[Balance]

That is not what I said.

They are already making money out of "care" - you just choose not to recognise that the property side of the business is also aged care.

You people need to get your heads around the fact that care is a spectrum of assistance - not simply the picture in your heads of dribbling old folk, who need help wiping their bum. Your stereotyping is clouding your ability to truly understand what these providers are providing.

One of my ex colleagues set up Summerset for the bankers/investors.

He made a fortune from selling the initial RV into the vehicle which was then used to build up Summerset. He moved on when Summerset was floated and now owns 2 smaller but high end RVs in Remuera, Auckland.

Straight from him - it’s a property game.

Don’t let your idealism blind you to reality. Sad but true.

[bull....]

and they all levered up to the gill's on low int rates.

as we all know leverage works against you big time when conditions change

[alokdhir]

and they all levered up to the gill's on low int rates.

as we all know leverage works against you big time when conditions change

Why U think RYM has to pay $ 134 million penalty to repay foreign loan ...shows how greedy they were and how stupid they were to read the market so wrong ...so got their timing doing leveraging totally wrong ...

Even small time share enthusiasts knew that these times cant last when simple KFL was trading 22 Cents over NAV

[justakiwi]

You are missing the point. Yes, it is a property sector primarily. Nobody is disputing that. But property prices go up and down over time, just as shares do. Right now, they are on a downward trend, but that will not be forever. Which is precisely why I said the RV sector may not be ideal for traders. For long term investors this is a temporary glitch in the matrix. Do you really believe we will still be in the same place (in terms of property prices) in 5-10 years? 10-20 years? Of course not.

The point I was trying to make is that there is now, and always will be (into the foreseeable future) a significant need for all levels of aged care, these RVs are providing. They will be providing the majority of aged care services (at all levels) for New Zealand. Nobody else can do it. Yes, there may be periods of time where house prices are down, but retired folk looking to move to an RV (for all of the reasons I mentioned in my previous post) will still wish to make that move. They might have to accept a lower price on the house they are selling, or they might have to look at a slightly less upmarket villa or apartment, but it won't stop them from doing it. Providers will no doubt have some years with lower profits, or some years where they have less to put into further development, but over the long term, they will be fine.

The way you, and others talk, one would think they are all going to go bust and turf everyone out on the street. That's not going to happen. It all boils down to whether one still has faith in the company (whichever one is your flavour of the month), and the patience to hold long term.

The market is fickle. If you choose to pay more attention to share price fluctuations, than to the underlying quality of the business, that's your choice. I do not.



One of my ex colleagues set up Summerset for the bankers/investors.

He made a fortune from selling the initial RV into the vehicle which was then used to build up Summerset. He moved on when Summerset was floated and now owns 2 smaller but high end RVs in Remuera, Auckland.

Straight from him - it’s a property game.

Don’t let your idealism blind you to reality. Sad but true.

[bull....]

arv and oca getting savaged today esp arv new lows :scared: cash issue coming ?

[Greekwatchdog]

arv and oca getting savaged today esp arv new lows :scared: cash issue coming ?

They are selling to pay for the RYM shares.. I love it happy to accumulate both...

[bull....]

They are selling to pay for the RYM shares.. I love it happy to accumulate both...

is rym better than arv and oca. way arv going it might be joining oca price wise soon ?

[Balance]

Ryman’s capital raising (when they boast they have standby banking facilities in place) is as clear as it gets that the banks are not prepared to increase their exposure any further to the RV sector.

Which inevitably means that all the RV stocks are going to have to raise capital to fund their development projects, existing and planned.

The alternative is to do what Ryman has decided to do as well as the CR - scale back development projects.

The days of unbridled growth and easy access to funds are over. Could be a few more years before the tide turns.

[Greekwatchdog]

is rym better than arv and oca. way arv going it might be joining oca price wise soon ?

RYM has never raised capital, RYM and ARV have sine listing. RYM have massive spending spree which we all noted at some stage they would be forced to do a CR. Again if ARV, OCA and SUM just complete there current program and don't go on another spending spree and sell down there unsold stock they will be cash positive. I haven't heard of any of hose 3 spending any more than the yare doing on current builds. Have you??

[alokdhir]

https://www.nzherald.co.nz/business/the-debt-explosion-that-led-to-ryman-healthcares-mea-culpa-moment/4HUAHC6QENGRTCFKXG6TQVAFNY/

Saga of RYM now finally out in public domain

[winner69]

Haven't updated this for a while so here goes and referenced to Dec 30 22.


If you ignored ARV the sector has outperformed NZX50 this year ...but still on average 50% off 2 year highs
ARV is an extreme outlier
RYM cap raise affected remaining stocks last week - on average down 8%



Will be interesting to see what happens next week or so

[bull....]

Haven't updated this for a while so here goes and referenced to Dec 30 22.


If you ignored ARV the sector has outperformed NZX50 this year ...but still on average 50% off 2 year highs
ARV is an extreme outlier
RYM cap raise affected remaining stocks last week - on average down 8%



Will be interesting to see what happens next week or so

the selling continue's is what's happening

[FTG]

FWIW, a little snippet from Aussie Media. Albeit there are some key structural differences in the Retirement Village/Aged Care sector between Aussie & NZ, similar challenges are likely reflected in NZ, especially amongst the smaller, independent operators.

Australia’s nursing homes are in deep financial trouble, with 66 per cent of private providers operating at a loss and their facilities hemorrhaging an average $28 per resident each day, new *official data reveals.
The most comprehensive audit of aged care undertaken also finds nursing homes are spending an average $12.40 a day on food and ingredients for each resident, and the average hands-on care time provided in facilities sits at a little over three hours a day.

Furthermore, Aussie is currently implementing a 15% wage increase in the sector, but with the Labor Government & Unions pushing for 25%! This will only add further pressure to NZ operators, in an already highly competitive labour market?

[Bjauck]

FWIW, a little snippet from Aussie Media. Albeit there are some key structural differences in the Retirement Village/Aged Care sector between Aussie & NZ, similar challenges are likely reflected in NZ, especially amongst the smaller, independent operators.

Australia’s nursing homes are in deep financial trouble, with 66 per cent of private providers operating at a loss and their facilities hemorrhaging an average $28 per resident each day, new *official data reveals.
The most comprehensive audit of aged care undertaken also finds nursing homes are spending an average $12.40 a day on food and ingredients for each resident, and the average hands-on care time provided in facilities sits at a little over three hours a day.

Furthermore, Aussie is currently implementing a 15% wage increase in the sector, but with the Labor Government & Unions pushing for 25%! This will only add further pressure to NZ operators, in an already highly competitive labour market?
Without a doubt we will have to pay more for aged care, or will we allow some in care to subsist in squalor?

Who will pay? Will it be way of taxes, a boost to gst and income tax, or the reintroduction of death duties, a wealth tax or CGT?

[FTG]

Without a doubt we will have to pay more for aged care, or will we allow some in care to subsist in squalor?

Who will pay? Will it be way of taxes, a boost to gst and income tax, or the reintroduction of death duties, a wealth tax or CGT?

The State certainly doesn't 'pay'. The State just shuffles money around, totally inefficiently, making us ultimately pay a higher price.

Remember, 'we' always pay, eventually....one way or the other. Sadly, some will possibly pay with their life (Shorter Life expectancy and shorter 'Health expectancy')

The more pertinent questions are, "how much' will we pay? "How' will we pay that much? And "when" will we pay?

BTW. Why do I get the feeling that you & some other folk expect others with greater resources than yourself (Income and/or financial Wealth) to pay some or all of your tab?

[Bjauck]

The State certainly doesn't 'pay'. The State just shuffles money around, totally inefficiently, making us ultimately pay a higher price.

Remember, 'we' always pay, eventually....one way or the other. Sadly, some will possibly pay with their life (Shorter Life expectancy and shorter 'Health expectancy')

The more pertinent questions are, "how much' will we pay? "How' will we pay that much? And "when" will we pay?

BTW. Why do I get the feeling that you & some other folk expect others with greater resources than yourself (Income and/or financial Wealth) to pay some or all of your tab?

I agree with your observations and questions - and will re-iterate my question. Who will pay?

Your BTW is packed with assumptions. Perhaps it was because of the audacity to suggest wealth, capital gains and capital inheritances may be taxed? FWIW I think higher incomes should have less tax levied. I actually hope to be able to continue to contribute for the welfare of others. I am happy to pay back to society. No family is separated from the rest of society.

[FTG]

I agree with your observations and questions - and will re-iterate my question. Who will pay?

Your BTW is packed with assumptions. Perhaps it was because of the audacity to suggest wealth, capital gains and capital inheritances may be taxed? FWIW I think higher incomes should have less tax levied.

My apologies if I have incorrectly assumed, from your 'audacious' (and rhetorical?) statements, that you are in support of the State taxing & redistributing citizens wealth, savings and capital. The sad fact is that there are a few folk who are in support of such a short-sighted & envious ideology.

You ask again, "Who will pay"?

I answer again, but pose to you in a different way, that will partly depend on how much & when 'we' pay. Remembering too, that the eventual 'how much' & 'when' will change commensurately with the quality level of the service/product.

We (individually and society) also need to remember that there is no such thing as a "free Lunch". If 'we' want, expect or demand any particular service/product in society, then it comes at a cost, and not necessarily just financial. Any expectation, demand, belief or impression otherwise is an illusion that will only bitterly disappoint.

Who should pay? In the overwhelming majority of cases, the individuals (and yes, in many cases supported by their respective families) who wish to avail themselves of the Retirement/Care Village 'service/product' offering, NOT non-users.

[davflaws]

The sad fact is that there are a few folk who are in support of such a short-sighted & envious ideology. (State taxing & redistributing citizens wealth, savings and capital).



Capitalism is very good at generating wealth and lousy (unless regulated) at distributing it. Rather than labelling the notion of taxation as a short sighted and envious ideology, it might be more useful to accept that we currently have a mixed economy and (notwithstanding your labels) that that is unlikely to change anytime soon.

Then we might discuss how capitalism might be regulated to everyone's advantage, exploiting its wealth generating power, and ameliorating its tendency to produce and increase inequality.

I find Picketty's arguments that unregulated capitalism leads to inequality convincing, and Picket and Wilkinson's (Spirit Level) argument that in more equal societys, Everyone is healthier and happier. It doesn't seem to matter whether the equality is achieved through historical accident (Japan), or redistributive taxation.

The Scandinavians regularly score at the top of international surveys of health and happiness, and have done so by the taxation route - which is the only one available by way of conscious intention.

But perhaps that is a discussion for the "Elections" forum rather than this thread.

[Bjauck]

My apologies if I have incorrectly assumed, from your 'audacious' (and rhetorical?) statements, that you are in support of the State taxing & redistributing citizens wealth, savings and capital. The sad fact is that there are a few folk who are in support of such a short-sighted & envious ideology... I was suggesting ways the tax base could be expanded to help pay for care costs. I don't see how redistributing wealth and/or capital gains is any more envious than the current redistribution of income or expenditure to others.

[FTG]

I was suggesting ways the tax base could be expanded to help pay for care costs.

Thank you for clarifying that my original 'assumption' re your opinion/position was actually correct.

IMV the financial pressures on the RV sector, will inevitably continue to build. Especially if we persist with the current State (taxpayer) funding model.

Expanding & deepening the tax base further only 'redistributes' the challenge elsewhere; for only a while. Expecting (and by some, demanding) non-users to pay even more towards those who wish to avail themselves of the services & products of any industry (including the RV sector) is sadly destined to fail and create even larger societal divisions.

[Bjauck]

Thank you for clarifying that my original 'assumption' re your opinion/position was actually correct.

IMV the financial pressures on the RV sector, will inevitably continue to build. Especially if we persist with the current State (taxpayer) funding model.

Expanding & deepening the tax base further only 'redistributes' the challenge elsewhere; for only a while. Expecting (and by some, demanding) non-users to pay even more towards those who wish to avail themselves of the services & products of any industry (including the RV sector) is sadly destined to fail and create even larger societal divisions. I am relieved we agree on the meaning of “could” and that you presumably canvass various possible solutions to a developing crisis too. The current NZ taxation system is highly regressive and highly redistributive from income earners.

Under your “user pays”, for those who currently receive a care subsidy, what would be their future? Would you extend user pays to medical care too? If not, why not?

[FTG]

Under your “user pays”, for those who currently receive a care subsidy, what would be their future? Would you extend user pays to medical care too? If not, why not?

I can sense our discussion is starting to permeate into areas other than the subject matter of this thread = "Retirement Village Operators". I would invite you to ask these questions on a more suitable thread, so that we don't brass off other thread participants?

It does seem that we do have some common ground in regards to recognising the growing challenges that society generally, and of course RV operators themselves, are going to have to confront. When it comes to having a sustainable funding model (whilst maintaining an acceptable quality level of service/product), IMV we seem to keep 'kicking the can down the road'. Hoping that either the growing challenge will magically disappear, or that we will just keep throwing (indebted) monies at it and 'future taxpayers' will happily pick up the tab.

[Bjauck]

I can sense our discussion is starting to permeate into areas other than the subject matter of this thread = "Retirement Village Operators". I would invite you to ask these questions on a more suitable thread, so that we don't brass off other thread participants?

It does seem that we do have some common ground in regards to recognising the growing challenges that society generally, and of course RV operators themselves, are going to have to confront. When it comes to having a sustainable funding model (whilst maintaining an acceptable quality level of service/product), IMV we seem to keep 'kicking the can down the road'. Hoping that either the growing challenge will magically disappear, or that we will just keep throwing (indebted) monies at it and 'future taxpayers' will happily pick up the tab.
I would have thought responsibility for and level of funding of hospital level and of rest-home level care would be most definitely on topic. However this particular discussion has probably run its course.

[justakiwi]

You are the one that took it way off course.


I can sense our discussion is starting to permeate into areas other than the subject matter of this thread = "Retirement Village Operators".


Way to late for that.


I would invite you to ask these questions on a more suitable thread, so that we don't brass off other thread participants?

[Greekwatchdog]

Column in the NZ Herald today list of 10 unfair practices. https://www.nzherald.co.nz/business/ Comments from the big 5 and I am happy with their response. So I am not worried about Govt Review.

[Greekwatchdog]

Montgomerie-Ibbotson Aged Care Pricing Index (ex For Bar)


Another tough month for the aged care stocks, down between -10% and -15%, has likely been driven to a significant degree by Ryman Healthcare's (RYM) capital raise. We think the sector represents good value at current prices, but what could act as a catalyst? RYM addressing its balance sheet and Summerset (SUM) reporting a strong full year result, along with guiding to a strong start to 2023, has clearly not been enough. In order for a meaningful re-rating to occur we probably need to see the bottom of the housing market in nominal terms, something that could be a while away. Our latest Montgomerie-Ibbotson (MI) aged care pricing index points to continued flat pricing on a monthly basis, while year over year unit price inflation has declined to ~+3%. We estimate that the incremental buffers built up during the strong house price inflation in 2020 and 2021 has been consumed. Looking ahead, we expect the aged care operators will be able to hold prices largely stable despite likely continued falls in house prices. The key thing to look out for will be a pick up in housing turnover.


Our MI index remains flat
The deceleration of growth in our MI index has continued. Year-on-year growth for our MI-aged care pricing index to February has fallen to only +3% and the index has been flat over the last six months. Over the last year our index has RYM and SUM's unit price inflation at +3% and +2% respectively, and both flat year-to-date, with similar price stability seen for both serviced apartments and independent living units. SUM has historically implemented biannual pricing increases, however, as we expected, no substantial changes were observed over the last three months as would have been under a continual biannual increase. Our index now utilises nearly 5,500 data points, giving us confidence in understanding the pricing strategies of the large operators.


Pricing buffers consumed by falling house prices
The fall in New Zealand house prices over the last year has erased our 'COVID pricing buffer', which represented the gap between growth in the REINZ local House Price Index (HPI) and the increase in our MI index since January 2020. The latest REINZ data for February showed Auckland house prices have fallen -22% from the November 2021 peak, and prices for the rest of New Zealand and New Zealand as a whole have fallen -12% and -16% from their respective peaks. With aged care operators moderately increasing prices through this period our incremental pricing buffer has entered negative territory for both RYM (-1%) and SUM (-4%). Strong demand, as indicated by SUM at its FY22 result, should make it possible for operators to keep prices largely flat.


Low turnover and elevated days to sell are no signs of a "proper" bottom in house prices
While the REINZ HPI indicated New Zealand house prices rose +0.1% in February versus January, sales volume (down -31% year over year) and days to sell (currently 54 days versus its long run average of 38 days) deteriorated further. We do not believe this recent small house price increase is a sign of a bottom in the New Zealand housing market. As shown in Figures 8 and 9, days to sell and number of houses sold have historically led house price movements. We wait for a turnaround in these metrics before looking more favourably on an HPI increase.


They all rate "Outperform with 12 month target as follows...



OCA = $1.30
ARV = $1.80
SUM = $11.10
RYM = $7.85

[percy]

Thanks for posting Greekwatchdog.Very interesting.
A lot of possible upside in this sector.
I have put the % upside from current share price for each company.
OCA = $1.30............78%
ARV = $1.80.............74.75%
SUM = $11.10...........29.06%
RYM = $7.85.............55.44%

[winner69]

Thanks for posting Greekwatchdog.Very interesting.
A lot of possible upside in this sector.
I have put the % upside from current share price for each company.
OCA = $1.30............78%
ARV = $1.80.............74.75%
SUM = $11.10...........29.06%
RYM = $7.85.............55.44%

Obvious which ones to BUY eh

And hardly worth while taking a punt on any other stocks in other sectors

[percy]

Obvious which ones to BUY eh

And hardly worth while taking a punt on any other stocks in other sectors

All look pretty good buys to me,but the stand outs are ARV and OCA.

[Entrep]

OCA will be lucky not to raise again in the near term. ARV and SUM would be my picks.

[bull....]

last mth

rym down 18%
sum down 17%
oca down 15%
arv down 10%

still looks like investors are avoiding the sector

[Balance]

last mth

rym down 18%
sum down 17%
oca down 15%
arv down 10%

still looks like investors are avoiding the sector

The property development sector is a disaster area out there currently. Why would any investor without exposure invest there?

RVs are but glorified property developers with huge tax as well as leverage advantages which they exploited entirely & appropriately, and extremely successfully during the boom years.

Like so many of the property I have seen over the decades, they all go one or two deals too far.

Now they face the ‘bust’ and it’s going to get really ugly before it gets better.

[troyvdh]

Dear Balance please define "property development sector'...As opposed to property investment ...I believe there is a difference.

BTW ...Do you understand that all markets operate in cycles.

Tell me when is the best time to buy..cheers.

I could be wrong I believe the only place on earth that land has been reclaimed is in the Netherlands.

I mean you are a legend.

[Balance]

Dear Balance please define "property development sector'...As opposed to property investment ...I believe there is a difference.

BTW ...Do you understand that all markets operate in cycles.

Tell me when is the best time to buy..cheers.

Markets and cycles? But of course - so timing is important as much as time in the market.

And you do have a valid point - the listed RVs are both property developers and investors.

Like I wrote before, they used leverage very successfully during the boom years and now, the leverage is coming back to bite them hard.

I will tell you the best time to buy when I have bought - promise. ��

[bull....]

The property development sector is a disaster area out there currently. Why would any investor without exposure invest there?

RVs are but glorified property developers with huge tax as well as leverage advantages which they exploited entirely & appropriately, and extremely successfully during the boom years.

Like so many of the property I have seen over the decades, they all go one or two deals too far.

Now they face the ‘bust’ and it’s going to get really ugly before it gets better.

all the dividend's will be next to go followed by cap raisings at big discounts :t_up:

[Balance]

all the dividend's will be next to go followed by cap raisings at big discounts :t_up:

They will not get rid of the dividends imo though they should.

Need to keep faith with the shareholders and maintain the facade of respectability.

Heck, the banks have been doing it for decades! Pay high dividends and hit shareholders for capital ever so often for ‘growth’ or to repair balance sheets.

[bull....]

Interest rate hikes trigger biggest property sales slump in almost 40 years - CoreLogichttps://www.newshub.co.nz/home/money/2023/03/interest-rate-hikes-trigger-biggest-property-sales-slump-in-almost-40-years-corelogic.html

[Greekwatchdog]

Interest rate hikes trigger biggest property sales slump in almost 40 years - CoreLogic

https://www.newshub.co.nz/home/money/2023/03/interest-rate-hikes-trigger-biggest-property-sales-slump-in-almost-40-years-corelogic.html

What you headline doesn't say Bull, Is that since March 2020 Houseprice's went up buy how much? I read last week Houseprice's are still up 20/25 % on pre Covid Levels. Headline sells. Use one of your 12 screens and some real research and report to us.

[bull....]

What you headline doesn't say Bull, Is that since March 2020 Houseprice's went up buy how much? I read last week Houseprice's are still up 20/25 % on pre Covid Levels. Headline sells. Use one of your 12 screens and some real research and report to us.

i can tell by your response you dont understand the implications of the headline so ill be nice and explain it to you

sales slumping mean's it takes longer to sell property
therefore RV sales will be slower as the time taken for one too sell there existing property is longer ( unless you just sell at what ever price ) therefore cashflow is slower for RV this impacting there business

[thegreatestben]

There's plenty of scenarios where the personal home doesn't go on the market.
Family/friends often take the opportunity to move into or purchase the home. I know of about 3 or 4 people in the last year or two who are about to or who have done this. Not everyone moving into a RV needs to put their house on the market.

[justakiwi]

Don't underestimate the reality of this statement. When someone has been thinking about moving into an RV, for some time, and has made the decision to do so, they are psyched up to go ahead and do it. Yes, they will want to get a good price for their house, but when it comes to the crunch, in most cases I suspect they will accept a lower price to "get it done."

It's a bit like when you resign from your job. You don't usually make that decision on the spur of the moment. It's something you have been thinking about for weeks, months, years. When you finally make the decision, you just want to walk out the door. Those last few weeks of whatever notice period you have to give, are a major pita.

This is no different in my opinion. The only exception might be people who have only recently purchased the house they are living in. Those people stand to possibly lose money when they sell. For anyone else, it's not going to be a huge deal. They have already made a significant profit.

Some people might have to lower their sights a little in terms of what they buy into in an RV - maybe they can't buy at the top of the price range now. Not the end of the world.


i can tell by your response you dont understand the implications of the headline so ill be nice and explain it to you

sales slumping mean's it takes longer to sell property
therefore RV sales will be slower as the time taken for one too sell there existing property is longer ( unless you just sell at what ever price ) therefore cashflow is slower for RV this impacting there business

[Greekwatchdog]

i can tell by your response you dont understand the implications of the headline so ill be nice and explain it to you

sales slumping mean's it takes longer to sell property
therefore RV sales will be slower as the time taken for one too sell there existing property is longer ( unless you just sell at what ever price ) therefore cashflow is slower for RV this impacting there business

Thanks Bull, but really I don't need you to tell me what I already know and understand. Part of a long term view when allocating to my Retirement Portfolio is too understand all the positive and negatives..

I am not a trader like you and many others..

[bull....]

Don't underestimate the reality of this statement. When someone has been thinking about moving into an RV, for some time, and has made the decision to do so, they are psyched up to go ahead and do it. Yes, they will want to get a good price for their house, but when it comes to the crunch, in most cases I suspect they will accept a lower price to "get it done."

It's a bit like when you resign from your job. You don't usually make that decision on the spur of the moment. It's something you have been thinking about for weeks, months, years. When you finally make the decision, you just want to walk out the door. Those last few weeks of whatever notice period you have to give, are a major pita.

This is no different in my opinion. The only exception might be people who have only recently purchased the house they are living in. Those people stand to possibly lose money when they sell. For anyone else, it's not going to be a huge deal. They have already made a significant profit.

Some people might have to lower their sights a little in terms of what they buy into in an RV - maybe they can't buy at the top of the price range now. Not the end of the world.

sure a lot of baby boomers are well off and its no problem but there must be plenty who are not so lucky as witnessed in the latest reports from RV operator's they mostly all said new sales were slower , it was re-sales which propped them up. I think they alluded to the fact slower sales of people's homes were affecting there new sales

[Greekwatchdog]

For Bar review Debt of RYM, OCA and ARV

The three aged care stocks with March year ends (Ryman [RYM], Arvida [ARV] and Oceania [OCA]) have tripled net debt over the last five years. As a group, aged care stands out in the NZ market; it has taken on more debt, both absolute and relative, than any other sector. Revaluation gains and capital raises has kept asset leverage largely flat, but in relation to earnings, and certainly cash generation, leverage has increased materially. With weighted interest rates set to double from FY22 to FY24 we have taken a closer look at covenants, interest expense and cash interest to be paid over the FY23–FY25 period. We walk away less concerned that covenants will be breached. On our estimates, P&L debt servicing will consume ~20% of EBIT, up from ~10% during FY18–FY22, and capitalised interest will consume ~10% of new sales cash flow. We expect the ability to reduce the absolute level of net debt will be a key focus for the market over the next 18 months.

Covenants are not created equal; we do not forecast any breaches, and if it gets close, we expect leniency from the banks


The three aged care stocks included in this analysis have similar levels of leverage (net debt/(net debt + equity)) of ~30–35%. Currently our estimates suggest that none are getting close to breaching leverage covenants of ~45–50%. OCA, ARV and RYM have also published interest coverage ratio (ICR) covenants of ~2.00–2.25x cash adjusted underlying EBIT. While gearing levels are similar there are differences, both with regards to the numerator (some version of a cash adjusted underlying EBIT) and the denominator (interest expense). Ultimately we do not expect any of these three to breach covenants. RYM and ARV are likely to be closest, due to more onerous covenant structures than OCA. As part of its capital increase, RYM received an amendment to its 2.25x ICR covenant until FY25 and also has fixed a large proportion of its debt for ~24 months. Post FY25, we believe RYM needs to have reduced its net debt in order to not get close to its ICR covenants. ARV's published covenants are the most onerous as they (1) are the highest (2.25x); (2) currently do not include all development gains; and (3) no part of the capitalised interest expense is excluded. Assuming ARV gets the technical amendement relating to its development gains (both OCA and RYM include almost all development gains), our modelling suggests that ARV will be close to but not below its covenants. However, should it need to, we expect a similar amendment to RYM. Longer term, for both RYM and ARV, they would likely need to either move some debt into a dedicated development facility like OCA or reduce the level of net debt in relation to EBIT.

Level of debt likely a key driver of performance over next 18 months — OCA and RYM best positioned


Outside of company specific details, we expect levels of debt and house prices to dominate the overall performance of the aged care sector over the next 18 months. While we remain cautious on near-term house price development we expect flat to declining levels of debt, a significant turn around from the last few years. If interest rates and construction costs remain high, we estimate that the sector has an attractive "out" by not starting any new build projects. This could result in the sector becoming largely debt free. Net debt makes up between 40% (RYM) and 50% (OCA) of enterprise value. Deleveraging can provide a powerful tailwind for the equity. While debt covenants can create some unease for equity holders, we believe they provide good discipline and an added incentive to reduce debt or at least reduce the speed at which it accumulates.

In theory an inflationary environment should be good news for aged care stocks


The core part of the aged care model is to use free funding from its occupational rights holders from one village to build a new village then rinse and repeat. An inflationary, high interest environment increases the value of this free funding. The 1970s was decade horribilis for equities, but house prices more than tripled in nominal terms in NZ. The future is uncertain and a key negative scenario for equities centers around inflation being more sticky than anticipated. Aged care operators that keep debt under control, grow by recycling cash and keep overheads low have the potential to perform well in a wide range of scenarios.

Run-down scenario provides an attractive back stop for the sector Run-down scenario provides an attractive back stop for the sector


The financial gearing in the aged care stocks has increased as the market value of equity has declined and interest bearing debt has increased. This high level of gearing has increased the risk/reward dynamic in the aged care sector; leverage works both ways. If this increased gearing was to be resolved organically i.e. through the release of cash tied up in development work in progress and unsold stock, it could provide signifiant tailwinds for the equity.

The aged care operators have taken notice of the increased costs of both debt and equity. The most significant action has been taken by RYM, which is also the operator that has built up the most amount of debt, in absolute terms and relative to assets. In February 2023, RYM raised over NZ$900m of equity to pay off its USPP debt and, more importantly in our view, announced a major pivot away from high density developments. RYM has also guided towards positive free cash flow in FY25, which would be a first since FY14. ARV and OCA have also signalled a slowdown in development and a more cautious approach to growth.

On our estimates OCA, ARV and, after the capital increase and strategy shift (pivot to less high density villages), to a large degree RYM, can pay down most of their interest bearing debt organically. This is through a combination of completing current construction, selling down unsold stock and collecting accounts receivables of stock that is sold but for which cash has not been collected (see our report "What If? Fast Track to Ex-Growth", published on 5 December 2022 for more detail).

This "wind down" of development operations would reduce EBITDA through lower development gains but increase it through earnings from the added units and from reduced costs and complexity. If these operators are able to achieve the exit EBITDA we estimate, pay down debt alongside the development run down, and trade on their current EV/EBITDA multiples, there would be a sizeable upside to the equity value over the next three to four years. And this is using today's depressed multiples.


The debt boom is (has to be) over


Focus across the listed aged care sector has for a long time been on growth. Specifically, growth in units, net asset values and underlying earnings. We believe that focus should be on, and is changing to, cash generation and levels of debt. In times of very low debt costs, rising property values and equity valuations at a multiple of book value, growing fast with borrowed money, is a rational prioritisation.

Today the world looks very different. All aged care operators are valued below tangible book value, house price inflation is negative and the aged care companies are raising incremental debt above 6%. In this environment we believe share price performance will be partly driven by an ability to generate free cash flow and reduce net debt.


Interest expense increasing but manageable


Net debt to annuity earnings has approached ~8x as the aged care sector has more than doubled net debt to ~NZ$4.5bn, up from below NZ$2bn five years ago. The build up of debt has been matched by an equally rapid build up of assets (partly funded by equity), leaving asset leverage ratios (net debt/(net debt + equity)) largely stable at around ~30–35%. The exception is RYM prior to its capital raise. Looking ahead, we expect debt levels to stabilise. We forecast that leverage for both RYM and OCA will decline over our forecast period.

We forecast the weighted average interest expense to approach ~6% over the next two to three years and aggregate interest expense of close to NZ$200m, up from ~NZ$100m in FY22. OCA stands out as the one with the least dramatic increase in effective interest rate. It has both the highest starting point (FY22) and lowest end point (FY25). OCA fixed a large proportion of its debt in the first half of 2022 and has also chosen to leave its retail bonds largely unswapped, which leaves it relatively unexposed.

Even though most debt is supporting development work in progress (WIP) approximately half of interest cost is expensed through the P&L. OCA and ARV in particular expense a substantial proportion of interest expense (over half), likely as a consequence of most of the debt originating from acquisitions. For OCA we expect a slight shift to a higher proportion being capitalised as the development facility is repricing faster.


Will OCA and ARV follow RYM? We think not


RYM's capital increase raises the question, will others follow suit? We think not. Firstly and most importantly, the underlying issue with regards to RYM, according to our estimates, was that RYM did not fully recycle cash in its new developments. This is particularly so over the last five years, leading to a build up of core debt. Prior to RYM's change of strategy and capital raise, we estimated that it would be left with ~NZ$1.8bn of core debt should it finish and sell down current villages under construction. This compares to being largely debt free for the other three operators in a similar run down scenario (see our report "What If? Fast Track to Ex-Growth", published on 5 December 2022 for more detail). Secondly, our analysis suggests that none of the aged care operators will go below their interest covenants (assuming ARV will get its technical amendment, discussed at its 1H23 result).


ur understanding is that RYM and ARV have interest expense for all of their debt included in the ICR used for testing their covenants. OCA has a development facility that is excluded. Assuming ARV receives its technical adjustment, which we have no reason to believe it won't, all three operators will stay within ICR covenants on our estimates, but with a relatively small margin of error. We believe there is ample room for variations and/or restructuring so that a large(r) proportion of debt is included in more traditional development facilities, which are not subject to ICR covenants.

Ryman Healthcare (RYM)Ryman Healthcare (RYM)


Debt and interest structure


RYM's debt structure has changed considerably since its last result. RYM's capital raise in order to repay its NZ$725m of USPP debt, which was majority floating, and restructuring of its hedges/swaps on its remaining bank debt means we estimate it enters FY24 with ~70% of its debt fixed. We understand that this debt has been fixed at a weighted average interest rate of ~4.5%.

ovenant structure


As announced at its capital raise in February 2023, RYM has received amendments to its ICR covenants through to FY26. These amendments lower its ICR covenants to 1.75x through to FY25, 2.00x at 1H26 before returning to 2.25x in FY26. Using RYM's indicated adjusted EBIT (EBIT less non cash component of DMF) calculation and our earnings and interest forecasts we estimate that RYM's ICR will bottom out at ~2.00x in FY23, suggesting that these covenant amendments were needed.


Arvida (ARV)


Debt and interest structure


ARV has a relatively small portion of its debt fixed relative to OCA and RYM at ~40%. This leaves ARV as one of the most exposed to floating benchmark interest rates. Unlike OCA, all of ARV's debt is part of the same corporate facility and it does not make use of a development facility. We estimate up to ~75% of its debt is associated with developments.

Covenant structure


ARV currently has the most onerous ICR covenants of the three aged care operators assessed in this report. Its covenant of 2.25x is the highest and covers all interest costs (expensed and capitalised). We have calculated ARV's ICR with the assumption it receives the technical amendment flagged at its 1H23 result. With this assumption we estimate ARV will get close to its covenants but not breach them. Should ARV want more headroom on these covenants we see it possible for ARV to get a similar amendment to RYM or utilise a development facility like OCA.

Oceania Healthcare (OCA)


Debt and interest structure


OCA's debt has a high portion fixed through its two retail bonds and swaps (~86% in FY22). While this has led OCA to realise higher interest expenses relative to RYM and ARV in FY21 and FY22 we estimate this fixed portion should allow it to have a lower weighted interest rate over the next three years, given the increase in floating benchmark interest rates.

Covenant structure


OCA's interest coverage ratio covenants are structured differently to RYM and ARV given its use of a development facility. At its 1H23 result, OCA had NZ$165m of its bank in such a facility, interest on this debt is capitalised and excluded from any interest coverage ratio covenants. The use of a development facility as well as a high proportion of debt fixed at relatively attractive levels gives OCA substantially more headroom relative to RYM and ARV. Our analysis of OCA's debt profile has led us to reduce our estimates of interest expense relatively materially for FY24 and FY25.

[Muse]

Thanks for sharing GWD.
Jarden issued a similar report last week, explicitly forecasting ICRs. Despite ARV having relatively low gearing, their covenants are higher (providing less head room all things equal) and suboptimal based on what's included and what's not included in the numerator and denominator of the ICR calculation. So despite the low gearing they would appear to have the least amount of headroom, particularly as they aren't well hedged. Suspect it played a role in the huge volume last week.

[Rawz]

Thanks GWD.. OCA guru management team looking pretty good right now

[bull....]

thx gwd interesting read , all dependant on cashflow generation which in time we will know who does better as they all fight it out

[Lola]

Thanks GWD.. OCA guru management team looking pretty good right now

And so do the PHL team. Well under the radar but recent published announcement shows solid progress.

[bull....]

Debt holding back retirement village sector - report
https://www.rnz.co.nz/news/business/486807/debt-holding-back-retirement-village-sector-report

roll out the cash raises

[justakiwi]

Or maybe they simply do what we have already discussed, as mentioned in the article:

"If interest rates and construction costs remain high, we estimate that the sector has an attractive 'out' by not starting any new build projects.
"This could result in the sector becoming largely debt-free."
Forsyth Barr said the three operators had each indicated they would scale back on development and take a more cautious approach.
"If these operators are able… to pay down debt alongside the development rundown… there would be a sizeable upside to the equity value over the next three to four years," it said.


Debt holding back retirement village sector - report


https://www.rnz.co.nz/news/business/486807/debt-holding-back-retirement-village-sector-report

roll out the cash raises

[Greekwatchdog]

Debt holding back retirement village sector - report


https://www.rnz.co.nz/news/business/486807/debt-holding-back-retirement-village-sector-report

roll out the cash raises

Obviously you have forgotten about detailed report I posted last week that this just mirrors yawn, really.

[Balance]

And so do the PHL team. Well under the radar but recent published announcement shows solid progress.

You must be joking, right?

PHL changed from whatever they were doing to becoming a RV operator right at the top of the property market cycle!

[Lola]

You must be joking, right?

PHL changed from whatever they were doing to becoming a RV operator right at the top of the property market cycle!

No not joking, but I'm just observing. Another careful move to expand announced on Friday. Thats two in what was the last week of the financial year.

[bull....]

property market still softening so i guess it keeps the pressure on these stocks

New Zealand annual house prices retreat further in March
https://www.newshub.co.nz/home/money/2023/04/new-zealand-annual-house-prices-retreat-further-in-march.html

[Balance]

Been doing my rounds of talking to real estate agents and developers in the last week.

Some trends starting to emerge in the property market.

Very very interesting and I will be bold and say that the bottom has already been reached in certain segments of the market.

For some other segments, more pain on the way and once the higher mortgage rates bite, the pain will be there for all to see.

[Aaron]

Been doing my rounds of talking to real estate agents and developers in the last week.

Some trends starting to emerge in the property market.

Very very interesting and I will be bold and say that the bottom has already been reached in certain segments of the market.

For some other segments, more pain on the way and once the higher mortgage rates bite, the pain will be there for all to see.

Don't be so enigmatic.

What segments have bottomed? if you are so bold

and what segments are in for more pain.

[Balance]

Don't be so enigmatic.

What segments have bottomed? if you are so bold

and what segments are in for more pain.

Starting to put my money where I see the opportunities.

Will obviously update once I am set!

Suggest anyone really interested in what's happening out there - just go and talk to a few good real estate agents. They are hungry for business, especially the new ones and are more likely to be frank and honest about what's happening out there.

[Leemsip]

Housing market momentum down is massive. These mortgage rates are going to kill off $750k+ mortgages for all but the highest earners. Landlords cash negative this year and will start to capitulate next spring. Recession inbound with job losses across all sectors which will ramp up into the spring.

I just cant see the COVID gains holding. Got another 20% decline in it I reckon, might take a couple of years.

As someone on twitter said - Buy 6% bonds and wear diamonds. These should re-rate significantly in a recession.

[Fortunecookie]

Housing market momentum down is massive. These mortgage rates are going to kill off $750k+ mortgages for all but the highest earners. Landlords cash negative this year and will start to capitulate next spring. Recession inbound with job losses across all sectors which will ramp up into the spring.

I just cant see the COVID gains holding. Got another 20% decline in it I reckon, might take a couple of years.

As someone on twitter said - Buy 6% bonds and wear diamonds. These should re-rate significantly in a recession.

I think there is a wild card and that's net migration. Apparently it is trending upwards, I think Tony Alexander mentioned 33k yoy.

Regarding mortgages. Borrowers have been stressed tested. From what I can gather the only times we have experienced this rapid rise in rates was in the mid 80s (after deregulation and they recognised they loosened it too quickly) and now. There is talk we are near the peak of the rate cycle. So what I'm trying to say is the banking system in NZ is prudent, whilst the current rapid rate rise is a concern we are potentially at near the peak on rates.

[ronaldson]

The latest brochure received by my household in West Auckland is Metlifecare touting move-in ready apartments from $885k and stage 1 villas from $1,520,000 at Orion Point, Hobsonville (prices are for an Occupation Right Agreement).

Interestingly the apartments (but not the villas) currently come with a $25k cash back commitment and 12 months free village fees, perhaps indicative of the incentives needed presently to secure sales and the need to cash flow quickly from new developments.

[RTM]

Housing market momentum down is massive. These mortgage rates are going to kill off $750k+ mortgages for all but the highest earners. Landlords cash negative this year and will start to capitulate next spring. Recession inbound with job losses across all sectors which will ramp up into the spring.

I just cant see the COVID gains holding. Got another 20% decline in it I reckon, might take a couple of years.

As someone on twitter said - Buy 6% bonds and wear diamonds. These should re-rate significantly in a recession.

Not so long ago we were all bleating that house prices were too high and talking about multiples of salaries.....10-12 or more. Have "we" forgotten that ? Reducing house prices in NZ is highly desirable in my book....this is currently being achieved with inflation and retreating house prices largely as a result of higher interest rates....perhaps to lower than pre-covid levels. Even that might not be enough ? Hopefully the outcome will be more stable and lower house prices....although I am not at all confident of that.

Yes...there will be some pain, especially for those who have borrowed heavily in the last 3-5 years.
And lending institutions....banks etc...will suffer a bit.

But the country couldn't withstand ever escalating property prices as per the last 5 years. Thats for sure.

[SailorRob]

Housing market momentum down is massive. These mortgage rates are going to kill off $750k+ mortgages for all but the highest earners. Landlords cash negative this year and will start to capitulate next spring. Recession inbound with job losses across all sectors which will ramp up into the spring.

I just cant see the COVID gains holding. Got another 20% decline in it I reckon, might take a couple of years.

As someone on twitter said - Buy 6% bonds and wear diamonds. These should re-rate significantly in a recession.

They also said buy jpegs of apes as well.

[Greekwatchdog]

For all the negativity in the housing market on here you just see this.
Barfoot & Thompson’s monthly residential sales up 86 per cent, home buyer confidence back. Thou its hard to compare Feb sales with March sales given the awful weather up that way in feb. Makes for interesting read.
https://www.nzherald.co.nz/business/barfoot-thompsons-monthly-residential-sales-up-86-home-buyer-confidence-back/WRRIK5YWIRFCLFKF4JL7JWLVTI/

[winner69]

Suppose it all depends who write the headlines..

interest.co.nz says

Barfoot & Thompson records lowest March sales since the GFC in 2008


Barfoot & Thompson's March sales down by a third compared to a year ago

https://www.interest.co.nz/property/120649/barfoot-thompsons-march-sales-down-third-compared-year-ago

[Greekwatchdog]

Suppose it all depends who write the headlines..

interest.co.nz says Barfoot & Thompson's March sales down by a third compared to a year ago

https://www.interest.co.nz/property/120649/barfoot-thompsons-march-sales-down-third-compared-year-ago


Exactly W69. No one really has a clue. All the doom merchants saying the world was going to end when covid hit were look like eggs especially when it did the opposite. I wonder if any of those eggs on here will put there hand up and say they got it wrong. Hmm never mind.

[SailorRob]

Exactly W69. No one really has a clue. All the doom merchants saying the world was going to end when covid hit were look like eggs especially when it did the opposite. I wonder if any of those eggs on here will put there hand up and say they got it wrong. Hmm never mind.

I didn't make any commentary but of course I was massively wrong with what I thought would happen.

[Greekwatchdog]

This ex ARV investor update

Despite the fall in the share price our business performancecontinues to improve to our lead demand indicators.Sales momentum continues to be strong, with ORA pricingfirm and record levels of new and resale gains beingrecorded. In March 2023, we had our best month on recordfor new and resale gains. In a difficult residential market,this reflects the relative appeal of our product and theunderlying business culture. It also highlights that oftenthe decision to move into in a retirement community isbased on the desire for safety, security and support.Our construction programmes have continued to addnew homes, delivering new villas, apartments and caresuites across multiple sites in the year. The level of enquiry,deposited waitlists, pre-sale applications, and level ofsettled sales all remain high. This has given us confidenceto continue to add to our future development opportunitiesalbeit applying a more conservative approach to committingcapital as we seek to cherry pick opportunities

[Habits]

Definitely mixed reactions today from the sector. OCA the star up 4 percent, while SUM down a bit

[bull....]

the arv result confirms slowdown underway , re-sales maintaining illusion of strong position but the smart cookie's know when you scale back development as all RV'S are doing sales and profits will be less going forward. re-sales not effected to the same degree.

[bull....]

Interesting article

Until now these deals have given the Big Six retirement villages the perfectly integrated business model.
Not only are they in the property development game, which has made them the darlings of the NZX and KiwiSaver, but they also effectively farm old people

Under the Retirement Villages Act it seems stealing from your grandparents has become a market mandated activity.

https://www.stuff.co.nz/opinion/300848345/janet-wilson-complex-retirement-village-laws-well-overdue-for-untangling

big risk this year ?


Review of Retirement Villages Act begins in 2023
https://www.hud.govt.nz/news/review-of-retirement-villages-act-begins-in-2023/#:~:text=In%202023%20the%20Ministry%2C%20working,a %20place%20to%20call%20home.

[SailorRob]

Interesting article

Until now these deals have given the Big Six retirement villages the perfectly integrated business model.
Not only are they in the property development game, which has made them the darlings of the NZX and KiwiSaver, but they also effectively farm old people

Under the Retirement Villages Act it seems stealing from your grandparents has become a market mandated activity.

https://www.stuff.co.nz/opinion/300848345/janet-wilson-complex-retirement-village-laws-well-overdue-for-untangling

big risk this year ?


Review of Retirement Villages Act begins in 2023
https://www.hud.govt.nz/news/review-of-retirement-villages-act-begins-in-2023/#:~:text=In%202023%20the%20Ministry%2C%20working,a %20place%20to%20call%20home.

As I've been saying... The perfect business model.

Communists can attack but then what will satisfy the demand.

[bull....]

As I've been saying... The perfect business model.

Communists can attack but then what will satisfy the demand.

i doubt there trying to put them out of business , but reduce there profits might be more likely

[SailorRob]

i doubt there trying to put them out of business , but reduce there profits might be more likely

Yeah, and that will reduce build rates and create a major problem.

I don't disagree that this is a risk and a big one.

[Balance]

As I've been saying... The perfect business model.

Communists can attack but then what will satisfy the demand.

Perfect business model - makes sense only if NZ is run by rational, smart and far sighted governments.

The current lot is none of that so it is entirely possible that they will force changes to the model. Means retirees in RVs will have to find $$$ and/or take out reverse mortgages to pay ongoing living costs.

Plus a CGT should really be included as part of the revamp.

But will Labour bother? The elderly electorate are predominantly NZ First, ACT and National voters.

[SailorRob]

Perfect business model - makes sense only if NZ is run by rational, smart and far sighted governments.

The current lot is none of that so it is entirely possible that they will force changes to the model. Means retirees in RVs will have to find $$$ and/or take out reverse mortgages to pay ongoing living costs.

Plus a CGT should really be included as part of the revamp.

But will Labour bother? The elderly electorate are predominantly NZ First, ACT and National voters.


I should add - prefect business model for everyone. Customers, shareholders, government.

I thought there already was a complete and comprehensive capital gains tax in NZ?

Anything bought with the intention of profit from capital gain is taxable isn't it?

[Balance]

I should add - prefect business model for everyone. Customers, shareholders, government.

I thought there already was a complete and comprehensive capital gains tax in NZ?

Anything bought with the intention of profit from capital gain is taxable isn't it?

CGT in NZ? Who ever bought anything with the intention of profit?

There is the bright line test on property investments and that's about it. And interesting enough, the RVs are not affected by that test.

I personally have no problem with a CGT and it is way overdue in NZ along with a comprehensive tax system revamp.

[Muse]

Aye me neither. Something simple - a 15-20% cap gains tax on everything bar the family home. Or something slightly higher if selling in under 12 months.

[SailorRob]

Aye me neither. Something simple - a 15-20% cap gains tax on everything bar the family home. Or something slightly higher if selling in under 12 months.

But there already is...

[Balance]

But there already is...

Please then explain how Sam Morgan sold Trade Me for over $700m and by his own admission, considered it unjust that he & fellow shareholders did not have to pay a cent in tax on the gain?

Also, given that the RVs are property developers, how they pay no tax on the ‘billions of dollars’ of gains they have made?

[FTG]

Please then explain how Sam Morgan sold Trade Me for over $700m and by his own admission, considered it unjust that he & fellow shareholders did not have to pay a cent in tax on the gain?

Also, given that the RVs are property developers, how they pay no tax on the ‘billions of dollars’ of gains they have made?

LOL - Sam M the Champagne socialist! Just like the other Champagne & Chardonnay Socilaists, knowing what's best for everyone else, but somehow believing that they are exempt to the principles they espouse.

If Sam had such a strong conviction on the merits of CGT, he would have voluntarily handed over to the State a couple of hundred $million from his own capital gains.

[Ferg]

LOL - Sam M the Champagne socialist! Just like the other Champagne & Chardonnay Socilaists, knowing what's best for everyone else, but somehow believing that they are exempt to the principles they espouse.

If Sam had such a strong conviction on the merits of CGT, he would have voluntarily handed over to the State a couple of hundred $million from his own capital gains.

Quite right FTG....NZ the only country in the world where once someone has *made it* they feel the need to tell everyone else a) what they are doing wrong and b) what is wrong with the country. We have seen this attitude many times before.

[Balance]

LOL - Sam M the Champagne socialist! Just like the other Champagne & Chardonnay Socilaists, knowing what's best for everyone else, but somehow believing that they are exempt to the principles they espouse.

If Sam had such a strong conviction on the merits of CGT, he would have voluntarily handed over to the State a couple of hundred $million from his own capital gains.

Why should he? Donate so that the government can pxss the money down the drain?

Like $56m on the bike bridge to nowhere?

Or $1.9 billion for mental health with no additional facility added in 3 years?

Maybe you prefer $25m on TVNZ/RNZ non merger?

Or tens of millions of dollars ‘cost of living’ allowance given to non eligible overseas recipients?

Better that he donated some of his money to charity and use the rest to invest in socially beneficial projects and companies - which he has.

Anyway, the point is that NZ does not have a CGT as SailorRob asserts.

Time to introduce one along with a revamp of the total tax system.

[SailorRob]

CGT in NZ? Who ever bought anything with the intention of profit?

There is the bright line test on property investments and that's about it. And interesting enough, the RVs are not affected by that test.

I personally have no problem with a CGT and it is way overdue in NZ along with a comprehensive tax system revamp.




We have many laws that are deliberately not enforced... But that is not to say they don't exist.

A CGT would be like the anti smacking law. There were already very adequate laws that existed to protect minors from abuse and assaults.

https://www.buddlefindlay.com/insights/just-admit-it-already-new-zealand-we-do-have-capital-gains-taxes/

Actual LAW;

https://www.legislation.govt.nz/act/public/2007/0097/latest/DLM1512409.html

https://www.legislation.govt.nz/act/public/2007/0097/latest/DLM1512414.html

https://www.legislation.govt.nz/act/public/2007/0097/latest/DLM1512416.html

Mathematically impossible for almost all 'property investors' to show that they invest for a return in the form of income.

[SailorRob]

Why should he? Donate so that the government can pxss the money down the drain?

Like $56m on the bike bridge to nowhere?

Or $1.9 billion for mental health with no additional facility added in 3 years?

Maybe you prefer $25m on TVNZ/RNZ non merger?

Or tens of millions of dollars ‘cost of living’ allowance given to non eligible overseas recipients?

Better that he donated some of his money to charity and use the rest to invest in socially beneficial projects and companies - which he has.

Anyway, the point is that NZ does not have a CGT as SailorRob asserts.

Time to introduce one along with a revamp of the total tax system.

We have many laws that are deliberately not enforced... But that is not to say they don't exist.

A CGT would be like the anti smacking law. There were already very adequate laws that existed to protect minors from abuse and assaults.

https://www.buddlefindlay.com/insigh...l-gains-taxes/

Actual LAW;

https://www.legislation.govt.nz/act/...LM1512409.htm (https://www.legislation.govt.nz/act/...LM1512409.html)l

https://www.legislation.govt.nz/act/...LM1512414.html

https://www.legislation.govt.nz/act/...LM1512416.html

Mathematically impossible for almost all 'property investors' to show that they invest for a return in the form of income.

[SailorRob]

Why should he? Donate so that the government can pxss the money down the drain?

Like $56m on the bike bridge to nowhere?

Or $1.9 billion for mental health with no additional facility added in 3 years?

Maybe you prefer $25m on TVNZ/RNZ non merger?

Or tens of millions of dollars ‘cost of living’ allowance given to non eligible overseas recipients?

Better that he donated some of his money to charity and use the rest to invest in socially beneficial projects and companies - which he has.

Anyway, the point is that NZ does not have a CGT as SailorRob asserts.

Time to introduce one along with a revamp of the total tax system.


Hang on what the hell is going on here?

So 'Balance' is saying that Morgan should NOT donate to government as they will piss it away on crap...

But he's then saying that Morgan should instead be forced to give the money via a tax to the same government for the same use?

[Balance]

Hang on what the hell is going on here?

So 'Balance' is saying that Morgan should NOT donate to government as they will piss it away on crap...

But he's then saying that Morgan should instead be forced to give the money via a tax to the same government for the same use?


Ignorant try, SR.

Which part of CGT with a comprehensive tax revamp did you not read?

[Balance]

We have many laws that are deliberately not enforced... But that is not to say they don't exist.

A CGT would be like the anti smacking law. There were already very adequate laws that existed to protect minors from abuse and assaults.

https://www.buddlefindlay.com/insigh...l-gains-taxes/

Actual LAW;

https://www.legislation.govt.nz/act/...LM1512409.htm (https://www.legislation.govt.nz/act/...LM1512409.html)l

https://www.legislation.govt.nz/act/...LM1512414.html

https://www.legislation.govt.nz/act/...LM1512416.html

Mathematically impossible for almost all 'property investors' to show that they invest for a return in the form of income.

All the links do not exist.

Just like CGT (like in other OECD countries) does not exist in NZ.

[Aaron]

If Sam had such a strong conviction on the merits of CGT, he would have voluntarily handed over to the State a couple of hundred $million from his own capital gains.

What a dumb statement, nobody would voluntarily pay tax. In the words of Warren Buffet after being attacked in the same manner for suggesting the rich should be taxed more.

The billionaire investor, in the new issue of Time magazine, says he will donate $1 to paying down the national debt for every dollar donated by a Republican in Congress. The only exception is Senate Republican leader Mitch McConnell - for whom Buffett said he would go $3-to-$1.

The idea stems from a New York Times opinion piece Buffett wrote last August in which he said the rich ought to pay more taxes. It sparked an instant controversy, with some Washington conservatives calling on the 81-year-old “Oracle of Omaha” to voluntarily pay extra.

"It restores my faith in human nature to think that there are people who have been around Washington all this time and are not yet so cynical as to think that <the deficit> can't be solved by voluntary contributions," the Berkshire Hathaway BRKa.N CEO told Time for an article hitting newsstands on Friday.

I remember when Stephen Tindall signed a letter asking the government to tax the rich more, he was accused by some dhead on here that he was virtue signaling and should voluntarily donate if he felt that strongly.

And to keep with thread I think some people lie about "intention" when selling assets. Although a heavily leveraged property speculator with a rental yield significantly below the mortgage rate and an interest only loan should have to show how many decades it would take to generate a rental profit without relying on capital gain as well.

Agreed a simple as possible comprehensive capital gains tax might be a good idea. It stops turning honest kiwis into liars and always seemed unfair to tax labour but not capital. Although it might make retirement village operators less attractive as an investment.

[SailorRob]

All the links do not exist.

Just like CGT (like in other OECD countries) does not exist in NZ.


Ahh so 'like in other OECD countries' now Unbalanced? Not just doesn't exist.

[SailorRob]

We have many laws that are deliberately not enforced... But that is not to say they don't exist.

A CGT would be like the anti smacking law. There were already very adequate laws that existed to protect minors from abuse and assaults.

https://www.buddlefindlay.com/insights/just-admit-it-already-new-zealand-we-do-have-capital-gains-taxes/

Actual LAW;

https://www.legislation.govt.nz/act/public/2007/0097/latest/DLM1512409.html

https://www.legislation.govt.nz/act/public/2007/0097/latest/DLM1512414.html

https://www.legislation.govt.nz/act/public/2007/0097/latest/DLM1512416.html

Mathematically impossible for almost all 'property investors' to show that they invest for a return in the form of income.


All the links work perfectly.

The second time I posted the same thing, they don't work.

You can argue with me all day UB but you cannot argue with the law.

[Balance]

deleted deleted

[Balance]

Ahh so 'like in other OECD countries' now Unbalanced? Not just doesn't exist.

Yawn - you are getting desperate, Sailor lost at sea!

[Balance]

All the links work perfectly.

The second time I posted the same thing, they don't work.

You can argue with me all day UB but you cannot argue with the law.

What an incredibly dumb statement!

Of course I can argue with the law. What do you think the courts are for?

[SailorRob]

What an incredibly dumb statement!

Of course I can argue with the law. What do you think the courts are for?


That's for the Legislature.

Courts cannot change the law.

Easter has unbalanced you, what's gone wrong?

[Balance]

That's for the Legislature.

Courts cannot change the law.

Easter has unbalanced you, what's gone wrong?

Again, what an incredibly dumb statement!

The government legislates and passes laws.

The courts interprets the law.

What do you think the courts are for?

Why do you think there are so many tax cases in front of the courts at any time of the year?

Because one can argue the law!!!!

[SailorRob]

Again, what an incredibly dumb statement!

The government legislates and passes laws.

The courts interprets the law.

What do you think the courts are for?

Why do you think there are so many tax cases in front of the courts at any time of the year?

Because one can argue the law!!!!


You can argue with how YOU interpret anything. Men can have babies etc...

But the law is what the law is...

Thus as I have stated and linked to the legislation... We have a comprehensive CGT. This is a fact.

Ultimately you're right, you can argue with anything, but you cant change it.

Your arguments are not going to change the fact that we have a CGT, but they may get you out of paying it.

[Aaron]

Thus as I have stated and linked to the legislation... We have a comprehensive CGT. This is a fact.

What a load of rubbish. Do long term property investors pay tax on any eventual capital gain if the property is sold???

Does a long term investor pay tax on a capital gain when selling their shares???

Answer is "no" in both cases because we don't tax capital gains and we don't have a comprehensive CGT.

Which of your links to the legislation do you think captures the long term property investor. Or business owner selling their business.

[SailorRob]

What a load of rubbish. Do long term property investors pay tax on any eventual capital gain if the property is sold???

Does a long term investor pay tax on a capital gain when selling their shares???

Answer is "no" in both cases because we don't tax capital gains and we don't have a comprehensive CGT.

Which of your links to the legislation do you think captures the long term property investor. Or business owner selling their business.


Did I ever say that they do??

What they do and what the law states are two different things.

I can't hold your hand through understanding the legislation and clearly you have difficulty in reading.

Not to mention in understanding the definition of an investor.

Long term property investor! What a laugh. What are they interested in the most? The sub inflation cap rates or is it something else?

[Balance]

Did I ever say that they do??

What they do and what the law states are two different things.

I can't hold your hand through understanding the legislation and clearly you have difficulty in reading.

Not to mention in understanding the definition of an investor.

Long term property investor! What a laugh. What are they interested in the most? The sub inflation cap rates or is it something else?

The late Michael Cullen must be illiterate then to recommend a comprehensive CGT in 2019 - since there's already a CGT in place.

You are a fraud, sailor lost at sea.

Thanks for taking the time and effort in enlightening us this afternoon to what a fraud you are.

[SailorRob]

The late Michael Cullen must be illiterate then to recommend a comprehensive CGT in 2019 - since there's already a CGT in place.

You are a fraud, sailor lost at sea.

Thanks for taking the time and effort in enlightening us this afternoon to what a fraud you are.


And I in turn would like to extend thanks to you for showing us just how unbalanced you are.

It is good to see you finally agree and understand.

The late Communist Cullen wasn't illiterate, he was as intelligent as you are.

Call me a fraud by all means, but know that you are also calling Tony and Fiona frauds as well. https://www.buddlefindlay.com/insights/just-admit-it-already-new-zealand-we-do-have-capital-gains-taxes/

Some direct quotes from these esteemed individuals who I would suggest know far more than either of us.

'Many New Zealanders would be surprised to hear that in fact, not many forms of a capital gain are actually left out of the tax net under our current tax laws'.

'Tax on capital gains now applies to a wide range of activities and investment types'

Perhaps I was wrong to call our capital gains taxes 'comprehensive' but using the definition from Tony (not many forms of gains are left out of the tax net) I chose to use the term comprehensive.

You'll never get that money back Balanced, stupid is as stupid does.

[Balance]

And I in turn would like to extend thanks to you for showing us just how unbalanced you are.

It is good to see you finally agree and understand.

The late Communist Cullen wasn't illiterate, he was as intelligent as you are.

Call me a fraud by all means, but know that you are also calling Tony and Fiona frauds as well. https://www.buddlefindlay.com/insights/just-admit-it-already-new-zealand-we-do-have-capital-gains-taxes/

Some direct quotes from these esteemed individuals who I would suggest know far more than either of us.

'Many New Zealanders would be surprised to hear that in fact, not many forms of a capital gain are actually left out of the tax net under our current tax laws'.

'Tax on capital gains now applies to a wide range of activities and investment types'

Perhaps I was wrong to call our capital gains taxes 'comprehensive' but using the definition from Tony (not many forms of gains are left out of the tax net) I chose to use the term comprehensive.

You'll never get that money back Balanced, stupid is as stupid does.

Sailor lost at sea - you are a fraud. It’s that simple.

[davflaws]

And I in turn would like to extend thanks to you for showing us just how unbalanced you are.

It is good to see you finally agree and understand.

The late Communist Cullen wasn't illiterate, he was as intelligent as you are.

Call me a fraud by all means, but know that you are also calling Tony and Fiona frauds as well. https://www.buddlefindlay.com/insights/just-admit-it-already-new-zealand-we-do-have-capital-gains-taxes/

Some direct quotes from these esteemed individuals who I would suggest know far more than either of us.

'Many New Zealanders would be surprised to hear that in fact, not many forms of a capital gain are actually left out of the tax net under our current tax laws'.

'Tax on capital gains now applies to a wide range of activities and investment types'

Perhaps I was wrong to call our capital gains taxes 'comprehensive' but using the definition from Tony (not many forms of gains are left out of the tax net) I chose to use the term comprehensive.

You'll never get that money back Balanced, stupid is as stupid does.

Balance's opinions on the merits of various stocks are almost always valuable, but he has very strong political opinions and a very thin skin, so once a discussion with him turns septic he stops engaging with the topic and things deteriorate to name calling and eventually just trolling.

If you must keep feeding the troll, this fight would be best transferred to the Elections forum or the Off Market Discussions forum elsewhere on this site.

[moka]

What a dumb statement, nobody would voluntarily pay tax. In the words of Warren Buffet after being attacked in the same manner for suggesting the rich should be taxed more.

The billionaire investor, in the new issue of Time magazine, says he will donate $1 to paying down the national debt for every dollar donated by a Republican in Congress. The only exception is Senate Republican leader Mitch McConnell - for whom Buffett said he would go $3-to-$1.

The idea stems from a New York Times opinion piece Buffett wrote last August in which he said the rich ought to pay more taxes. It sparked an instant controversy, with some Washington conservatives calling on the 81-year-old “Oracle of Omaha” to voluntarily pay extra.

"It restores my faith in human nature to think that there are people who have been around Washington all this time and are not yet so cynical as to think that <the deficit> can't be solved by voluntary contributions," the Berkshire Hathaway BRKa.N CEO told Time for an article hitting newsstands on Friday.

I remember when Stephen Tindall signed a letter asking the government to tax the rich more, he was accused by some dhead on here that he was virtue signaling and should voluntarily donate if he felt that strongly.

And to keep with thread I think some people lie about "intention" when selling assets. Although a heavily leveraged property speculator with a rental yield significantly below the mortgage rate and an interest only loan should have to show how many decades it would take to generate a rental profit without relying on capital gain as well.

Agreed a simple as possible comprehensive capital gains tax might be a good idea. It stops turning honest kiwis into liars and always seemed unfair to tax labour but not capital. Although it might make retirement village operators less attractive as an investment.When you say nobody would voluntarily pay tax it depends how you see tax. I am talking about tax minimisation, avoidance and evasion, rather than Sam Morgan voluntarily handing over to the State a couple of hundred $million from his own capital gains.

I see tax as paying “rent” to the country you are living in. You are paying your way and not freeloading. The people who have benefited the most from the economy should support programs that help the poorest. As Tindall and other millionaires said in their letter “Government leaders must take the responsibility for raising the funds we need and spending them fairly."

Why is it that if you take advantage of a corporate tax break, you're a smart businessman, but if you take advantage of something so you don't go hungry, you're a moocher?
— Jon Stewart

https://soapboxie.com/government/Should-we-tax-the-rich-more-pros-and-cons

[Panda-NZ-]

Australia ends up doing a better job of rewarding work over wealth.

Though incidentally both are still doing pretty well.

[Aaron]

When you say nobody would voluntarily pay tax it depends how you see tax. I am talking about tax minimisation, avoidance and evasion, rather than Sam Morgan voluntarily handing over to the State a couple of hundred $million from his own capital gains.

I see tax as paying “rent” to the country you are living in. You are paying your way and not freeloading. The people who have benefited the most from the economy should support programs that help the poorest. As Tindall and other millionaires said in their letter “Government leaders must take the responsibility for raising the funds we need and spending them fairly."

Why is it that if you take advantage of a corporate tax break, you're a smart businessman, but if you take advantage of something so you don't go hungry, you're a moocher?
— Jon Stewart

https://soapboxie.com/government/Should-we-tax-the-rich-more-pros-and-cons

Not sure what you are getting at there Moka. All I was saying is that often if you suggest a capital gains tax or increasing taxes on the wealthy some idiot will always chip in with "if you are so concerned why don't you voluntarily pay more tax". No one likes paying tax but most can see the benefit and as long as the same rules apply to everyone most people grudgingly accept it. Once I am wealthy, I suspect I will not champion ideas like capital gains tax and taxing the wealthy as much, hopefully I will be more like Sam Morgan or Stephen Tindall.

Apologies to all those interested in retirement village operators. What happened to macduffy he used to always put me on the straight and narrow if straying off thread topic.

[Balance]

Not sure what you are getting at there Moka. All I was saying is that often if you suggest a capital gains tax or increasing taxes on the wealthy some idiot will always chip in with "if you are so concerned why don't you voluntarily pay more tax". No one likes paying tax but most can see the benefit and as long as the same rules apply to everyone most people grudgingly accept it. Once I am wealthy, I suspect I will not champion ideas like capital gains tax and taxing the wealthy as much, hopefully I will be more like Sam Morgan or Stephen Tindall.

Apologies to all those interested in retirement village operators. What happened to macduffy he used to always put me on the straight and narrow if straying off thread topic.

Kerry Packer said it best all those years ago :

https://youtu.be/DBg7DnQjjcY

Start at 1.28 mins

No need to apologise, Aaron as the introduction of a comprehensive CGT in NZ is well overdue and it must be discussed.

Sure it will have an adverse impact in the short term on RVs. As we know, they are currently paying zero tax on the huge capital gains that they are making on property development by using the Occupancy License structure. In exchange, the RVs are subsidising the huge residential costs of the residents - bit like reverse mortgage in a way except in this case, the RVs take all the capital gains.

In the long term however, a CGT will channel investments in a better structure and a more equitable structure for all concerned.

I believe that the institutional market is already pricing in the possibility of a CGT on RVs as well as a drop in valuations of course.

[SailorRob]

Balance's opinions on the merits of various stocks are almost always valuable, but he has very strong political opinions and a very thin skin, so once a discussion with him turns septic he stops engaging with the topic and things deteriorate to name calling and eventually just trolling.

If you must keep feeding the troll, this fight would be best transferred to the Elections forum or the Off Market Discussions forum elsewhere on this site.

Understood, cheers.

[Balance]

Balance's opinions on the merits of various stocks are almost always valuable, but he has very strong political opinions and a very thin skin, so once a discussion with him turns septic he stops engaging with the topic and things deteriorate to name calling and eventually just trolling.

If you must keep feeding the troll, this fight would be best transferred to the Elections forum or the Off Market Discussions forum elsewhere on this site.

I don't suffer fools and when a poster like you makes & supports the contention that a NZer has no culture or heritage unless they adopt Maori culture or are Maori, it tells me that you are a fool.

[SailorRob]

I don't suffer fools and when a poster like you makes & supports the contention that a NZer has no culture or heritage unless they adopt Maori culture or are Maori, it tells me that you are a fool.

Balance, just chill out man.

It will be OK, just 'paper losses'.

[Curly]

I don't suffer fools and when a poster like you makes & supports the contention that a NZer has no culture or heritage unless they adopt Maori culture or are Maori, it tells me that you are a fool.
Exactly. Each one to their own culture but respect the other. A bit much when you are bomb barded with it perpetually. Tired of Maori privilege. Why can’t we be one nation of Kiwis and toil together. Seems to me its just another ploy to cause division and strife.

[SPC]

You'll need a Peters or Seymour strong coalition partner if you want the current direction to change. Luxon is just as bad, he will be toast once the media turn up the screws pre election, he'll be squirming like toad under the pressure. There will be dirt hiding in a cupboard somewhere. He'll fall over imo.

[Bjauck]

Aye me neither. Something simple - a 15-20% cap gains tax on everything bar the family home. Or something slightly higher if selling in under 12 months.
Why exclude the family home? In effect that would end up subsidising the middle class and wealthier, making residential real estate even more desirable and expensive. Especially if death duty in NZ remains zero.

Without other fundamental tax reform in NZ, but with a general cgt but exempt family homes, you would need to introduce tax concessionary savings schemes and a decent boost to KiwiSaver tax concessions otherwise the NZ listed companies and NZX would shrink further…

[Airw0lf]

Hi all, is there any sort of ETF for the NZ and/or AUS aged care sector? I wouldn't mind exposure to this area but an ETF would be ideal as opposed to building my own portfolio with various weightings in different players, etc.

[iceman]

Hi all, is there any sort of ETF for the NZ and/or AUS aged care sector? I wouldn't mind exposure to this area but an ETF would be ideal as opposed to building my own portfolio with various weightings in different players, etc.

I've often wondered why Smartshares don't diversify their NZ Property Fund (ticker NPF) to include retirement village operators. It seems a bit silly to me.

[Snoopy]

I've often wondered why Smartshares don't diversify their NZ Property Fund (ticker NPF) to include retirement village operators. It seems a bit silly to me.

There is such a fund, although it is run by Harbour Asset Management, not Smartshares

https://www.harbourasset.co.nz/our-funds/harbour-real-estate-investment-fund/

It is called the "Harbour Real Estate Investment Fund" and is according to the fund fact sheet:
"An actively-managed fund that invests predominantly in listed companies which derive their economic value from owning or controlling real estate."

However, if you look at the same February 2023 fund fact sheet, you will see that around 85% of the funds are invested in REITs (mostly the NZ listed property PIEs) and only around 13% of the fund is in 'other' shares. So although the fund has a mandate to allow investment in retirement village providers, it would seem they largely choose not to, The target is to have only 12.5% of listed investments outside of the REIT space. Why that 12.5% figure was chosen in the first place, is unknown.

"As well as holding listed Property Sector funds, the Fund may also hold securities which are not included in listed property security or Real Estate Investment Trusts (REITS) benchmark indices. To be included, underlying profit certainty needs to be high. Examples include property management, sea ports, toll roads, airports, cell-phone towers, aged care & retirement villages, waste management facilities and data centres industries."

SNOOPY

[iceman]

There is such a fund, although it is run by Harbour Asset Management, not Smartshares

https://www.harbourasset.co.nz/our-funds/harbour-real-estate-investment-fund/

It is called the "Harbour Real Estate Investment Fund" and is according to the fund fact sheet:
"An actively-managed fund that invests predominantly in listed companies which derive their economic value from owning or controlling real estate."

However, if you look at the same February 2023 fund fact sheet, you will see that around 85% of the funds are invested in REITs (mostly the NZ listed property PIEs) and only around 13% of the fund is in 'other' shares. So although the fund has a mandate to allow investment in retirement village providers, it would seem they largely choose not to, The target is to have only 12.5% of listed investments outside of the REIT space. Why that 12.5% figure was chosen in the first place, is unknown.

"As well as holding listed Property Sector funds, the Fund may also hold securities which are not included in listed property security or Real Estate Investment Trusts (REITS) benchmark indices. To be included, underlying profit certainty needs to be high. Examples include property management, sea ports, toll roads, airports, cell-phone towers, aged care & retirement villages, waste management facilities and data centres industries."

SNOOPY

Thanks Snoopy. I think these funds, both HAM and Smartshares, would get a lot more interest if they included more of the retirement villages in there. After all that's pretty much what the RV's are, property investments.

[Airw0lf]

Thanks Snoopy. I think these funds, both HAM and Smartshares, would get a lot more interest if they included more of the retirement villages in there. After all that's pretty much what the RV's are, property investments.Thanks both - I agree that there should be more of an aged care sector focus. The list of "other" investments for that HAM fund is also way too long - includes things like airports and data centres!

[bull....]

summerset result confirms slowdown well underway .... lower profits to come for all

Biggest first quarter house price fall in over 15 years

https://www.stuff.co.nz/life-style/homed/real-estate/131737759/biggest-first-quarter-house-price-fall-in-over-15-years

[Bjauck]

summerset result confirms slowdown well underway .... lower profits to come for all

Biggest first quarter house price fall in over 15 years

https://www.stuff.co.nz/life-style/homed/real-estate/131737759/biggest-first-quarter-house-price-fall-in-over-15-years

Yet House prices are still 18.5% above pre-Covid levels - Feb 2020. They have still gone up in excess of inflation in that period, from an already inflated price point.

[RTM]

Not so long ago we were all bleating that house prices were too high and talking about multiples of salaries.....10-12 or more. Have "we" forgotten that ? Reducing house prices in NZ is highly desirable in my book....this is currently being achieved with inflation and retreating house prices largely as a result of higher interest rates....perhaps to lower than pre-covid levels. Even that might not be enough ? Hopefully the outcome will be more stable and lower house prices....although I am not at all confident of that.

Yes...there will be some pain, especially for those who have borrowed heavily in the last 3-5 years.
And lending institutions....banks etc...will suffer a bit.

But the country couldn't withstand ever escalating property prices as per the last 5 years. Thats for sure.


Yet House prices are still 18.5% above pre-Covid levels - Feb 2020. They have still gone up in excess of inflation in that period, from an already inflated price point.

Yes...they need to drop further yet. Or let inflation do its thing with flat house prices.

[Balance]

Yes...they need to drop further yet. Or let inflation do its thing with flat house prices.

Property inflation was off the chart when interest rates headed towards zero between 2020 and 2021.

Should be no surprise that property prices are deflating rapidly when interest rates are headed ever higher as the RBNZ’s sole weapon.

[nztx]

Interesting commentary in Chris Lee's newsletter today on property, syndications
funding and revaluations in current market conditions

Possibly directed more at Commercial, it has implications across the wider property market too

[Greekwatchdog]

I find this very interesting. Make of it what you will for all the negativity at the sector.
https://www.1news.co.nz/2023/04/15/retirement-home-residents-reject-ill-informed-commentary-open-letter/

[Airw0lf]

I find this very interesting. Make of it what you will for all the negativity at the sector. https://www.1news.co.nz/2023/04/15/retirement-home-residents-reject-ill-informed-commentary-open-letter/I wonder if it's like anything in the world - some of these retirement homes/villages are amazingly run and others are god awful?

[justakiwi]

I seriously doubt the three major players are anything but very well run. Our local Radius facility however, has had a bad reputation for years - high staff turnover, and more than a few "incidents" have been reported in the media over the years. I can't comment from an experience point of view though, as I've never been there, let alone worked there.

If any of you are interested, most of the RV providers have Facebook pages, and some - particularly RYM - have groups. I joined that one out of pure curiosity, and comments from occupants are all positive. The negative comments you see there, are 99% from the general public, who either have a vested interest in Mum or Dad's finances OR they are simply ignorant about the sector.



I wonder if it's like anything in the world - some of these retirement homes/villages are amazingly run and others are god awful?

[Bjauck]

I find this very interesting. Make of it what you will for all the negativity at the sector.
https://www.1news.co.nz/2023/04/15/retirement-home-residents-reject-ill-informed-commentary-open-letter/RV residents purchased the right to live there under the current RV set-up and relevant legislation, with the required legal consultation. They did so presumably because the villages operating under the current regime appealed to them and suited their requirements. Any major changes to profitability and other requirements may result in a change to the village environment or affordability of the entry price for occupancy. Both of which presumably appealed to current villagers, under advice from their legal consultants.

[bull....]

House price plummet from market peak continues

https://www.stuff.co.nz/life-style/homed/real-estate/131786691/house-price-plummet-from-market-peak-continues

no end in sight yet

[bull....]

summerset in danger of going under 8 dollars :scared: new 52 week low

[Greekwatchdog]

summerset in danger of going under 8 dollars :scared: new 52 week low

So why would you not post that on the SUM thread?

[winner69]

House price plummet from market peak continues

https://www.stuff.co.nz/life-style/homed/real-estate/131786691/house-price-plummet-from-market-peak-continues

no end in sight yet


March median house price UP about 3% from February

That’s not plummeting

[winner69]

So why would you not post that on the SUM thread?


Maybe couldn’t find a SUM thread

[Greekwatchdog]

Maybe couldn’t find a SUM thread


He has 12 screens "W69", really its not that hard to locate

[bull....]

March median house price UP about 3% from February

That’s not plummeting

blame the newspaper for that headline

[troyvdh]

Why this obsession about house prices ....Do folk still need to move into a retirement home ?.
Ok the value of a home drops by say 5 %.....so what ?.
The kids may get a bit less.

[percy]

Why this obsession about house prices ....Do folk still need to move into a retirement home ?.
Ok the value of a home drops by say 5 %.....so what ?.
The kids may get a bit less.

Your are a breath of fresh air..

[Balance]

Why this obsession about house prices ....Do folk still need to move into a retirement home ?.
Ok the value of a home drops by say 5 %.....so what ?.
The kids may get a bit less.

Simple exercise :

Go and talk to the real estate agents in St Heliers, Kohimarama and Mission Bay about multi-million properties struggling to sell and how that affect demand (and then, price) for OCA’s ultra luxurious and very expensive St Helier retirement village.

[troyvdh]

Balance ..with all due respect...Talk to real estate agents.....hahahahahaahahahahahahahah

[Balance]

Balance ..with all due respect...Talk to real estate agents.....hahahahahaahahahahahahahah

I am most thankful to some of them for their services over the decades. No sweat however if your experience is otherwise.

[troyvdh]

Balance ...No question ...how ever I think you are missing the point cheers.

[X-men]

Migrants are coming in.... property is holding up

[troyvdh]

Dear x thanks for that.

[troyvdh]

What do folk think about disclosure of money invested .

[Balance]

Migrants are coming in.... property is holding up

If 20% drop is holding up, imagine what the property market must be like when it is dropping.

https://www.stuff.co.nz/life-style/homed/real-estate/131786691/house-price-plummet-from-market-peak-continues

[X-men]

https://i.stuff.co.nz/business/131801260/number-of-investment-properties-selling-plummets-up-to-83

See.. just media trying to sell the news... overall property market is stable

My bank manager said she is overwhelmed with high no of loan application...so expect the Market is coming back soon

[bull....]

Why this obsession about house prices ....Do folk still need to move into a retirement home ?.
Ok the value of a home drops by say 5 %.....so what ?.
The kids may get a bit less.

sure people will still go to retirement homes but state of the property market is very important to RV's

falling values mean less property sales which means longer sell time because less people want to buy in a falling property market
for old people to sell and enter RV this slower sell time means less cash flow to RV
if property values fall by a large amount the price spread of peoples homes value to rv selling prices may become to large for some people to make this meaning reduced sales for RV's and less development margins
so something will give at some stage if property market keeps falling .... i would say RV selling prices and with building costs continuing to rise there margin crunch is coming if this senario happens

so property market very important to watch and historically being an election yr , uncertanty and recession occurring wont change the trend i reckon

[percy]

House prices according to www.homes.co.nz
In 1975 I bought a house in Speight Street,ChCh for $10,500 today the valuation is $690K.
In 1981 I bought a house in Creyke Road,ChCh for $40,000 ....today the valuation is $1.45mil
In 1986 I bought at house in Norwood Street,ChCh for $84,000.........today the valuation is 825K
In 2020 I bought a flat in Grange Street Ch Ch for $485,000.............Today the valuation is $640k.
I am 74.I expect others my age have seen similar property price rises, and would note they would easily be able to afford moving into their local retirement village.
A lot would also own shares,bonds or rental properties.
Therefore for me and others moving into a retirement village is a lifestyle decision. .

ps.Selling houses .All houses I have owned have been sold within a few days,as we have always met the market,and have kept them presentable.

[GTM 3442]

Really interesting if really scary numbers, Percy.

I just can't imagine what's happened to that house in Speight Street to account for such an amazing rise. Did someone wrap it in gold leaf or something?

[winner69]

In 1972 I bought a house in Houghton Bay for $14,100

It’s no longer there

Land must be have worth a goldmine as 6 town houses adorn the property now

[percy]

Really interesting if really scary numbers, Percy.

I just can't imagine what's happened to that house in Speight Street to account for such an amazing rise. Did someone wrap it in gold leaf or something?

Just looked at it on Google Maps.
New roof,chimney removed..Looks good but basically the shell or core of the property looks the same.,
What I did not mention was the house my mother bought in 1956 or 57 in Kahu Road,ChCh for 5,000 pound ie $10,000 is now valued at $1.57 mil.

[bull....]

amazing gains percy you must be in the top 10 % as far as wealthy nz people go.
anyway yours is a small club the majority of upcoming retiree's i imagine only own 1 house and there circumstances thru life may be all different
how many of them have owned it the whole time and never borrowed against it or lost money in finance co's etc etc

[Marilyn Munroe]

A speculation: If there is a change of government this year interest deductability on property will be reinstated.

Those of us with longer memories will the recall the haste with which a previous incoming National government sorted out an issue with expense deductability for real estate agents. Methinks National has a soft spot for the property owning class and their hangers on.

This may reverse the current decline in property prices.

Boop boop de do
Marilyn

[Rawz]

Interest rates... interest rates dropping will reverse the current decline in property prices.

Pure and simple imo

[Rawz]

In 1972 I bought a house in Houghton Bay for $14,100

It’s no longer there

Land must be have worth a goldmine as 6 town houses adorn the property now

You boomers had it so easy back in the day. That house valued at $220k in todays dollars. https://www.rbnz.govt.nz/monetary-policy/about-monetary-policy/inflation-calculator

Must have been easy living back then.

[troyvdh]

I share Percy's story..1980 I started with 2 houses..10k or 13k..even by late 80s a place in Albany St 85k ...now we still own it...who knows 1.3 1.4.
There must many folk with similar stories.I find it puzzling..costs to build/land gone crazy...I find it difficult to believe property values will fall much further.

[RTM]

You boomers had it so easy back in the day. That house valued at $220k in todays dollars. https://www.rbnz.govt.nz/monetary-policy/about-monetary-policy/inflation-calculator

Must have been easy living back then.

Yep, it was a breeze. On our 2nd house, three mortgages, 18, 21 & 24%.
Luckily we could get rid of two higher ones reasonably quickly.
Jeeze…don’t wanna go there again.

[Fortunecookie]

Banks were deregulated around the mid 1980s, hence interest rates reduced over time. Obviously there is a correlation with asset prices.
Of course there were other factors.

Will it be the same going forward. I'm sure everyone has got their opinions.

[winner69]

Yep, it was a breeze. On our 2nd house, three mortgages, 18, 21 & 24%.
Luckily we could get rid of two higher ones reasonably quickly.
Jeeze…don’t wanna go there again.

And cost of living was high too eh mate ……and we couldn’t even afford a car

[Fortunecookie]

I'm not suggesting one decade is more difficult then the other. Each has it's own unique challenges and opportunities.

[justakiwi]

Deleted.........

[Curly]

Talking to widow down the road. Just sold her property for $230k a over her asking price. Ppty 2 yrs old. Property down turn. Yeah right.

[clearasmud]

In 1972 I bought a house in Houghton Bay for $14,100

It’s no longer there

Land must be have worth a goldmine as 6 town houses adorn the property now
I used to visit Houghton Bay in the 60's.
Do you remember that tip that smelt of burning rubber?

[676767]

Talking to widow down the road. Just sold her property for $230k a over her asking price. Ppty 2 yrs old. Property down turn. Yeah right.

Don't really understand this comment. Are you saying all the data showing continued property devaluation across the market is made up because you had a chat to the lady down the road?

[Bjauck]

Don't really understand this comment. Are you saying all the data showing continued property devaluation across the market is made up because you had a chat to the lady down the road? The comment is inherently enigmatic.

Maybe the widow set a very low asking price. We don't know what advice the widow received. Was she widowed recently as the property sold was only two years old? Did the widow and her late spouse make improvements or undertake a new build on the section within the last two years?

[Balance]

The comment is inherently enigmatic.

Maybe the widow set a very low asking price. We don't know what advice the widow received. Was she widowed recently as the property sold was only two years old? Did the widow and her late spouse make improvements or undertake a new build on the section within the last two years?

Begs the question as to how some 'investors' out there make their investment decisions!

Shudder!

[bull....]

love affair with arv looks over

[Muse]

love affair with arv looks over

Some scary looking covenant forecasts out this AM

[troyvdh]

Thanks Moose..where was this..cheers

[Balance]

Next potential blow to hit the RV industry :

Capital Gains Tax arising from the 'Ground breaking IRD Report on Taxes Paid by the Uber Rich' released yesterday.

Well worthwhile for shareholders and investors to think through carefully what how it will impact the profitability and cash flow of the industry if introduced.

https://www.newsroom.co.nz/ground-breaking-study-adds-fuel-to-tax-debate

This is going to hang around like a bad smell over the RV stocks until it's clarified one way or the other.

[RTM]

Next potential blow to hit the RV industry :

Capital Gains Tax arising from the 'Ground breaking IRD Report on Taxes Paid by the Uber Rich' released yesterday.

Well worthwhile for shareholders and investors to think through carefully what how it will impact the profitability and cash flow of the industry if introduced.

https://www.newsroom.co.nz/ground-breaking-study-adds-fuel-to-tax-debate

This is going to hang around like a bad smell over the RV stocks until it's clarified one way or the other.

I think the effect of this will be a lot more widespread than just the RV Industry.
Balance, I think I recall you saying that the tax system in NZ needs a comprehensive review. Apologies if wrong and I will correct.
If we do intend to make major changes I hope we take our time, survey the world to get best practice, and make sure we don’t go down some rabbit hole that has unintended consequences. In an ideal world it would be good to get a level of agreement between this political parties. ‘Spose that’s hoping for way to much.

[Ggcc]

Next potential blow to hit the RV industry :

Capital Gains Tax arising from the 'Ground breaking IRD Report on Taxes Paid by the Uber Rich' released yesterday.

Well worthwhile for shareholders and investors to think through carefully what how it will impact the profitability and cash flow of the industry if introduced.

https://www.newsroom.co.nz/ground-breaking-study-adds-fuel-to-tax-debate

This is going to hang around like a bad smell over the RV stocks until it's clarified one way or the other.
I would find it fair that if they introduced CGT they include share buying and selling and not just realestate. Everyone would be seen as a trader regardless. Too many making money buying and selling shares and one might think not paying their obligations.

[JeffW]

I would find it fair that if they introduced CGT they include share buying and selling and not just realestate. Everyone would be seen as a trader regardless. Too many making money buying and selling shares and one might think not paying their obligations.

Apologies, but a bit off topic. I agree Ggcc, provided there is no exemption for main home - this type of exemption discriminates against those of us in the provinces that have not a hope in Hades of a similar capital gain on our properties as those in metro areas, so invest a similar amount of capital in our homes and shares as our metro friends do in just their homes, but will be adversely hammered comparatively on eventual realisation. And it has the issue of defining exactly what a main home is. If we're to do it, let's do it properly like we've done with GST

[Bjauck]

Apologies, but a bit off topic. I agree Ggcc, provided there is no exemption for main home - this type of exemption discriminates against those of us in the provinces that have not a hope in Hades of a similar capital gain on our properties as those in metro areas, so invest a similar amount of capital in our homes and shares as our metro friends do in just their homes, but will be adversely hammered comparatively on eventual realisation. And it has the issue of defining exactly what a main home is. If we're to do it, let's do it properly like we've done with GST Off topic for companies with a large investment in residential real estate?

The NZ tax system is arbitrary and discriminatory. So Aucklanders extra wealth in their main homes, exempt from any CGT, would just be another part of that arbitrariness and unfairness. It would be quite something for any government to survive introducing a CGT on investments let alone including the family home within the CGT.

Other countries exempt the family home from CGT. However, to partially balance that out, they also have stamp duties on real estate (including the family home), savings and pension schemes with concessionary tax regimes and pension contributions deductible for tax purposes.

[Greekwatchdog]

ANZ seem to think House Prices may be near bottom.https://i.stuff.co.nz/business/property/300863851/house-prices-may-be-near-bottom-anz

In their latest Property Focus report, they said that the Reserve Bank’s proposal that loan-to-value (https://www.stuff.co.nz/business/131863374/reserve-bank-may-lift-mortgage-loantovalue-restrictions-after-house-price-falls) restrictions be eased, combined with stronger recent housing market data (https://www.stuff.co.nz/life-style/homed/real-estate/131786691/house-price-plummet-from-market-peak-continues) and some falls in fixed mortgage rates, indicated prices were likely to only fall 18% from their November 2021 (https://www.stuff.co.nz/business/money/300863083/bnz-latest-bank-to-loosen-longterm-home-loan-rates) peak.
They previously expected 22%.

[Bjauck]

Singapore is now charging foreigners a stamp duty of 60% of the purchase price of a residential property. Domestic purchasers pay stamp duty too, but it is much lower if it is your only property. Domestic buyers now will pay 20% stamp duty, if they already own one residential property and the purchase is of a second property.

That is a bit of what needs to be done if you want to try make home ownership affordable for a wider section of your country’s residents. As long-term RV shareholders that is what we should want too. So that the potential client base for units and ORAs remains as large as possible.

https://www.cnbc.com/2023/04/27/singapore-raises-stamp-duties-to-cool-property-market.html

Continually inflating the cost of land ends up sucking up capital. Capital that could be spent on buildings, improvements, training and boosting labour productivity.

[Jaa]

Singapore is now charging foreigners a stamp duty of 60% of the purchase price of a residential property. Domestic purchasers pay stamp duty too, but it is much lower if it is your only property. Domestic buyers now will pay 20% stamp duty, if they already own one residential property and the purchase is of a second property.

That is a bit of what needs to be done if you want to try make home ownership affordable for a wider section of your country’s residents. As long-term RV shareholders that is what we should want too. So that the potential client base for units and ORAs remains as large as possible.

https://www.cnbc.com/2023/04/27/singapore-raises-stamp-duties-to-cool-property-market.html

Continually inflating the cost of land ends up sucking up capital. Capital that could be spent on buildings, improvements, training and boosting labour productivity.

Many countries do something similar with either stamp duty and/or capital gains, different rates for foreigners to locals. I like the different rates for second+ houses too that would quickly re-focus NZ's economy! Houses should be to live in not speculation.

If only Labour or National would adopt such a far-sighted policy.

[Jaa]

ANZ seem to think House Prices may be near bottom.https://i.stuff.co.nz/business/property/300863851/house-prices-may-be-near-bottom-anz

In their latest Property Focus report, they said that the Reserve Bank’s proposal that loan-to-value (https://www.stuff.co.nz/business/131863374/reserve-bank-may-lift-mortgage-loantovalue-restrictions-after-house-price-falls) restrictions be eased, combined with stronger recent housing market data (https://www.stuff.co.nz/life-style/homed/real-estate/131786691/house-price-plummet-from-market-peak-continues) and some falls in fixed mortgage rates, indicated prices were likely to only fall 18% from their November 2021 (https://www.stuff.co.nz/business/money/300863083/bnz-latest-bank-to-loosen-longterm-home-loan-rates) peak.
They previously expected 22%.

ANZ of course is completely unbiased about their biggest risk right?

[SailorRob]

ANZ seem to think House Prices may be near bottom.https://i.stuff.co.nz/business/property/300863851/house-prices-may-be-near-bottom-anz

In their latest Property Focus report, they said that the Reserve Bank’s proposal that loan-to-value (https://www.stuff.co.nz/business/131863374/reserve-bank-may-lift-mortgage-loantovalue-restrictions-after-house-price-falls) restrictions be eased, combined with stronger recent housing market data (https://www.stuff.co.nz/life-style/homed/real-estate/131786691/house-price-plummet-from-market-peak-continues) and some falls in fixed mortgage rates, indicated prices were likely to only fall 18% from their November 2021 (https://www.stuff.co.nz/business/money/300863083/bnz-latest-bank-to-loosen-longterm-home-loan-rates) peak.
They previously expected 22%.


What is ANZ's prior track record in making these types of predictions?

[Greekwatchdog]

What is ANZ's prior track record in making these types of predictions?

As good as any economist making predictions. I guess its all about the movements around the market with trends. RBNZ loosening things up and maybe interest rates have or are near peak signal a change. Time will be the winner..

[SailorRob]

As good as any economist making predictions. I guess you its all about the movements around the market with trends. RBNZ loosening things up and maybe interest rates have or are near peak signal a change. Time will be the winner..


Exactly, they have ZERO predictive ability.

[RTM]

Many countries do something similar with either stamp duty and/or capital gains, different rates for foreigners to locals. I like the different rates for second+ houses too that would quickly re-focus NZ's economy! Houses should be to live in not speculation.

If only Labour and National would adopt such a far-sighted policy.

I've made a slight change above. Keep living in hope that they could both agree on the right thing.

[SailorRob]

Just looked at it on Google Maps.
New roof,chimney removed..Looks good but basically the shell or core of the property looks the same.,
What I did not mention was the house my mother bought in 1956 or 57 in Kahu Road,ChCh for 5,000 pound ie $10,000 is now valued at $1.57 mil.


That would be 8 million now if invested in American market.

House would have incurred a lot of expenses in near 70 years. Without factoring expenses that's around a 2%/pa real return.

[Snoopy]

Just looked at it on Google Maps.
New roof,chimney removed..Looks good but basically the shell or core of the property looks the same.,
What I did not mention was the house my mother bought in 1956 or 57 in Kahu Road,ChCh for 5,000 pound ie $10,000 is now valued at $1.57 mil.



That would be 8 million now if invested in American market.

House would have incurred a lot of expenses in near 70 years. Without factoring expenses that's around a 2%/pa real return.


What was percy's mother thinking? She should have taken the family to New York City, lived in the gutters, and put all her NZ pounds on the S&P500 in 1957! How could she have been so silly? Missed out on being the richest woman in the graveyard too!

SNOOPY

[Habits]

That's if she had 5000pounds to invest. I suppose it is more likely she borrowed using a mortgage the same as most home buyers

[SailorRob]

What was percy's mother thinking? She should have taken the family to New York City, lived in the gutters, and put all her NZ pounds on the S&P500 in 1957! How could she have been so silly? Missed out on being the richest woman in the graveyard too!

SNOOPY


Wasn't my point sport.

Point was there has been no real change in value of the property over that time for obvious reason.

What she could have done is rented, invested the deposit and the spread and done very well.

Don't see the point of moving to NYC however.

If you step way back and look at your assets Snoopy, you will see what the issue is.

You need to own productive assets that generate cash.

[Bjauck]

That would be 8 million now if invested in American market.

House would have incurred a lot of expenses in near 70 years. Without factoring expenses that's around a 2%/pa real return. £5,000 in 1957 is worth $294,288 today after compounding annual CPI inflation of 5.3% according to the RBNZ calculator. So the Percys’ house has beaten inflation five fold (obviously without taking into account maintenance costs.) The value of the land would probably have risen much more than the improvements.

Let’s not forget the house has also provided an annual dividend of accommodation to the owners - tax free - as without the house the owners would have to find rent from their after tax income. If the house is not owner occupied, then the landlords would receive taxable net rent.

[SailorRob]

£5,000 in 1957 is worth $294,288 today after compounding annual CPI inflation of 5.3% according to the RBNZ calculator. So the Percys’ house has beaten inflation five fold (obviously without taking into account maintenance costs.) The value of the land would probably have risen much more than the improvements.

Let’s not forget the house has also provided an annual dividend of accommodation to the owners - tax free - as without the house the owners would have to find rent from their after tax income. If the house is not owner occupied, then the landlords would receive taxable net rent.


Yes that's right, though as we know inflation has been much higher than that which explains a lot of equity return as well.

A very, very low single digit return and it's not maintenance costs that are the issue it's CAPEX to keep up with the times. Perfectly maintained in it's original form would be like going back in time.

Also worth noting that this 2% return has required 40 years of declining rates and the most over valued property market in the world to achieve.

Run the same figures most anywhere else in the world, basically what happened in NZ was unprecedented and can unfold the other way as well.

But we should expect this from an asset that produces nothing.

As perfectly depicted in Shillers book 'Irrational Exuberance' the long term returns are always around zero real. Select locations will differ for sure.

The dividend is true, but so is the new roof, kitchen x3 bathroom x3 rates, insurances, extentions etc... all adds up.

[ValueNZ]

Yes that's right, though as we know inflation has been much higher than that which explains a lot of equity return as well.

A very, very low single digit return and it's not maintenance costs that are the issue it's CAPEX to keep up with the times. Perfectly maintained in it's original form would be like going back in time.

Also worth noting that this 2% return has required 40 years of declining rates and the most over valued property market in the world to achieve.

Run the same figures most anywhere else in the world, basically what happened in NZ was unprecedented and can unfold the other way as well.

But we should expect this from an asset that produces nothing.

As perfectly depicted in Shillers book 'Irrational Exuberance' the long term returns are always around zero real. Select locations will differ for sure.

The dividend is true, but so is the new roof, kitchen x3 bathroom x3 rates, insurances, extentions etc... all adds up.
Whether or not it was a good purchase for percy's mother is dependent on whether her personal utility of owning her own house was greater than the return she would have got by investing that capital. Many people don't live through life frugally so they can die with an ultra high net worth, and thats okay.

Although it does particularly get on my nerves when people claim their home is an investment, when it is clearly not.

[Bjauck]

Sure NZ real estate property has been super-inflated as a result of the NZ tax system, being the de facto pension scheme of many, and many baby boomers’ distrust of shares stemming from the 1987 Black Monday.

[SailorRob]

Whether or not it was a good purchase for percy's mother is dependent on whether her personal utility of owning her own house was greater than the return she would have got by investing that capital. Many people don't live through life frugally so they can die with an ultra high net worth, and thats okay.

Although it does particularly get on my nerves when people claim their home is an investment, when it is clearly not.


Great post, agreed.

Problem is going forward people expecting the same result.

So the 'personal utility' aspect which I agree with you on, may dramatically change forward to the point where it means getting nowhere.

[SailorRob]

Sure NZ real estate property has been super-inflated as a result of the NZ tax system, being the de facto pension scheme of many, and many baby boomers’ distrust of shares stemming from the 1987 Black Monday.


As well as a whole lot of other things, but yeah, very interesting how many folk I know that the major boom in the value of their properties has bailed them out of being in real trouble.

Problem is we can only do that once, the next gen now has the debt and they did the bail out.

Political divide.

[bull....]

Barfoot & Thompson had its worst April in 22 years last month while the agency's median selling price dipped below $1 million for the first time in more than two years.
The real estate agency, which is the largest in the Auckland market by a substantial margin, sold 473 residential properties in April, down 23% compared to April last year, and the lowest number of sales in the month of April for 22 years.

https://www.interest.co.nz/property/121007/barfoot-thompsons-median-selling-price-slips-below-1-million-now-down-245k-november

[aquaman]

This may lure NZ staff to Aussie. NZ Govt needs to step up.
Salary increases for aged care workers:



https://www.9news.com.au/national/federal-budget-2023-frontline-worker-pay-rise-cost-of-living/66499f81-6888-48d8-a89a-ca0926327bbf

[Balance]

This may lure NZ staff to Aussie. NZ Govt needs to step up.
Salary increases for aged care workers:



https://www.9news.com.au/national/federal-budget-2023-frontline-worker-pay-rise-cost-of-living/66499f81-6888-48d8-a89a-ca0926327bbf

Excellent news.

Need an exodus of skilled NZers on a grand & epic scale for the sheep-like population of NZ to wake up and hold the wasteful spending of the current government to account.

Last skilled one to leave NZ, destroy the drawbridge to Australia so none of the NZ parasites can join.

[Poet]

IRD Applies to Liquidate Large Aged Care Provider | Newsroom (https://www.newsroom.co.nz/large-aged-care-provider-faces-liquidation)

300 bed operator can't make ends meet on current government funding. Industry needs an additional 15000 beds by the end of the decade, but lost 1200 last year. Hmmm, what to do...

[dobby41]

Last skilled one to leave NZ, destroy the drawbridge to Australia so none of the NZ parasites can join.

Best you leave before the drawbridge rises - when are you off or don't you believe what you are saying?

[Balance]

Best you leave before the drawbridge rises - when are you off or don't you believe what you are saying?

Read my reply on ‘Election’ Labour government - parasite dobby41.

[dobby41]

Read my reply on ‘Election’ Labour government - parasite dobby41.

Too much dross to wade through with your comments so I won't bother.
I gather you won't be leaving any time soon.