OCA - Oceania Group - retirement villages

[iceman]

According to Patrick Smellie's article on Businesss Desk today, Treasury rated the housing policy changes "worse than doing nothing" on many scores and this :
""The IRD was even less enthusiastic than the Treasury about both the brightline test exemption and deductibility moves, recommending against both, but supporting a five-year exemption on new builds if the government was determined to go ahead.

The Inland Revenue Department’s commentary said, “there is a good reason to exempt new builds to minimise adverse impacts of the measures in reducing the supply of new housing”.

Such an exemption should simply leave the existing five year brightline test in place.

“Building consents are at an all-time high. A full exemption would create an incentive for speculation in the market for new builds, placing further upward pressure on prices.” "

[Blue Skies]

According to Patrick Smellie's article on Businesss Desk today, Treasury rated the housing policy changes "worse than doing nothing" on many scores and this :
""The IRD was even less enthusiastic than the Treasury about both the brightline test exemption and deductibility moves, recommending against both, but supporting a five-year exemption on new builds if the government was determined to go ahead.

The Inland Revenue Department’s commentary said, “there is a good reason to exempt new builds to minimise adverse impacts of the measures in reducing the supply of new housing”.

Such an exemption should simply leave the existing five year brightline test in place.

“Building consents are at an all-time high. A full exemption would create an incentive for speculation in the market for new builds, placing further upward pressure on prices.” "



Few observations, Treasury could not have got it's predictions about house prices more wrong last year so maybe they're not most credible source of advice.
They also said the BL test should be extended to 20 years not 10.
With a massive percentage of mortgage lending going to investors last year, outbidding FHB'ers & dangerously pushing prices/income ratio's into alarming territory based purely on expectations of Capital Gains & a shrinking number of homeowners, govt now staked its reputation on curbing rampant house price inflation & will do whatever it takes to achieve this.

[850man]

According to Patrick Smellie's article on Businesss Desk today, Treasury rated the housing policy changes "worse than doing nothing" on many scores and this :
""The IRD was even less enthusiastic than the Treasury about both the brightline test exemption and deductibility moves, recommending against both, but supporting a five-year exemption on new builds if the government was determined to go ahead.

The Inland Revenue Department’s commentary said, “there is a good reason to exempt new builds to minimise adverse impacts of the measures in reducing the supply of new housing”.

Such an exemption should simply leave the existing five year brightline test in place.

“Building consents are at an all-time high. A full exemption would create an incentive for speculation in the market for new builds, placing further upward pressure on prices.” "

The truth comes out, not recommended by the experts but Cindy goes ahead anyway. Another knee in the balls for the NZ economy

[newtrader]

Does anyone have any thoughts on how many shares realistically retail shareholders will receive under the share offer? I presume it will be scaled down based on a percentage of your current holdings.
Of course you can apply up to 50k, but no real point tying up cash and see a majority of it being refunded.

What do you think? 10-20% of current holdings?

[BlackPeter]

Does anyone have any thoughts on how many shares realistically retail shareholders will receive under the share offer? I presume it will be scaled down based on a percentage of your current holdings.
Of course you can apply up to 50k, but no real point tying up cash and see a majority of it being refunded.

What do you think? 10-20% of current holdings?

Dilution is something like 13% and I suppose that this is what they will give everybody who asks for it as a matter of course ... i.e. I'd assume if not everybody participates we might get something like 15% of existing shares. 20% feels quite optimistic, but if you don't need the money for the next three weeks or so - why not try?

[Beagle]

https://www.nzherald.co.nz/business/will-my-sector-be-next-businessnz-slams-governments-move-on-interest-deductibility/YZZP5QDBHP67OWX4WK7NZXPTQ4/
Tax expert Robin Oliver, a former deputy commissioner at the IRD, described the Government's move on interest payments by landlords as "out there". Oliver, who sat on the Government's tax working group in the last term said he could not think of an example of a sector being unable to deduct an expense which was available to all other sectors of the economy. It would amount to "a massive tax penalty on renting out property," he said. "You're taxed on income that you don't actually have, because your profit is your income minus your expenses, but they just ignore the expenses part," Oliver said."You could have almost no profit, maybe a loss, but you still have to fork out thousands of dollars to the IRD. It's not an income tax, it's just a penalty."
Oliver claimed a sharp drop in the Kiwi dollar since the announcement likely reflected international investors fretting about the risk of putting money in New Zealand. "

No new taxes in our next term in Government, anyone remember that ? This is a new tax, its the egregious disallowance of the biggest legitimate expense landlords have and is therefore a new penalty tax. Calling it closing a loophole is the most blatant and disingenuous propaganda I have ever heard. I am hopeful this will cost them the next election as this anti business ideology is extremely ugly and attacks middle N.Z., the typical Mum and Dad investor with one or two rental properties trying to get ahead and build a decent life for their family.

I think this comment in the comments section sums it up very well A popover with more user information
"Labour calling interest deductibility a "loophole" is a disgrace, and the business community should demand a retraction of this mis-characterisation. It beggars belief that this actually happened, and shows their anti-business ideology in its full nakedness. Not a pretty sight and will cost them the next election. Jacinda's political capital has just been nuked as far as middle NZ is concerned".

There will be an impact on the housing market for sure. There will be an equal sized positive impact when a National lead coalition remedies this outrageous tax grab.

In terms of the cash issue they have the option to accept oversubscriptions so one's allocation could be more than the theoretical. Whether $1.30 is a bargain after the radical movement of the goalposts is another question but it could be less as effectively its at $1.30 or a 2.5% discount to VWAP whichever is the lower.

[Biscuit]

https://www.nzherald.co.nz/business/will-my-sector-be-next-businessnz-slams-governments-move-on-interest-deductibility/YZZP5QDBHP67OWX4WK7NZXPTQ4/
Tax expert Robin Oliver, a former deputy commissioner at the IRD, described the Government's move on interest payments by landlords as "out there". Oliver, who sat on the Government's tax working group in the last term said he could not think of an example of a sector being unable to deduct an expense which was available to all other sectors of the economy. It would amount to "a massive tax penalty on renting out property," he said. "You're taxed on income that you don't actually have, because your profit is your income minus your expenses, but they just ignore the expenses part," Oliver said."You could have almost no profit, maybe a loss, but you still have to fork out thousands of dollars to the IRD. It's not an income tax, it's just a penalty."
Oliver claimed a sharp drop in the Kiwi dollar since the announcement likely reflected international investors fretting about the risk of putting money in New Zealand. "

No new taxes in our next term in Government, anyone remember that ?

I think this comment in the comments section sums it up very well A popover with more user information
"Labour calling interest deductibility a "loophole" is a disgrace, and the business community should demand a retraction of this mis-characterisation. It beggars belief that this actually happened, and shows their anti-business ideology in its full nakedness. Not a pretty sight and will cost them the next election. Jacinda's political capital has just been nuked as far as middle NZ is concerned".

Absolutely 100% agree. Disgraceful is the only word to describe this.

[justakiwi]

Can we please try to keep this thread OCA focused? I get that the current housing situation and associated politics, is relevant to the retirement sector, but there are other threads where it could be discussed.

[Waltzing]

we think in our little group that NZ is on a path to join the Nordic country's and its a 3 term at least with G support unless this blows up with house prices recovering and some very fancy private company syndicates taking over the investing public. In our pre 2000 incarnation we were part of the role out of horses for courses syndicates and they sold and sold and sold....

where there is a will theres a way and already one young turk ACA proposed a new private company structure for house rentals last year.

Imagine the business coming the way of the accounting profession....

And if you have to track days in your houses imagine the fun and games with that..

Its only a short trip next election cycle to a wealth tax...oh imagine the accounting for that...and we have a lovely suite ready for it already...we also dont have to worry about contra's as it handles that in auto mode...

commercial property could be the next sector to become very very inflated and money flows into that.

[davflaws]

https://www.nzherald.co.nz/business/will-my-sector-be-next-businessnz-slams-governments-move-on-interest-deductibility/YZZP5QDBHP67OWX4WK7NZXPTQ4/
the typical Mum and Dad investor with one or two rental properties trying to get ahead and build a decent life for their family.



Has the "typical mum and Dad investor" really got one or two rental properties?? Doesn't everyone want to get ahead and build a decent life for their family??

I guess I see the Govt's latest move as as the first comprehensive attempt to deal with our chronic structural shortage of housing in the last thirty years. That is more important to me (because the housing shortage has effects that fall disproportionately on the "have nots" and which go right across health, education, and justice, than an additional impost on people who own several houses.

And of course I am strongly in favour of measures that promote a more equal society (nearly everyone is healthier and happier). But then I'm a socialist.

Disc: bought 120,000 OCA at 135 yesterdayi

[Bjauck]

Absolutely 100% agree. Disgraceful is the only word to describe this. She may have been trying to get around her promise not to introduce a general CGT. Why tell a lie that interest expense deductions were a loophole though? She could have stopped the carrying forward of losses from the current year to the next coupled with a higher investor deposit requirement and an extended bright line test. Then they could have given the explanation that the Covid response necessitated them breaking their word on the bright line issue.

Did they avoid being upfront with their plans last election as they would have been unlikely to have won or to have got the share of the vote they actually got in the election with the policies they have now revealed?

[Waltzing]

"But then I'm a socialist."

its where it leads too.... if you dont have the economy then your stuffed....

this is both panic and a slippery slope. Its where it leads not one small step but this time its a sprint as the rain threatens to brings down the mountain above you... thats where your at right now. There's a lot of water building up in the hills and your about to run for higher ground. In fact your running right now for that high ground because they saw an opportunity to cross the Rubicon.

[dobby41]

And if you have to track days in your houses imagine the fun and games with that..


You don't really - you are overstating things for effect I suspect.
Won't be hard to track that you moved and rented out the family home for a while.

[macduffy]

Does anyone have any thoughts on how many shares realistically retail shareholders will receive under the share offer? I presume it will be scaled down based on a percentage of your current holdings.
Of course you can apply up to 50k, but no real point tying up cash and see a majority of it being refunded.

What do you think? 10-20% of current holdings?

No idea, really, but I'm aiming to scrape together as much as I have sitting around earning "nothing", to take a chance on the lottery!

:cool:

[newtrader]

Dilution is something like 13% and I suppose that this is what they will give everybody who asks for it as a matter of course ... i.e. I'd assume if not everybody participates we might get something like 15% of existing shares. 20% feels quite optimistic, but if you don't need the money for the next three weeks or so - why not try?

I noticed that you need a CSN number to apply for this offer. ̶T̶h̶i̶s̶ ̶m̶a̶y̶ ̶n̶e̶e̶d̶ ̶t̶h̶o̶s̶e̶ ̶w̶h̶o̶ ̶h̶a̶v̶e̶ ̶t̶h̶e̶i̶r̶ ̶s̶h̶a̶r̶e̶s̶ ̶h̶e̶l̶d̶ ̶b̶y̶ ̶a̶ ̶c̶u̶s̶t̶o̶d̶i̶a̶n̶ ̶(̶e̶.̶g̶.̶ ̶S̶h̶a̶r̶e̶s̶i̶e̶s̶)̶ ̶m̶a̶y̶ ̶n̶o̶t̶ ̶b̶e̶ ̶a̶b̶l̶e̶ ̶t̶o̶ ̶e̶a̶s̶i̶l̶y̶ ̶a̶p̶p̶l̶y̶ ̶f̶o̶r̶ ̶t̶h̶i̶s̶ ̶s̶h̶a̶r̶e̶ ̶o̶f̶f̶e̶r̶.̶ EDIT - this is incorrect
Given the dilution of 13%, between 15% and 20% seems to be the expected range?

[Sideshow Bob]

I noticed that you need a CSN number to apply for this offer. This may need those who have their shares held by a custodian (e.g. Sharesies) may not be able to easily apply for this share offer.
Given the dilution of 13%, between 15% and 20% seems to be the expected range?

Hit $1.31 earlier. For 1c and a bit of brokerage, maybe betterer to by on-market??

[justakiwi]

Sharesies investors can participate. We were even able to apply for the initial Placement Offer, which I do not understand.


I noticed that you need a CSN number to apply for this offer. This may need those who have their shares held by a custodian (e.g. Sharesies) may not be able to easily apply for this share offer.
Given the dilution of 13%, between 15% and 20% seems to be the expected range?

[James108]

Has the "typical mum and Dad investor" really got one or two rental properties?? Doesn't everyone want to get ahead and build a decent life for their family??

I guess I see the Govt's latest move as as the first comprehensive attempt to deal with our chronic structural shortage of housing in the last thirty years. That is more important to me (because the housing shortage has effects that fall disproportionately on the "have nots" and which go right across health, education, and justice, than an additional impost on people who own several houses.

And of course I am strongly in favour of measures that promote a more equal society (nearly everyone is healthier and happier). But then I'm a socialist.

Disc: bought 120,000 OCA at 135 yesterdayi

I agree and off the back of this I intend to vote labour at the next general election for the first time in my life. Lots of the YoPros in my office in their 20's and early 30's feel the same.

I disagree with calling it a loophole though.

[Beagle]

where there is a will theres a way and already one young turk ACA proposed a new private company structure for house rentals last year.

Imagine the business coming the way of the accounting profession....

commercial property could be the next sector to become very very inflated and money flows into that.
It won't matter what "vehicle" a residential property is owned by. The new draconian envy penal tax will still apply.


Has the "typical mum and Dad investor" really got one or two rental properties?? Doesn't everyone want to get ahead and build a decent life for their family??

I guess I see the Govt's latest move as as the first comprehensive attempt to deal with our chronic structural shortage of housing in the last thirty years. That is more important to me (because the housing shortage has effects that fall disproportionately on the "have nots" and which go right across health, education, and justice, than an additional impost on people who own several houses.

And of course I am strongly in favour of measures that promote a more equal society (nearly everyone is healthier and happier). But then I'm a socialist.

Disc: bought 120,000 OCA at 135 yesterdayi Better there than as a deposit on a new rental property. There were other ways to address this rather than completely turn 100 years of tax law on its head. This is a naked and extremely ugly anti business tax grab plain and simple. What's next a wealth tax ? Calling it "closing a loophole" is propaganda that would make Xi Jinping sit up and takes notes on how to copy.

Now we appear to live in an extremist left leaning country I for one am not sure I will bother to add to my position at $1.30. Probably better off buying WHS shares where Cindy has already exerted her bully boy tactics to coerce them to repay the wage subsidy.

[Waltzing]

"Won't be hard to track that you moved and rented out the family home for a while."

in your busy llfe over an n period and your a professional flying in and out of country's and you have more than one house...

its going to be a royal pain in the .... another item to track... the items to track will grow..

[Biscuit]

......And of course I am strongly in favour of measures that promote a more equal society (nearly everyone is healthier and happier). But then I'm a socialist.....

Well, I'm a capitalist. I'm also in favour of promoting a more equal society. I'm always happy to pay tax and I don't go out of my way to avoid tax. It is probably true that property price growth is undesirable and unsustainable. Eventually, high prices will stimulate supply or other solutions. Its a market. That's how markets work. Socialism on the otherhand.... does not work.

[daveypnz]

Sharesies investors can participate. We were even able to apply for the initial Placement Offer, which I do not understand.

Sharesies is considered an institution therefore were able to allow their customers to participate in the raise despite not being institutional investors.

[justakiwi]

Yes I understand that, but what’s the point of a company having two separate offers (one for institutional and one for retail investors) if individual (technically “retail”) investors can participate in both? It seems to defeat the purpose to me.


Sharesies is considered an institution therefore were able to allow their customers to participate in the raise despite not being institutional investors.

[Chinesekiwi]

I could not have written better to reflect my thoughts - snap!


Well, I'm a capitalist. I'm also in favour of promoting a more equal society. I'm always happy to pay tax and I don't go out of my way to avoid tax. It is probably true that property price growth is undesirable and unsustainable. Eventually, high prices will stimulate supply or other solutions. Its a market. That's how markets work. Socialism on the otherhand.... does not work.

[daveypnz]

Yes I understand that, but what’s the point of a company having two separate offers (one for institutional and one for retail investors) if individual (technically “retail”) investors can participate in both? It seems to defeat the purpose to me.

Because only current shareholder can participate in the retail offer. Any sharesies member was able to participate in the institutional offer. I assume the reason retail investors typically can't participate in institutional offers is because they don't have enough capital to make it worthwhile but sharesies with their large customer base makes it worthwhile.

Current holders can participate in both to accumulate more shares if they desire, especially with scaling.

[Curly]

Getting close to a buy on the market and avoid any scaling.

[Panda-NZ-]

It won't matter what "vehicle" a residential property is owned by. The new draconian envy penal tax will still apply.


If we repealed the disgraceful revenue tax increase by John to 15% then rest home and medical care fees would be cheaper. Most NZers don't own investment properties and sell their primary home to go into retirement care.

[Blue Skies]

No govt policy will appeal to everyone but I think there's been a sea change in the majority on NZ'ers attitudes to rampant speculation driving house prices up way out of kilter with incomes, & home ownership far beyond the reach of even well paid professional young couples & families.

National backing property investors over young families might be backing the wrong horse on this one. Not many are going to lose sleep over a property investor (making far more money tax free than a young professional with years of training paying PAYE on salary), having to pay some tax on huge profits.

My hope is this will redirect some of that speculative property investment into the share market by those mum & dad investors trying to secure their retirement, into NZ businesses which are creating and providing jobs for the country, companies like OCA.

(Just to note, remember the Bright Line test was created by National & efforts to label it a CGT were rejected by John Key, although to my mind that's always what its clearly been).

[Beagle]

To be clear, I have no issue with the bright line test being extended to 10 years and this is congruent with a number of other specific previsions (which i won't go into) within the Income Tax Act around holding property for 10 years.

I do have a major issue with upending the fundamental principle upon which the entire tax system has been founded many decades ago, that being that when a business expense is "necessarily incurred" in earning business income it is tax deductible. This comes on top of a plethora of other legislative changes (some of which are already grossly iniquitous to rental property investors,) and amounts to the Labour Govt adopting a punitive tax regime against a specific sector for alleged social good. All its going to do is seriously reduce the rental property supply and force up rents as landlords pass the extra cost of doing business on to their tenants. People are struggling to pay rent now on Auckland properties and landlords are struggling to get an acceptable return for the serious risks involved, (not the least of which is methamphetamine contamination of their property). Labour's changes will serious exacerbate the problem. I estimate Auckland rents on average will go up by $30 per week per annum for the next 4 years more than they otherwise would of without this radical tax plundering. Add in rent increases to cover ever increasing rates and insurance and tenants can expect some very serious pain in the years ahead.

Maybe the Govt's ultimate goal is to have vast numbers of tenants cooped up in huge state owned apartment blocks (beside railway lines to save carbon emissions) paying them exorbitant rent Xi Jinping style ?

Its the thin end of the wedge. What radical new upheaval of the tax system for so called social justice is coming next ? Lets decimate the offshore oil and gas exploration industry and now adopt punitive measures against another huge industry, rental properties. Where does it end ?

Wonder what Maverick is thinking seeing the value of his massive holding in OCA shrink under the weight of Labour's draconian and punitive tax extremism ?

I am not sure I can be bothered applying for shares under the retail offer. Disc: I let some more OCA shares go today. It feels like the tide is going out on this sector (in the short term at least).

[Panda-NZ-]

Rents have been going up, up and up under the current policies. The current situation is assumed to be a positive with your line of thinking, but it is not so for many.

Accomodation supplement needs to be axed now...
Working for families was brought in partly to pay for increasing rents.
Kiwisaver withdrawals another hopeless idea to throw in.
First home grant.. axe...

[Waltzing]

Mr B is stating the potential tipping point. "huge state owned apartment blocks"

If rental properties are to have a residential classification for tax purposes then this class of asset is now to be removed from the market side of the system.

If this fails to achieve the desired effect other options will come next.

For those with off shore occupations it may well be that only one asset is held here in the form of a house only dwelling in NZ.

All other assets will be moved into purely commercial assets and for all of your investors this is surely good news because you have chosen to invest in public companies which will not be effected by these policies.

Its doubtful that these policies will be extended in way to commercial enterprise.

Some other countries provide wonderful places to reside with lakes in summer that are cleaner than NZ, not sure about some south island lakes which may be the purist but around here totally polluted.. Its a big world.

[Baa_Baa]

Wonder what Maverick is thinking seeing the value of his massive holding in OCA shrink under the weight of Labour's draconian and punitive tax extremism ?

I am not sure I can be bothered applying for shares under the retail offer. Disc: I let some more OCA shares go today. It feels like the tide is going out on this sector (in the short term at least).

I'm not seeing the direct linkage of the punitive rental home investor policy to OCA's situation, unless it depresses the overall property market valuations (which OCA haven't factored the rises in yet), but on reflection I'm not applying for shares offered that I can get on market for 1 cent more.

In any event as I stated many times before, this company for me is a long game and I'm happy with my 'relatively' large holding. I'm not about to flip to momentum trading OCA, except when something like Covid comes along and the market serves up a sub $0.40 share buy price!

[James108]

Beagle i don’t believe rents will go up that much although they will likely go up some. But rents are driven by supply and demand not what landlords wish they could charge, in Auckland we are finally building more houses than needed by population increase, the AUPOIP has really helped with this. Furthermore rents literally can’t increase beyond what people can afford. If investors aren’t getting a suitable return on residential property investment maybe they should pay less for that property, maybe that is even the intended outcome. That residential property falls in value...

If you agree that property prices need to fall at some point policy/tax needed to be introduced that made landlords upset. I favoured a land tax and corresponding income tax reduction even though it would have hurt my retirement village shares. Although this change isn’t nearly as good props to labour for surprising me and having some political courage, national certainly don’t have any.

[Beagle]

Landlords I know of are talking $120-$150 per week more phased in over 4 annual incremental steps to cover the extra costs of being in business, in addition to whatever other extra charges they are liable for with ever increasing insurance and rates bills and other compliance costs like extra insulation. The core of Labour's support group are going to get absolutely hammered by Labour's own policies. Talk about shooting themselves in the foot. Accommodation supplements and working for families benefits will have to increase substantially and the ever increasing payments to moteliers will get dramatically worse...the net tax revenue from this dramatic new policy will be minimal, if any, in my opinion.

The net return on a typical Auckland house taking all costs into account including deep cycle maintenance is already pitiful and often well under 3%.

In terms of OCA, there is no doubt a significant number of landlords will sell out over the next 4 years which will suck a fair bit of wind out of the property market and to some extent this will affect OCA. One good thing is this change makes for a very clear line of demarcation between the political parties so Labour's radical upheaval of the tax system could be easily be reversed by a National lead coalition.

With OCA, they really haven't repriced their units at all for the ~ 20% increase in the national average price in the last year so they are arguably better positioned than their peers to withstand the effects of this tax onslaught.

I like the new OCA acquisitions but they couldn't have come at a worse time and sentiment at the minute is very negative. Maybe I will be less grumpy in April when the new retail issue funds are due ?, maybe not.

[Panda-NZ-]

In terms of OCA, there is no doubt a significant number of landlords will sell out over the next 4 years which will suck a fair bit of wind out of the property market. One good thing is this change makes for a very clear line of demarcation between the political parties so Labour's radical upheaval of the tax system could be easily be reversed by a National lead coalition.


Interest rates are near 0% and all the nonsense ideas like "First home grants" and kiwisaver withdrawals are allowed so a mild moderation to no change is more likely.

[patrick]

I'm not seeing the direct linkage of the punitive rental home investor policy to OCA's situation, unless it depresses the overall property market valuations (which OCA haven't factored the rises in yet), but on reflection I'm not applying for shares offered that I can get on market for 1 cent more.

In any event as I stated many times before, this company for me is a long game and I'm happy with my 'relatively' large holding. I'm not about to flip to momentum trading OCA, except when something like Covid comes along and the market serves up a sub $0.40 share buy price!

Punitive rental home investor policy!
Only punitive for those who have milked the system and now find huge profits gone.
VERY good decision to remove the deduction.

[Waltzing]

"VERY good decision to remove the deduction.'

and be damned accounting best practise.

No the policy is BAD and the GOVT saw an opportunity to introduce its desired hand against the scales of the market.

Its a failure of market supply and a side effect.

Its a brainless policy that shows they have NO IDEA how to solve the problem but want to promote a POLICY.

MR B is right and usually this type of POLICY comes back to haunt you in historical terms at a later date.

YOU the TAX payer may well now be the back stop for this POLICY.

Yes the profits stop but its YOU the TAX Payer that is now on the HOOK.

Pay up Billions and thats just the start. To fund it the Govt will need to TAX, TAX , TAX.

What will they do with super profits on retirement villages now that "Loop Holes" are the expenses in profit and loss accounts.

They have to stick with this and they cant walk it back.

This introduces the concept that at any time a reclassification of accounting principles in which a market event that distorts a market is acceptable and there is no classification in the profit and loss account that is except from this process.

Everything is now a potential TAX LOOP HOLE.

It goes without saying thats it folks.

[Panda-NZ-]

This pays for the accomodation supplement and first home grant market intervention/kiwisaver abuse started by national.

Investors haven't done much to do their only real job of increasing housing supply.

[Cyclical]

Punitive rental home investor policy!
Only punitive for those who have milked the system and now find huge profits gone.
VERY good decision to remove the deduction.
It's a very good decision if you're a wealthy property investor that actually owns the properties. It's a very good decision if you're a future first home buyer. It's a very good decision if you want to collect more tax (although as beagle points out, the longer term outcome for the government coffers will probably be negative). However, for everyone else, including renters, investors (I'm not just talking property investors), business owners and anyone that actually wants to make a go of things and not depend on the state, it's an absolute shocker in terms of the impact it will have and the message it sends. Just like the ban on oil and gas exploration and complete lack of consultation on that. I actually thought Grant was doing a pretty good job, but not anymore. Remains to be seen if it breaks the ponzi scheme that has allowed them to keep the economy bubbling along this last year...if there are serious repercussions there, then we might actually see this government get the boot next time...but I doubt it, there are too many blind socialists out there fully sold on the story, in the belief the inflection point is nigh.

[Beagle]

Early feedback and mood of the market from the coalface. Significant majority of houses passed in with no bids. Start of a trend, of that I am quite certain.
https://www.oneroof.co.nz/news/39161

I'm calling it now. The tailwinds for retirement villages are over. There are better opportunities out there than this sector and I am glad I only have a very modest allocation, circa ~ 5% to the retirement industry now, all a "free carry" off previous profits.

[Cyclical]

Early feedback and mood of the market from the coalface. Significant majority of houses passed in with no bids. Start of a trend I reckon.
https://www.oneroof.co.nz/news/39161

I'm calling it now. The tailwinds for this sector are over. There are better opportunities out there than this sector and I am glad I only have a very modest allocation, circa ~ 5% to the retirement sector now.
Most of us have been calling it since Tuesday morning, Beagle ;-)

[davflaws]

Eventually, high prices will stimulate supply or other solutions. Its a market. That's how markets work. Socialism on the otherhand.... does not work.

Socialism works fine as part of a mixed economy. Markets work fine and produce socially useful results without regulation or intervention in some cases, and don't work fine without regulation and intervention in others. In these cases, the socially harmful effects of market failure always fall most heavily on the have nots.

Capitalism works fine to produce things, though the "hidden" costs (environmental degradation, education and training and health and welfare of the workforce are often socialised). Unregulated capitalism is lousy at distributing the fruits of that production (Google Picketty). Everyone is worse off as a result.

And since this is an OCA thread - I think OCA will be well placed to rocket away after the capital raise since I understand it will be EPS accretive and the 20% rise in property prices has not yet been reflected in OCA revaluations.

[iceman]

Furthermore rents literally can’t increase beyond what people can afford.



That statement is plain wrong. The Government is currently paying about $37M in accommodation supplements per week as well as who knows how much in "emergency housing". Rents will without a shadow of doubt to up significantly, starting 1 October. This silly Government will be paying most of that increase through accommodation supplements. Take with one hand to give with the other, but back to thee same people that you took it of in the first place. Can't get any more socialist than that :-)

[Panda-NZ-]

Why don't rents go down when costs ( like 100 year lows for interest rates) go down.

Maybe costs are mostly irrelevant.

[Beagle]

Most of us have been calling it since Tuesday morning, Beagle ;-)

LOL I always act first, busily adjust my portfolio and call it later ;)

[Beagle]

It's a very good decision if you're a wealthy property investor that actually owns the properties. It's a very good decision if you're a future first home buyer. It's a very good decision if you want to collect more tax (although as beagle points out, the longer term outcome for the government coffers will probably be negative). However, for everyone else, including renters, investors (I'm not just talking property investors), business owners and anyone that actually wants to make a go of things and not depend on the state, it's an absolute shocker in terms of the impact it will have and the message it sends. Just like the ban on oil and gas exploration and complete lack of consultation on that. I actually thought Grant was doing a pretty good job, but not anymore. Remains to be seen if it breaks the ponzi scheme that has allowed them to keep the economy bubbling along this last year...if there are serious repercussions there, then we might actually see this government get the boot next time...but I doubt it, there are too many blind socialists out there fully sold on the story, in the belief the inflection point is nigh.

Well said. The Kiwi dollar has had a significant fall since their punitive new tax regime was announced. This will suck the wind out of the economic sails and we'll come "off the foils" for sure. They are completely clueless and have no idea the message they have just sent. They simply cannot be trusted.

[Cyclical]

Why don't rents go down when costs ( like 100 year lows for interest rates) go down.

Maybe costs are mostly irrelevant.

Maybe some landlords have refrained from increasing rents due to the mortgage being easier to service, or maybe a good chunk of them are still paying 4% plus on terms locked in pre covid, or maybe the lower servicing costs have been directed towards investment in the healthy homes requirements. Fear not, they'll being going up a lot quicker for the next few years. One of the lovely side effects of this change is that while landlords might be 120 to 150 a week out of pocket because of it, they'll need to bump up the rent 150% of that figure just to break even, assuming a 33% marginal rate...marvellous.

[justakiwi]

Taken to PM instead.


LOL I always act first, busily adjust my portfolio and call it later ;)

[Panda-NZ-]

Well said. The Kiwi dollar has had a significant fall since their punitive new tax regime was announced. This will suck the wind out of the economic sails and we'll come "off the foils" for sure.

Every farmer voted for labour this time partly due to the lower NZD.

That should keep on going hopefully. Many regional electorates turned marginal seats.

[Cyclical]

Every farmer voted for labour this time partly due to the lower NZD.

That should keep on going hopefully. Many regional electorates turned marginal seats.

Lower NZD? I suspect it was more to do with Jacinda being so kind, and National imploding, more than anything else.

[Cyclical]

LOL I always act first, busily adjust my portfolio and call it later ;)

Haha, can't say I hadn't noticed ;-)

[Panda-NZ-]

87c ---> 65c is a pretty big drop and a stimulus to regional areas.

[James108]

Yea, the lower NZD is just a bonus, great job Jacinda! How did people expect some of the highest house prices in the world to fall? Or did we not care about that?

At the end of the day the only way for house prices to fall is to reduce the return on equity, which means a tax if you aren’t the reserve bank. Just building more houses doesn’t work, we are currently building more than any time in the last 10 years with little immigration and prices have increased. Although this has meant rents have been flat in Auckland for the past year. Which is part of the reason I feel talk of increasing rents by 30% is a sad landlord delusion/ wet dream. If rents could increase to cover the full cost of this landlords wouldn’t be so salty but they know rents can’t which is why they are so upset.

[Sideshow Bob]

Every farmer voted for labour this time partly due to the lower NZD.

No - saw the landslide coming and voted labour so could govern alone and not rely on the Greens.....

[Cyclical]

Yea, the lower NZD is just a bonus, great job Jacinda! How did people expect some of the highest house prices in the world to fall? Or did we not care about that?

At the end of the day the only way for house prices to fall is to reduce the return on equity, which means a tax if you aren’t the reserve bank. Just building more houses doesn’t work, we are currently building more than any time in the last 10 years with little immigration and prices haven’t moved. Although this has meant rents have been flat in Auckland for the past year. Which is part of the reason I feel talk of increasing rents by 30% is a sad landlord delusion/ wet dream. If rents could increase to cover the full cost of this landlords wouldn’t be so salty but they know rents can’t which is why they are so upset.

The bolded bits there are just incorrect. There are plenty of factors that come into play in any sort of market, and property isn't exempt from them. Up until Tuesday, we were in a boom cycle for property prices. Plenty of commentators out there were saying we were nearing the end, with natural market forces coming into play (eg supply in Auckland going up is but one, as you've said) like slimmer yields, talk of interest rate hikes, peeps reaching their serviceability limits etc, plus some regulatory help like the new LVR requirements on IP's beginning to bite. This is all natural stuff and a "soft landing" was not far off. But this week, out of the blue, the government took a bloody great big pointy thing and unequivocally popped it, big time. Well that's my opinion anyway. Time will tell.

[Sideshow Bob]

87c ---> 65c is a pretty big drop and a stimulus to regional areas.

Was 0.69 against the USD when Jacinda came to power.

What stimulus??

[iceman]

Was 0.69 against the USD when Jacinda came to power.

What stimulus??

Stop it with facts SB. Panda likes his own facts. Be kind.

[Sideshow Bob]

Stop it with facts SB. Panda likes his own facts. Be kind.

Sorry Iceman. I'll just start making some sh1t up!! :t_up:

[Getty]

Stop it with facts SB. Panda likes his own facts. Be kind.

Mmm, makes me wonder who he's Pandering to?

[James108]

The bolded bits there are just incorrect. There are plenty of factors that come into play in any sort of market, and property isn't exempt from them. Up until Tuesday, we were in a boom cycle for property prices. Plenty of commentators out there were saying we were nearing the end, with natural market forces coming into play (eg supply in Auckland going up is but one, as you've said) like slimmer yields, talk of interest rate hikes, peeps reaching their serviceability limits etc, plus some regulatory help like the new LVR requirements on IP's beginning to bite. This is all natural stuff and a "soft landing" was not far off. But this week, out of the blue, the government took a bloody great big pointy thing and unequivocally popped it, big time. Well that's my opinion anyway. Time will tell.

A soft landing wasn't far off... hand me a tui m8. They've been saying that for the past 12 years. What would it take to convince you action needed to be taken? Another doubling of house prices, or is that just what you would prefer to see? I smell a vested interest.

Slimmer yields is a lower return on equity which is exactly what I said. Interest rates have been falling for 40 years, people don't want to wait another 40 years for them to rise (I honestly don't think they will rise much in the foreseeable future as I think all the major productivity gains have already been made). Supply has been increasing for 10 years (meanwhile property prices went through the roof), people don't want to wait another 10 to buy a house.

Face it landlords were getting obscenely rich at the expense of renters who could not afford to buy their own house. Those that work for a living should have a decent opportunity to buy their own place.

[Cyclical]

A soft landing wasn't far off... hand me a tui m8. They've been saying that for the past 12 years. What would it take to convince you action needed to be taken? Another doubling of house prices, or is that just what you would prefer to see? I smell a vested interest.

The recent increases simply aren't sustainable and personally I think any investor buying in today's market is just crazy. It was only in recent years that we saw the Auckland market back off for a couple of years or so...don't you expect that to happen again any time soon, without such outrageous intervention? I'm not a landlord, but we all have a vested interest in the social and economic impacts of the government's policies, and I can't see this one having a positive impact on the most vulnerable people in our society, or the economy.


Slimmer yields is a lower return on equity which is exactly what I said.

Indeed, but you said it's the only way for prices to come down and that required a tax.

Let's just agree to disagree.

[Waltzing]

Mr B is down to 5%, we are down in NZ retirement sector to 1.6% and will increase travel in AUS, ASIA and EUROPE.

NZ commercial we will increase again as the 10 Year increases and the NZ DIV's increase . Thats is increase commercial in COMP PROPS that are above 4% or about to increase to above 4% in the next 12 months.

WBC we have one underwater position left but we are likely to move that into KIP actually....

OCA now a tiny holding.

SKC is a trade range of 3.40 to 4 dollars.

SKL, every dull stock has its day.]

Amsterdam, Donuts are in ... you wait the PM will be donuting soon..

Its actually a sport, try it you take your donuts and throw them or smash them on a house and wait for the owner (property owner of your overprice rental to wash off).

[Cyclical]

Anyway, back to OCA... What's driving the SP down at the moment? Is it any one factor, or a combination of things? Those things being nervousness around Earl's departure, this capital raise and associated dilution, uncertainty off the back of the government's policy announcements concerning residental property this week, or something else I've missed? Trying to decide if i should partake in the offer... OCA still makes up a disproportionately large part of my portfolio, so unless there are compelling reasons why I should grab some, then I might let it slide. Keen to hear people's thoughts. TIA

[nztx]

A soft landing wasn't far off... hand me a tui m8. They've been saying that for the past 12 years. What would it take to convince you action needed to be taken? Another doubling of house prices, or is that just what you would prefer to see? I smell a vested interest.

Slimmer yields is a lower return on equity which is exactly what I said. Interest rates have been falling for 40 years, people don't want to wait another 40 years for them to rise (I honestly don't think they will rise much in the foreseeable future as I think all the major productivity gains have already been made). Supply has been increasing for 10 years (meanwhile property prices went through the roof), people don't want to wait another 10 to buy a house.

Face it landlords were getting obscenely rich at the expense of renters who could not afford to buy their own house. Those that work for a living should have a decent opportunity to buy their own place.


Where are the decent opportunities to own Anyting - which Labour conveniently promised every sucker & their dog last term
and was supposed to happen overnight ? .. ;)

Still trying to be extracted out of Phil Twyford's Briefcase lining by the latest muppet to warm the pew ? ;)

BTW -- the current crew seem to have an uncanny knack of directing the exact opposite to appear out of most of their
unfortunate ill thought out Socialistic motions & interference in the market .. it wasn't a major issue when Cullen & Clark
were in ; and but for the continuing interference now, there shouldn't be a problem now aside for just very few waiting
state accommodation patrons which even a dog box made of heavy reinforced steel with no sides would probably
be too good for .. ;)

Think it through -- Deposit Limitations - Hate on Spec Developers - Disallow Interest deductions,\
before it - Brightline - 2 or 3 now 5 years .. before that depreciation claims wiped ..

These all mean what ? Less Stock on Market, Less Landlords (Mum & Dad Investors with just one property on average )
buying to rent out , less house movements & sales , harder to buy , Longer queues ,
Nanny State by default being called on Govt's failing promises to "Home for All" to step up

Govt have created the bulk of current Housing problems all by themselves - no additional assistance needed
and are trying to point the finger for their own failures & escalating problems at their favourite hobby horse
which the way things are going will become extinct shortly.. then who will they try to blame ? ;)

Will Govt who conveniently lead all the sheep up the narrow path to large borrowings at cheap rates be around
or carry the blame when interest rates rise (which they are), mortgagee sales occur - after their own policies have had
deliberate effect of suppressing the market & compressing pricing upwards ?

There was a chance before of some housing / accomodation .. Govt clearly dont want that unless controlled
by the latest small muppet in the pew - it will turn into a shambles, as has the Motel for homeless already
in record time all paid for everyone's heard earned taxes syphoned off ..

We all know where core blame lies for the current Housing / Pricing / Market situation lies and that's clearly
at the steps of Parliament .. ;)

[Lion_graf]

You were very bullish on OCA this past year Beagle. I know you picked up a lot between .42 and .90. Have you been selling?

What is the upside you see from here and are not participating in the spp?

Also I've been away. What is the acquisition for. Building on already owned land or buying more land to develop? Have we been given any insight to this raise? Sorry if it's been covered.

[winner69]

Taken to PM instead.

I can imagine what the PM said ........

[davflaws]

there shouldn't be a problem now aside for just very few waiting
state accommodation patrons which even a dog box made of heavy reinforced steel with no sides would probably
be too good for .. ;)



YUK! You should be ashamed of yourself.

[Habits]

Has anyone else noticed that the nz herald story of the 12 house landlord Peter Lewis, with a "strategy" to avoid the interest deductibility rules is staying at the top of the herald app. For a few days now, other big current stories just leap frog it down the list. I call it a non-story as he simply plans to downsize and clear his mortgage I wouldnt call that amazing. There must be a lot of interest to keep it up there.

[Entrep]

Has anyone else noticed that the nz herald story of the 12 house landlord Peter Lewis, with a "strategy" to avoid the interest deductibility rules is staying at the top of the herald app. For a few days now, other big current stories just leap frog it down the list. I call it a non-story as he simply plans to downsize and clear his mortgage I wouldnt call that amazing. There must be a lot of interest to keep it up there.

The Herald knows they can post anything related to expensive housing or villainous landlords and they will get a ton of clicks. It's click/anger/emotion bait. The Herald stopped being a newspaper and turned to a tabloid a long time ago.

[dobby41]

Has anyone else noticed that the nz herald story of the 12 house landlord Peter Lewis, with a "strategy" to avoid the interest deductibility rules is staying at the top of the herald app. For a few days now, other big current stories just leap frog it down the list. I call it a non-story as he simply plans to downsize and clear his mortgage I wouldnt call that amazing. There must be a lot of interest to keep it up there.

It is a non story.
He is doing what he should have done ages ago and paid down the debt (he isn't young) and get on with living life.
Seems to make a big thing of the 1 house he is going to sell and the tenant who will be on the street.
No mention that a family may buy that house and the ex tenant can have their rental they moved out of.
Many landlords think they are Gods gift to society for housing people in houses they purchased at ever inflated prices from each other without actually increasing the housing stock.

[Habits]

I am a LL too but would not call myself Gods gift to society lol. We have happy long term tenants paying below market rent and we look after the place, a block of investment units on one title housing six families for over ten years, way better than the previous 30 years LL before us. If that is Gods gift to society then so be it. :ohmy:

[Waltzing]

Should we all be allowing this tread to return to OCA's profit and loss balance sheet and customer care.

I suppose the wider property market is applicable to the stock but many of you as investors have a life time of property in NZ.

Should we now be looking out 10 years or more when investing in this sector.

The government might be here for a while but it will change one day.

This sector isnt going away and may well some time in the future have its day in the sun again.

[Dlownz]

Here's my take on the whole housing debacle. Housing is the one asset that is taxed the least.
House prices need to drop (let's face it, stop bring so damm greedy)
The changes labour has made don't actually fix the problem (just another band aid)
Until nz faces the fact to truly close the loophole it's going to be on going
The fix.. Tax all housing. 05%. As a start. Doesn't matter if its your family home.
Drop all personal tax rates to match the gain in housing tax.
If you own one house you will be about the same better off.
If you own more than one it starts to hit. It's time housing is no longer seen as a investment
When you have the news story's about complaining about these things rather than have a title ie Judith Collins have instead woman that owns this many houses....
The complainers are always the ones that own the most. Tremains in hawkesbay owns somewhere in the ball park of 400 Houses. It's time to stop that crap. Clost the loop holes.

[Brain]

Has anyone else noticed that the nz herald story of the 12 house landlord Peter Lewis, with a "strategy" to avoid the interest deductibility rules is staying at the top of the herald app. For a few days now, other big current stories just leap frog it down the list. I call it a non-story as he simply plans to downsize and clear his mortgage I wouldnt call that amazing. There must be a lot of interest to keep it up there.

Peter Lewis with 8% dept on his property portfolio ( assuming the properties are roughly equal value) was not going to be effected too much by the tax change. I think he was just trying to tell everybody how wealthy he is.

It is the recent investors in property that I think have been badly let down. Always risky investing in areas where the govt can change the rules on you. After the non deductibility of interest move which for most came right out of left field you have to wonder what these muppets are going to do next.

[Waltzing]

" Clost the loop holes."

technically these arnt LOOP HOLES and thats where the problem starts.

Yes Brain the horse has bolted.

"these muppets are going to do next"

That what all the young turks in ACA offices are now thinking.

Its a whole new game. We started the move to a new tax location several years ago.

It now looks like the right move.

[Beagle]

Cindy is the master of "spin" Unfortunately there are vast hordes of "have nots" out there that lap that complete nonsense of "close the loophole up" because they think all people who have done well have been rorting the system.

I have revised down my fair value price target for OCA because I think house price inflation going forward in the foreseeable future will be negligible. Shares are fair value at $1.30 in my opinion, certainly no great bargain there and investors will need to take a long term view because I see little to get this fired up again towards $1.60 anytime soon.

[bottomfeeder]

Hit $1.31 earlier. For 1c and a bit of brokerage, maybe betterer to by on-market??

That's what I thought. Put my order in for $1.31, thinking at least on market you will get what you want and won't be scaled back. I got 200 yesterday. I am at the top of the queue, but if I don't get my order filled, they will be an expensive purchase with the brokerage up front. May have to wait for the documents in the mail.

[bottomfeeder]

I have revised down my fair value price target for OCA because I think house price inflation going forward in the foreseeable future will be negligible. Shares are fair value at $1.30 in my opinion, certainly no great bargain there and investors will need to take a long term view because I see little to get this fired up again towards $1.60 anytime soon.

Yeah have to agree. This CR and purchase has put a limiter on the SP, for some time to come.

[macduffy]

May have to wait for the documents in the mail.

Better to have contract notes emailed.

:)

[dobby41]

That's what I thought. Put my order in for $1.31, thinking at least on market you will get what you want and won't be scaled back. I got 200 yesterday. I am at the top of the queue, but if I don't get my order filled, they will be an expensive purchase with the brokerage up front. May have to wait for the documents in the mail.

Am I reading the offer correctly that the price is the lower of $1.30 or 2.5% discount to the 5 day average prior to 12th April - so may be less than $1.30

[justakiwi]

Yes. That is correct.


Am I reading the offer correctly that the price is the lower of $1.30 or 2.5% discount to the 5 day average prior to 12th April - so may be less than $1.30

[BlackPeter]

Cindy is the master of "spin" Unfortunately there are vast hordes of "have nots" out there that lap that complete nonsense of "close the loophole up" because they think all people who have done well have been rorting the system.

I have revised down my fair value price target for OCA because I think house price inflation going forward in the foreseeable future will be negligible. Shares are fair value at $1.30 in my opinion, certainly no great bargain there and investors will need to take a long term view because I see little to get this fired up again towards $1.60 anytime soon.

Not quite sure I understand where this pessimism is coming from. Most analysts think that the impact of the governments latest house price package will be moderating the market, but only modestly.

Interesting to look into todays data wrap released form the ANZ research team. They think that the latest announcements might push house price inflation down by roughly 2 % per year - which would mean for the current year only 25% house price inflation instead of the originally estimated 27%.

https://publications.anz.com/SingletrackCMS__DownloadDocument?uid=033428e6-47a9-4d0e-880f-cccea2640d6d&docRef=3f29086e-987a-4eb8-97ae-e44763b6d7cf&jobRef=9d6f174b-e9ea-4922-b270-16c65a8eded5

Given that I am not sure the link will work - here is the relevant graph:

12391

Now, I don't like the way how the government introduced this change either and there are clearly fairness issues, but from the economic impact (and the impact on house prices) I don't think this means the end of the world is nigh ...

I don't see the latest tax changes impacting significantly on OCA or any other retirement village provider, and people will grow old and need care as before this announcement ...

As far as house prices are concerned ... I think the measure is likely to take the edge of the currently absolutely crazy house price inflation, and this is a good thing.

[nztx]

And how long will it take to see any results from the latest Govt package ? (factoring in Govt's past success rates
with jumping on the problem and actually throwing just a few walls on a block of dirt ) .. ;)

Let's give credit for their ability to jump on wrong end of issues & opposite happening, like a see-saw high into the sky .. ;)

Maybe Miss Muppet can hold the thing down & scream more loudly than the earlier drone .. ;)

[nztx]

YUK! You should be ashamed of yourself.


Sorry to disturb your cornflakes - but as you will be aware - with a certain patronage the point is valid .. ;)

[Beagle]

Am I reading the offer correctly that the price is the lower of $1.30 or 2.5% discount to the 5 day average prior to 12th April - so may be less than $1.30

Correct.

A lot of investors are angry about Labour collapsing the goal posts on top of them BP. Two thirds of houses at the big Auckland auction were passed in with no bids on Wednesday, the day after Labour dropped their bombshell.

[bottomfeeder]

Not related to OCA directly, but relevant to valuation of its property. Deductibility of interest shouldn't put a long term damper on property prices. While not deductible against income, it will be deductible against bright line tax as a holding cost. One way or another it will be deductible. So for investors who want to sell within 10 years, it shouldn't be a real burden, or have I got it wrong. If I am right the effect on property prices may not be as great.

[nztx]

Not related to OCA directly, but relevant to valuation of its property. Deductibility of interest shouldn't put a long term damper on property prices. While not deductible against income, it will be deductible against bright line tax as a holding cost. One way or another it will be deductible. So for investors who want to sell within 10 years, it shouldn't be a real burden, or have I got it wrong. If I am right the effect on property prices may not be as great.

My take on this is - there may be an element of factoring in tax cost of non deductible interest flowing to rents

That will at least see prices maintain if not rise - given all the additional risks politicians have added into
the basket

Mum & Dad investors where possible may be looking at exiting for easier investment classes without the risks

The news wont be good for Renters - add more property coming out of rental stock onto the market
Speculators & potential investors will think twice = less new Property Investors with stock for renters.

Longer lead time for Govt funded initiatives to see fruit & add to basket of rental stock
Longer Queues for rentals
More homeless
More demand for reduced number of available stock - short to medium term - at higher rates

Short term the answers suggest Govt's further meddling has once again shot Renters badly in both feet
- the exact opposite of what they were trying to solve .. like earlier attempts at meddling

The private element in the Property market is as if not more important than Govt's presence
Reduce one - short term major pain & the other has to tip wholesale bucks in to bridge the gap .. ;)

And of course the Good Old Taxpayer gets to lump the final large bll for all the mindless meddling all the
way along ..

Have I summed it up correctly or missed anything ? ;)

[Waltzing]

"Have I summed it up correctly or missed anything"

and send that to the Pm

but what effect will it have on OCA and sector if any...?

[nztx]

"Have I summed it up correctly or missed anything"

and send that to the Pm

but what effect will it have on OCA and sector if any...?


Water off a ducks back in Cuckoo land - IMO on first point .. :)

I guess slight difference -- Oldies wanting to share their Village's gains is possibly more of a point .. ;)

[Beagle]

https://www.interest.co.nz/property/109683/bnz-economists-say-government-dead-set-curtailing-house-prices-and-will-do-what-it?utm_source=ST&utm_medium=email&utm_campaign=ShareTrader+AM+Update+for+Friday+26+M arch+2021

Its difficult to come to any other conclusion than the tide has turned, or is about to turn.

[nztx]

Oh good -- Govt now like to try control free market in property .. using Bank of Taxpayer ..

bound to end well with No private property investors left, many many further annoyed homeless
and much of country totally P*****d off with Cindy's band of clueless bureaucrats & muppets
needlessly wasting resources pursuing endeavours they have already failed badly at

= Boot up current lot's stupid behinds eventually & out .. ;)


The EXACT Opposite measures to what the current bunch of idiots have done would solve things in record time
and little cost -- maybe a little depreciation and removal of the idiot restrictions tossed in to fix things .. ;)



A simple Supply & Demand Equation .. seems lost on the Socialist Fumblers
with a RB Governor out there all too happy to throw more petrol on the flames .. ;)

I'm no economist ... but how DUMB is it that the current Govt haven't woken up to the GROSS
STUPIDITY of their campaign & vendetta against private landlords - mostly Mums & Dads
with just ONE Rental Property ? .. ;)

[Getty]

Here's my take on the whole housing debacle. Housing is the one asset that is taxed the least.
House prices need to drop (let's face it, stop bring so damm greedy)
The changes labour has made don't actually fix the problem (just another band aid)
Until nz faces the fact to truly close the loophole it's going to be on going
The fix.. Tax all housing. 05%. As a start. Doesn't matter if its your family home.
Drop all personal tax rates to match the gain in housing tax.
If you own one house you will be about the same better off.
If you own more than one it starts to hit. It's time housing is no longer seen as a investment
When you have the news story's about complaining about these things rather than have a title ie Judith Collins have instead woman that owns this many houses....
The complainers are always the ones that own the most. Tremains in hawkesbay owns somewhere in the ball park of 400 Houses. It's time to stop that crap. Clost the loop holes.

Good on you for posting a gutsy post.

Everyone is looking for the everybody else tax, that is one that they dont have to pay.

In lieu of that, the next painless tax is capital gains on property, including as you say owner occupied homes.
If people live in their home for say 20 years, it has trebled in price, would it hurt them if they had to pay tax on that "unearnt" income when they sell?
It would help put a lid on prices, stop speculation, and help keep housing as what it should be, a place to live, then hand it on to the next bloke at an affordable price when you have finished with it.

But like you, this has to be offset with a reduction in earnt income, such as PAYE TAX.

I dont agree with your point on Tremains though, or the thousands of other big or small private landlords out there.

They provide an important service in housing those on their way to private ownership, or those who will never be able to buy.

I presume your point on that is that Tremains etc have bought these homes in competition to people who could have bought them as owner occupied.
Bit idealistic maybe, but either way, people are being housed.

BTW, I am not connected to Tremains, or any other home rental co.

[Beagle]

Oh good -- Govt now like to try control free market in property .. using Bank of Taxpayer ..

bound to end well with No private property investors left, many many further annoyed homeless
and much of country totally P*****d off with Cindy's band of clueless bureaucrats & muppets
needlessly wasting resources pursuing endeavours they have already failed badly at

= Boot up current lot's stupid behinds eventually & out .. ;)


The EXACT Opposite measures to what the current bunch of idiots have done would solve things in record time
and little cost -- maybe a little depreciation and removal of the idiot restrictions tossed in to fix things .. ;)



A simple Supply & Demand Equation .. seems lost on the Socialist Fumblers
with a RB Governor out there all too happy to throw more petrol on the flames .. ;)

I'm no economist ... but how DUMB is it that the current Govt haven't woken up to the GROSS
STUPIDITY of their campaign & vendetta against private landlords - mostly Mums & Dads
with just ONE Rental Property ? .. ;)

Lets see how happy Labour's supporters are when rents go up $120-$150 a week and those who own their own homes and are not landlords see the byproduct of this war on investors with the value of their own homes in decline.

[nztx]

Lets see how happy Labour's supporters are when rents go up $120-$150 a week and those who own their own homes and are not landlords see the byproduct of this war on investors with the value of their own homes in decline.



YESSSSS - you're on to it .. :)

[Waltzing]

Mr B is best!

Yes but even if we get some deflation for a while. 10 years out what accounting model will be adopted if it is found that GDP simply did not support the deficit required. The reserve bank must be wondering what next. Japan style support to the market to support the tax base required to fund the deficit as the government faces so many services requiring much larger funding and health is about to implode.

They are going to be sitting on a ever hot volcano.

[dobby41]

Lets see how happy Labour's supporters are when rents go up $120-$150 a week and those who own their own homes and are not landlords see the byproduct of this war on investors with the value of their own homes in decline.

How long do you think it will take for rents to go up?
The effect, for existing owners, doesn't start until 1 Sep and then only removed 255 of the deductibility.
Given the cashflow effect of removing deductibility of interest for someone paying 2.29% is about the same as the mortgage rate going up to 3.3% (and being fully deductible) should it happen at all? Rents didn't go down when mortgage rates from from 6+% to 2+%.

[nztx]

How long do you think it will take for rents to go up?
The effect, for existing owners, doesn't start until 1 Sep and then only removed 255 of the deductibility.
Given the cashflow effect of removing deductibility of interest for someone paying 2.29% is about the same as the mortgage rate going up to 3.3% (and being fully deductible) should it happen at all? Rents didn't go down when mortgage rates from from 6+% to 2+%.


but increases in Rates & Insurance plus all the growing list of Govt prescribed 'add-ons' etc will always generally ensure
that Rents will continue upwards recovering those extra costs..

Interest rates here look to be showing signs of possible tickle upwards say within 5-10

Stuck with yearly reviews/increases, now this on the horizon IMO expect some further hefty increases in Rent on the way
and in that catch up along with cushioning for Interest Non deductibility

Yields will be calculated on newer values after moving upwards as well

Some of the target audience of Renters will be Govt subsidised as well ..

Remember there is a avalanche of would be Rentors desperate for a roof out there -- with a limited available supply
available - so what does that suggest ?

[Biscuit]

but increases in Rates & Insurance plus all the growing list of Govt prescribed 'add-ons' etc will always generally ensure
that Rents will continue upwards recovering those extra costs..

Interest rates here look to be showing signs of possible tickle upwards say within 5-10

Stuck with yearly reviews, now this on the horizon IMO expect some further hefty increases in Rent on the way
and in that catch up along with cushioning for Interest Non deductibility

Remember there is a avalanche of would be Rentors desperate for a roof out there -- with a limited available supply
available - so what does that suggest ?

I think we will see a flood of small investors out of the residential rental market now. With a serious risk of little capital gain, poor rental yield made worse by ever increasing rates and insurance costs, increasing bureaucratic requirements, likely increases in interest rates, interest and depreciation non-deductibility, there is no way that is an attractive investment.

[Mrbuyit]

Demand may also soften for first home buyers, that are going to have an asset with stagnant / minimal capital gain VS unlimited double digit gains?
Possibly some supply increase with leveraged landlords needing to offload property that now requires too much external cash injection to operate?
Do either of these things impact OCA unit supply and demand?
Well maybe Beryl and Alfred have some difficulty selling their 70s bungalow for $1mil plus to move into a shiny new OCA unit?

[Biscuit]

Demand may also soften for first home buyers, that are going to have an asset with stagnant / minimal capital gain VS unlimited double digit gains?
Possibly some supply increase with leveraged landlords needing to offload property that now requires too much external cash injection to operate?
Do either of these things impact OCA unit supply and demand?
Well maybe Beryl and Alfred have some difficulty selling their 70s bungalow for $1mil plus to move into a shiny new OCA unit?

I think that is a real possibility now.

[nztx]

https://www.stuff.co.nz/business/property/300262320/property-investors-petition-for-reversal-of-rule-changes

Property investors petition for reversal of rule changes


https://www.stuff.co.nz/business/money/124655757/renter-says-delay-in-getting-a-bond-refund-is-causing-her-financial-hardship

Renter says delay in getting a bond refund is causing her financial hardship


HAPPY PEOPLE everywhere ;)


This is what you get with a Meathead Govt trying to meddle in the Free Market - Folks ;)

[Getty]

maybe Bob Jones of property fame, will sponsor a boxing tournament, where all parties can get in & sort out their differences.

All profits to the night shelter.

[nztx]

Cindy's Govt really need to learn how to be smarter .. ;)

Have they fallen out with Helen Clark, since they started looking at screwing over Landlords ? ;)

Cullen was smart - he simply didn't meddle in things that cause large numbers issues ;)

[Balance]

How long do you think it will take for rents to go up?
The effect, for existing owners, doesn't start until 1 Sep and then only removed 255 of the deductibility.
Given the cashflow effect of removing deductibility of interest for someone paying 2.29% is about the same as the mortgage rate going up to 3.3% (and being fully deductible) should it happen at all? Rents didn't go down when mortgage rates from from 6+% to 2+%.

Rents like property prices move up in unison.

[nztx]

How many Homeless were there when Clark & Cullen were in ?

None or Very Few ? ;)


Ardern, The King of the Money (or Debt) Pile & Miss Muppet:

We spend 3.9 Billions on State Housing to fix it

The Bad News:


You are mostly all still going to be HOMELESS or in Motels in 5 years Time .. ;)

We are too busy chasing Greedy Private Landlords who may have made a bit on a rising market
to even be bothered building too many New Houses .. ;)


How Many MORE are going to be thrown onto the large growing HOMELESS heap from Labour's
most recent chapter in their Vendetta against Private Landlords (of mostly just one house each) ? ;)


Labour have done MORE in their recent terms to harm & make Homeless the Vulnerable & those
needing a Roof over their head - through current Policies & RB Interventions than any other
Labour Government probably in history in NZ - is that not true ? ;)

[Beagle]

I think we will see a flood of small investors out of the residential rental market now. With a serious risk of little capital gain, poor rental yield made worse by ever increasing rates and insurance costs, increasing bureaucratic requirements, likely increases in interest rates, interest and depreciation non-deductibility, there is no way that is an attractive investment.
Add to that list being taxed on any gains if you sell within 10 years, tenancy reforms tipping the balance of power more and more in favour of the tenant and the very real prospect of capital loss either through decline in general market value, tenant damage or methamphetamine contamination, (or some combination of these factors), as well as increasing risks of belligerent tenants not paying rent and making it much harder to evict them even Blind Freddy can tell you this is now an absolute mugs game.

I think quite a significant number of investors will sell and try and get in before the decline happens, (but the market has already turned).

[Balance]

How many Homeless were there when Clark & Cullen were in ?

None or Very Few ? ;)


Ardern & Miss Muppet:

We spend 3.9 Billions on State Housing to fix it

The Bad News: You are mostly all still going to be HOMELESS or in Motels in 5 years Time .. ;)

We are too busy chasing Greedy Private Landlords who may have made a bit on rising market
to even be bothered building too many New Houses .. ;)


How Many MORE are going to be thrown onto the large growing HOMELESS heap from Labour's
most recent chapter in their Vendetta against Private Landlords (of mostly just one house each) ? ;)


Labour have done more in their recent terms to harm & make Homeless the Vulnerable & those
needing a Roof over their head - through current Policies & RB Interventions than any other
Labour Government probably in history in NZ - is that not true ? ;)

What happens when you have a bunch of cone heads who have never done anything useful or meaningful in their lives & careers outside of sucking on taxpayers etc etc.

[JohnnyTheHorse]

https://www.stuff.co.nz/business/property/300262320/property-investors-petition-for-reversal-of-rule-changes

Property investors petition for reversal of rule changes


https://www.stuff.co.nz/business/money/124655757/renter-says-delay-in-getting-a-bond-refund-is-causing-her-financial-hardship

Renter says delay in getting a bond refund is causing her financial hardship


HAPPY PEOPLE everywhere ;)


This is what you get with a Meathead Govt trying to meddle in the Free Market - Folks ;)

What free market??? There hasn’t been a free market in a very long time with the way the governments / central banks are setting the risk free rate for the market.

I don’t agree with the way they have approached this with the new tax rule on the basis that it’s a fundamental business process. Would have much rather they approached it from increasing interest rates for investors (like most businesses), DTI ratio, limit IO lending, limiting use of equity in existing properties.

The greed I’ve seen from many property investors over this absolutely disgusts me. Get your heads out of your arses and put yourself in shoes of a family slaving away, earning an average wage, with no hope of ever owning a home. We now have a class divide where most people can only buy a house if their parents are rich. What we have seen with house prices is going to cause real damage across society and we will all pay the price. The educated youth will leave and everyone in the bottom half will stop wanting to contribute meaningfully to society.

And that’s not to mention the risk to the financial system of what we’ve seen.

NZ has a bleak future.

[Balance]

What free market??? There hasn’t been a free market in a very long time with the way the governments / central banks are setting the risk free rate for the market.

I don’t agree with the way they have approached this with the new tax rule on the basis that it’s a fundamental business process. Would have much rather they approached it from increasing interest rates for investors (like most businesses), DTI ratio, limit IO lending, limiting use of equity in existing properties.

The greed I’ve seen from many property investors over this absolutely disgusts me. Get your heads out of your arses and put yourself in shoes of a family slaving away, earning an average wage, with no hope of ever owning a home. We now have a class divide where most people can only buy a house if their parents are rich. What we have seen with house prices is going to cause real damage across society and we will all pay the price. The educated youth will leave and everyone in the bottom half will stop wanting to contribute meaningfully to society.

And that’s not to mention the risk to the financial system of what we’ve seen.

NZ has a bleak future.

Not for property owners - the future is actually very very bright.

[winner69]

Bloody heck - now FHB want preferential treatment

Is it me or is there total confusion and misunderstanding out there

https://www.stuff.co.nz/life-style/homed/housing-affordability/300261813/calls-for-first-home-buyers-to-be-exempt-from-brightline-test

[nztx]

It's surprising that Ardern's band of dreaming supporters completely oblivious to the vast costs of Govt inspired
regulatorily required Rental Improvements haven't yet advocated putting their individual paws out for a share
of the Property's Capital Growth during period of their tenancies .. ;)


Nothing like 'If it's not Broken then lets screw it over completely & make sure the job is completely Stuffed' .. ;)

Let's see how much more of the very Real Socialist 'what's yours is mine' there is still to creep out from
under the beds across the nation .. ;)

[Balance]

Bloody heck - now FHB want preferential treatment

Is it me or is there total confusion and misunderstanding out there

https://www.stuff.co.nz/life-style/homed/housing-affordability/300261813/calls-for-first-home-buyers-to-be-exempt-from-brightline-test

The worms are crawling out of the rotting dog’s breakfast hastily put together by the Kiwibuild government.

[Waltzing]

When is a house a house. From accounting tax stand point rental properties are now not a business for which normal cost of capital taxation rules apply.

What other forms of rental accommodation fall under the regs as they stand , MR B?

[850man]

Bloody heck - now FHB want preferential treatment

Is it me or is there total confusion and misunderstanding out there

https://www.stuff.co.nz/life-style/homed/housing-affordability/300261813/calls-for-first-home-buyers-to-be-exempt-from-brightline-test

No pleasing some people is there. I can see Cindy handing this one out, any excuse for another speech from the throne to sprinkle more kindness at any cost

[artemis]

No pleasing some people is there. I can see Cindy handing this one out, any excuse for another speech from the throne to sprinkle more kindness at any cost

When you say 'any cost' I think you mean 'taxpayer cost'.

[nztx]

When is a house a house. From accounting tax stand point rental properties are now not a business for which normal cost of capital taxation rules apply.

What other forms of rental accommodation fall under the regs as they stand , MR B?


More than one way of skinning a whatever to get a work around though .. most smart Accountants & Advisors
will have it worked out before the Band of Meddlers' ink dries on signing it off .. ;)

[nztx]

No pleasing some people is there. I can see Cindy handing this one out, any excuse for another speech from the throne to sprinkle more kindness at any cost

Does such kindness extend as far as 5 years sleeping in Clarke's mancave Rent Free ? ;)

[Baa_Baa]

Wake me up when someone mentions OCA. Yawn. :sleep:

[Beagle]

When is a house a house. From accounting tax stand point rental properties are now not a business for which normal cost of capital taxation rules apply.

What other forms of rental accommodation fall under the regs as they stand , MR B?

Don't know, maybe boarding houses, hopefully not retirement units ? :eek2: The whole thing is an absolute dog's breakfast. 3.3% allocation to this sector now down from ~ 5% yesterday. Feels about the right level for now...wait and see where the dust settles.

The worry is there's vast numbers of disaffected voters who think Cindy has done well closing this "loophole" and have no understanding of what is fair and reasonable for investors who have put up substantial risk capital only to have the Govt not just move the goal posts but collapse them on top of investors. The Govt don't care, they have simply thrown hundreds of thousands of baby boomers who have one or two rental properties under the bus.

[nztx]

Wake me up when someone mentions OCA. Yawn. :sleep:



Aha .. OCA may make considerably more filthy LOOT from Govt renting out to the subsidised Homeless
which are estimated to be growing more rapidly in numbers than the Oldies cycling in then departing

Of course a different market, but the size of the trove of Filthy Loot has been rumoured to be absolutely
Huge and is shelled out direct from Robertson's 'Bank of the Taxpayer" .. No Questions asked .. ;)

Just think of the next Rest Home being built as an Extra Large Motel .. ;)

[Waltzing]

Oh Dear "absolute dog's breakfast".

no doubt in a week or two we will see the auction numbers on Interest.co.nz

well perhaps we will see a slow creep up in some good commercial prop stock.. bought more KPG today...

even WBC went up... sold some more that came into profit.

Could all those farmers , business owners and Boomers now feel unsafe?

Polls could change again.

[dobby41]

Yields will be calculated on newer values after moving upwards as well

Which is why Brian Fallow suggested today in the Herald (paywall) that property investors shouldn't be able to deduct interest costs because the borrowed money was used mainly for the capital gain.
It was an interesting opinion piece.

[dobby41]

Rents like property prices move up in unison.

But people are saying that prices will stagnate or go down but rents will go up?

[nztx]

Which is why Brian Fellow suggested today in the Herald (paywall) that property investors shouldn't be able to deduct interest costs because the borrowed money was used mainly for the capital gain.
It was an interesting opinion piece.


How many properties does he own .. or does the early morning walk just take him past a few ? ;)

[nztx]

But people are saying that prices will stagnate or go down but rents will go up?


Captive Renter audience not going anywhere fast .. sort of insulates pricing

Insurers, Banks, Govt Regulation & Local Body sticky fingers will always ensure upwards rents hooked to spiralling costs

It dont look good for Renters who will be receiving end of that lot and then some more from the most recent lot ontop coming ;)

[nztx]

More Rental Happiness



https://www.stuff.co.nz/life-style/homed/latest/124652371/family-that-bought-house-for-homeless-parents-say-tax-changes-leave-a-bitter-taste

Family that bought house for homeless parents say tax changes leave 'a bitter taste'


https://www.stuff.co.nz/pou-tiaki/124638933/suitable-for-two-tenants-just-not-a-single-mother-and-baby-son

'Suitable for two tenants', just not a single mother and baby son


HAPPY PEOPLE EVERYWHERE ;)

[winner69]

Never thought about it - I assume the BL test applies on homes owned in partnership with say the kids, even if the property is the their family home.

[Bjauck]

Which is why Brian Fellow suggested today in the Herald (paywall) that property investors shouldn't be able to deduct interest costs because the borrowed money was used mainly for the capital gain.
It was an interesting opinion piece.

I wonder if more landlords will decide the hassle of tenants is too much now - especially if mortgage interest cannot be deducted from gross rent. So will the next step be to impose a tax on owning empty non-tenanted houses to stop the rental housing pool from shrinking.

To test the waters, Maybe the government should have phased in their reform by allowing only 50% of interest to be deductible from rent. With the other 50% to be deductible from bright line taxable capital gains on sale if any.

[Joshuatree]

Wake me up when someone mentions OCA. Yawn. :sleep:

Exactly. a bunch of political stool pigeons fouling up the place with their rentals.Sure you do ,poop; theres another materialistic bubble.

[Balance]

But people are saying that prices will stagnate or go down but rents will go up?

Cost recovery (as in no tax deduction on interest) just as the costs of compulsory insulation, heat pump and steam extractor have been passed onto tenants.

Obviously only able to do so when there's a housing shortage - you see any possibility of the housing shortage becoming a surplus?

[BlackPeter]

How many Homeless were there when Clark & Cullen were in ?

None or Very Few ? ;)


Ardern, The King of the Money (or Debt) Pile & Miss Muppet:

We spend 3.9 Billions on State Housing to fix it

The Bad News:


You are mostly all still going to be HOMELESS or in Motels in 5 years Time .. ;)

We are too busy chasing Greedy Private Landlords who may have made a bit on a rising market
to even be bothered building too many New Houses .. ;)


How Many MORE are going to be thrown onto the large growing HOMELESS heap from Labour's
most recent chapter in their Vendetta against Private Landlords (of mostly just one house each) ? ;)


Labour have done MORE in their recent terms to harm & make Homeless the Vulnerable & those
needing a Roof over their head - through current Policies & RB Interventions than any other
Labour Government probably in history in NZ - is that not true ? ;)

Look, we get it that you don't like the current government - and hey, everybody is entitled to their view. However - your constant bitching about the government has absolutely nothing to do with OCA. Please leave your droppings in the appropriate thread instead of constantly polluting this one.

[bull....]

when they run out of motels to house the homeless the govt can use the surplus retirement units to house them.
as the last tax loophole entices everyone to band together in schemes to build retirement villages

[Waltzing]

Interesting article in stuff on a property investor restoring apartments that he claims were run down. One wonders just how much consulting was done on this POLICY or rather lets face it CGT was something they wanted to do , were always going to do and nothing was going to get in the way. This was the perfect storm to bring it in.

How many run down houses or apartments have been rebuilt and how many now will be left to rot.

New retirement villas for the semi retired? A new village to cater for a younger age group?

can they lower the age one can move in? 50 and over?

[bohemian]

Cost recovery (as in no tax deduction on interest) just as the costs of compulsory insulation, heat pump and steam extractor have been passed onto tenants.

Obviously only able to do so when there's a housing shortage - you see any possibility of the housing shortage becoming a surplus?

The demand is being caused by Covid refugees, wait till everyone is vaccinated and they will be out of here.

[Curly]

Judging by this thread the Cindy the tooth ferry is hitting many nails on the head.
What does the multi property owning landlord offer to our society other than self interest and exploitation of a housing need.
Can anyone point me to the OCA thread?
Need to catch up on Beagle talking with forked tongue.

[Cyclical]

Interesting article in stuff on a property investor restoring apartments that he claims were run down. One wonders just how much consulting was done on this POLICY or rather lets face it CGT was something they wanted to do , were always going to do and nothing was going to get in the way. This was the perfect storm to bring it in.

How many run down houses or apartments have been rebuilt and how many now will be left to rot.

New retirement villas for the semi retired? A new village to cater for a younger age group?

can they lower the age one can move in? 50 and over?

Yes, there is real danger here. One of my colleagues, a recent fhb bless her, was saying the market needs investors to buy the dungas to sort them out, as fhb's and those without plenty of equity can't go there because the banks don't like the risk. Often banks will insist on a property report which will highlight every issue under the sun (they are getting tougher by the minute...good luck selling that '90s monolithic clad house) and bring about termination of the contract.

[Waltzing]

if rate go up too high i will be under pressure from the high smarter minds in our little group to trade theses not invest.

as alluded to by MR B rates impact low div property possible including OCA.

[Greekwatchdog]

Can you take this conversation elsewhere. You have hijacked the thread.

[tommy_d]

We all know where core blame lies for the current Housing / Pricing / Market situation lies and that's clearly
at the steps of Parliament .. ;)

agree 100%. Anyone attributing it to any particular government that has had a role in the last 20 or so years is simply displaying their political bias, it's not like it hasn't been a constant direction of change irrespective of who is in charge.

As to fixing what i see as the problem = housing being too much of a proportion of living costs for many or most, and people like me making gains that are speculative in nature and untaxed simply due to getting lucky on buying at the right time - if i had a solution i could see working, i'd love to see it implemented. I don't, and am glad it's not my job to try and solve what i see as a massive problem in our society.

[tommy_d]

I think quite a significant number of investors will sell and try and get in before the decline happens, (but the market has already turned).
sounds like those trying to sell OCA at $1.50 after you'd unloaded at $1.60 ;)

[Habits]

Judging by this thread the Cindy the tooth ferry is hitting many nails on the head.
What does the multi property owning landlord offer to our society other than self interest and exploitation of a housing need.
Can anyone point me to the OCA thread?
Need to catch up on Beagle talking with forked tongue.

Gee you have issues. As for Beagle, when he is not here people miss his posts... but you dont have to take his advice, form your own opinion and take ownership

[Waltzing]

The model for retirement villages might not be perfect from a social values perspective for all members of society.

There is no doubt that for many people they provide the hope of a safe place for loved ones that need care.

There are no super profits in the OCA model so far.

MR B is entitled in the market to rebalance his portfolio at his discretion at any time and is not required to make any disclosures; no shareholder should have to in any stock unless required by the market regulator under statue law.



DISC: Holding and not selling a small holding.

[Greekwatchdog]

Back to OCA. Those live in Akl. What are your thought on the Hobsonville Point acquisition? Does it fit in to there Meadowbank/Sand portfolio mix?

[James108]

There is a summerset and will soon be a ryman in hobsonville point. But this village is already established so low risk I imagine. Hobsonville point is a very nice area with great access to the motorway and ferry. I imagine the geographical ‘catchment’ is quite large.

[bull....]

from a t/a perspective the uptrend from covid lows has been broken not only oca but all retirement stocks. from a fundamental perspective macro headwinds due to govt intervention in the market will hamper continued growth going forward and the uncertainty in regards will they close the retirement tax loophole , probably not until theres over supply but who knows for sure. wont be long into the future now when this industry becomes a sunset industry reliant only on churn and care fee's for profit.

[winner69]

from a t/a perspective the uptrend from covid lows has been broken not only oca but all retirement stocks. from a fundamental perspective macro headwinds due to govt intervention in the market will hamper continued growth going forward and the uncertainty in regards will they close the retirement tax loophole , probably not until theres over supply but who knows for sure. wont be long into the future now when this industry becomes a sunset industry reliant only on churn and care fee's for profit.

Loopholes seem to be an endangered species so maybe retirement tax free gains are an endangered species as well

[Bjauck]

Loopholes seem to be an endangered species so maybe retirement tax free gains are an endangered species as well ...and will the current government continue to claim things are loopholes, when they are actually standard practice, to "massage" favourable electoral support? So as the current government descends to Orwellian tactics, who knows what their next target will be.

Owner-occupied home real estate ownership has far greater "loopholes" using the definition used by the Labour government. It is not taxed on capital gains. It does not have a bright line test and the net benefit derived from it is not subject to either a fringe benefit tax or FDR fair dividend or income tax. Why didn't they tackle that more glaring "loophole"?

[bull....]

Loopholes seem to be an endangered species so maybe retirement tax free gains are an endangered species as well

maybe according to interest.co.nz article the ird will decide during the consultation phase

Different tax rules for commercial and residential investment properties create uncertainty for owners of mixed use premises

The changes mean that owners of a residential investment property will no longer be able to claim the interest portion of their mortgage payments as a tax deductible expense, and if they sell the property within 10 years of purchasing it they will be taxed on any capital gain (commonly referred to as the bright-line test).
The new rules don't apply to commercial investment properties such as shops, offices, warehouses and factories, which will not be subject to the bright-line test and their owners will still be able to claim mortgage interest as a tax deductible expense.
But the Government is yet to decide how the changes to interest deductibility rules will be applied to mixed use properties, if at all, leaving thousands of investors up in the air on the issue for the time being at least.
Mixed use properties are surprisingly common and are growing in number

https://www.interest.co.nz/property/109705/different-tax-rules-commercial-and-residential-investment-properties-create

hence the market will be skewed towards commercial investment for tax reasons and the build to rent model will become the new thing eg mirvac model in aus. kpg is currently investigating this as well. the new model will replace mums and dads as rental providers in the long run

[Beagle]

I am pleased I rebalanced earlier this month and (for the record) clearly noted why I had done so at the time. (The rate of human resource cost growth since listing at a CAGR of 7.3% is a real handbrake on growth).

The Govt's move this week overturned a fundamental tax principle of business expense deductibility that goes back as far as I can ever remember, certainly at least 60 years to the Income Tax Act 1961.

Its radical, destabilizing and proves almost anything is possible (including attacking the retirement sector's tax free gains). Its naked "envy socialism" at the most ugly I can ever recall and represents the most egregious breech of fundamental rights of business people to claim legitimate business expenditure I have ever seen. Where is National saying they will immediately repeal this is they get elected ?

What worries me is the hordes of ignorant "have nots" who this extremist socialism appeals too. These people have no understanding of the tax system and what an extreme and egregious breech of fundamental rights this is. There's probably millions of them. This is what worries me. If this sledgehammer to bust down the real estate market doesn't work, what's next ? What sector is next, the retirement sector ?

At best I see sustained selling pressure from badly disaffected landlords balancing out excess immigration and getting the housing market back into balance from a demand supply perspective and house prices tracking in line with inflation, no real inflation adjusted increase in housing prices for the foreseeable future. I think a scenario this benign is unlikely. (This undermines my previous expectations of 3-4% house price inflation per annum and somewhat undermines my expectations of eps growth for OCA).

At worst I can foresee a significant fall in the housing market as a glut of new supply and substantial wave of disaffected investor selling overwhelms market demand and as prices start to fall further substantial waves of investor selling has the effect of crashing the market by 30-50% over the next few years. This would totally undermine my expectations of underlying eps growth in OCA in the years ahead.

The actual outcome is likely to be somewhere in the middle of the above two scenario's and there will be a meaningful impact on OCA's ability to grow eps. How meaningful is quite frankly anyone's guess.

What's happened is a game changer, its not closing a loophole (Xi Jinping would be proud of that sort of propaganda and might even be taking notes)...which is why I have further reduced my stake in this sector to just a little over 3% this week. ( I am undecided on whether or not to apply for $50K worth under the retail offer) I'm not feeling favorable about it at present because I think there are better companies in sectors that aren't being hit with a a radical socialist sledgehammer, or have already been heavily coerced to repay the wage subsidy (WHS is a good example).

Caveat - Predictions about the future are notoriously difficult to get right. I am happy to hold a modest stake in OCA and hope that someone in Govt sees common sense or that OCA can make some modest progress with growth despite the tough outlook for real estate going forward. Hopefully one day in the future this draconian and extremist socialism will be reversed...

[Beagle]

...and will the current government continue to claim things are loopholes, when they are actually standard practice, to "massage" favourable electoral support? So as the current government descends to Orwellian tactics, who knows what their next target will be.

Owner-occupied home real estate ownership has far greater "loopholes" using the definition used by the Labour government. It is not taxed on capital gains. It does not have a bright line test and the net benefit derived from it is not subject to either a fringe benefit tax or FDR fair dividend or income tax. Why didn't they tackle that more glaring "loophole"?

For those not familiar with the expression
Orwellian" is an adjective describing a situation, idea, or societal condition that George Orwell identified as being destructive to the welfare of a free and open society. It denotes an attitude and a brutal policy of draconian control by propaganda, surveillance, disinformation, denial of truth (doublethink), and manipulation of the past, including the "unperson"—a person whose past existence is expunged from the public record and memory, practiced by modern repressive governments.

[thegreatestben]

Beagle: https://www.google.com/amp/s/www.newshub.co.nz/home/politics/2021/03/national-would-roll-back-bright-line-test-extension-reverse-interest-deductibility-changes.amp.html

[Beagle]

Beagle: https://www.google.com/amp/s/www.newshub.co.nz/home/politics/2021/03/national-would-roll-back-bright-line-test-extension-reverse-interest-deductibility-changes.amp.html

Thanks, missed that. That gives me some much needed hope.

[clearasmud]

Overreaction Beagle!
England has done the same thing in regards to interest deductibility.
When you think about it housing investors can borrow at close to the inflation rates so there is no real cost of borrowing much of the time, hopefully, anyway.

[Beagle]

Surely you're not so naïve to think interest rates will start with a 2 handle indefinitely ? Who cares what England has done ? They completely messed up the Corona virus response, should we follow their methodology with that too ?

30 out of 45 houses passed in without a single bid at a major auction on Wednesday. I'm not overreacting, I'm calling it that the market has already turned and there's already very clear auction room market evidence to confirm my prognosis.

[Waltzing]

Staying On Thread....

Is MR B forecasting a big hit to OCA sale and resale asking prices?

Who would buy at the moment when you can wait 6 months and bet you can buy what percent lower?

Very pleased to have down sized to 1.6 from 20% overweight.

[James108]

What worries me is the hordes of ignorant "have nots" who this extremist socialism appeals too. These people have no understanding of the tax system and what an extreme and egregious breech of fundamental rights this is. There's probably millions of them. This is what worries me. If this sledgehammer to bust down the real estate market doesn't work, what's next ? What sector is next, the retirement sector ?


It irks me that you label those that see the appeal of fixing an out of control housing market as ignorant. A few points.

1. It was disingenuous to call this a closing of a tax loophole.

2. Most New Zealanders believe that housing is a human right. Further most New Zealanders believe that if you work hard and earn an average wage you should be able to buy your own house.

3. Given the above is no longer possible it follows that house prices are far too high and that the market has not delivered a solution to this over the last 5-10 years. This is too long to wait for the market to come up with a solution. You yourself factored in a 3%-4% rise in house prices going forward.

4. A 3%-4% p.a rise from an extremely unaffordable level is unacceptable when wages are growing at 2%. The government had to intervene, lest we return to a time when society is split into serfs and landed gentry. I prefer a land tax and corresponding reduction in income tax, would you prefer this? (I assume not..).

5. ACT would have you believe that building more would cause prices to drop. What they don't tell you is building in NZ has been increasing for the last 10 years as fast as the construction industry can ramp it up. Further, unless supply increases to the point where rents start falling this is unlikely to impact on house prices which are driven primarily by return on equity, just like all assets. Can supply increase enough for rents to fall? In my view its possible but remember you cannot make more land close to the city so demand for this will continue to increase as long as we have a population increase. Rents didn't really fall in Christchurch when they were oversupplied with houses.

6. How else do you decrease returns on equity? In my view unless you are the reserve bank the easiest/best way and a way that is guaranteed to succeed will involve some sort of tax. I would like to see a corresponding decrease in income tax (you would assume LABOUR would be for this but apparently they will never reduce a tax..) but in any case at least they got half the equation right.

7. Is this bad for renters? Potentially they will face a small increase in rent. In my view the government need to step up to ensure that a strong pipeline of new dwellings is coming through (they have partially done this with the tax carve outs for new builds) to balance supply and demand which could keep rents flat - like they have been in Auckland over the last year (meanwhile property prices have increased by 20%.. go figure).

In essence I find it ignorant of the 'haves' to care more about tax law (which the government, democratically elected by the people in an overwhelming majority and responding to a housing crisis, have the absolute right to change) than the disintegration of New Zealand society into a country of serfs and land owners.

[Beagle]

I think its fair to say at this stage unit and resale price appreciation is a missed opportunity. OCA were far too slow to capture the ~ 20% rise in the market this year and with this radical shifting of the real estate goalposts they appear to have missed the opportunity altogether. I used to have Earl's ear so too speak...but he never really listened.

At least Brent speaks my language and the magic words of "underlying eps accretive" apply to the new acquisitions. Maybe the change in leadership is a REALLY good thing ?

[Beagle]

It irks me that you label those that see the appeal of fixing an out of control housing market as ignorant. A few points.

1. It was disingenuous to call this a closing of a tax loophole. It was worse than that, its blatant propganda.

2. Most New Zealanders believe that housing is a human right. Further most New Zealanders believe that if you work hard and earn an average wage you should be able to buy your own house. We have one of the most generous social welfare systems in the world including significant accommodation supplements. Its always been incredibly hard to buy your first home. As a young person i lived like a hermit for three years, never going out to any social occasion that would cost me money, no fancy car, no travel, no entertainment and saved every cent for three whole years and then got a mortgage on a very modest house in a low decile suburb at 18% interest. How many young people are prepared to do that these days ? You can still buy an apartment in Auckland for around $450K and get a 2.5% mortgage.

3. Given the above is no longer possible it follows that house prices are far too high (young people need to understand you start at the bottom of the real estate ladder, not half way up) and that the market has not delivered a solution to this over the last 5-10 years. This is too long to wait for the market to come up with a solution. You yourself factored in a 3%-4% rise in house prices going forward.

4. A 3%-4% p.a rise from an extremely unaffordable level is unacceptable when wages are growing at 2%. The government had to intervene, lest we return to a time when society is split into serfs and landed gentry. I prefer a land tax and corresponding reduction in income tax, would you prefer this? (I assume not..). There are other far more reasonable ways they could have intervened, such limits around the amount of interest only lending, freeing up vast tracks of land around major cities, raising deposit requirements for investors even further.e.t.c. Attacking fundamental rights to business interest deductibility that have probably existed for over a century is draconian and an egregious breech of fundamental tax principles, what's next, a wealth tax, inheritance tax ? Raise GST to 30% ?

5. ACT would have you believe that building more would cause prices to drop. What they don't tell you is building in NZ has been increasing for the last 10 years as fast as the construction industry can ramp it up. Further, unless supply increases to the point where rents start falling this is unlikely to impact on house prices which are driven primarily by return on equity, just like all assets. Can supply increase enough for rents to fall? In my view its possible but remember you cannot make more land close to the city so demand for this will continue to increase as long as we have a population increase. Rents didn't really fall in Christchurch when they were oversupplied with houses. Have a look at how the BNZ see the oversupply going forward https://www.interest.co.nz/property/109683/bnz-economists-say-government-dead-set-curtailing-house-prices-and-will-do-what-it?utm_source=ST&utm_medium=email&utm_campaign=ShareTrader+AM+Update+for+Friday+26+M arch+2021

6. How else do you decrease returns on equity? In my view unless you are the reserve bank the easiest/best way and a way that is guaranteed to succeed will involve some sort of tax. I would like to see a corresponding decrease in income tax (you would assume LABOUR would be for this but apparently they will never reduce a tax..) but in any case at least they got half the equation right. Labour reducing any tax is exceptionally unlikely in my opinion. Remember how they would back the fiscal creep tax adjustment National were proposing ? New tax rate of 39%, now this thing this week, what's next ?
Remember their pledge of no new taxes this term ?

7. Is this bad for renters? Potentially they will face a small increase in rent. Honestly you have no idea. I am talking to clients with rental properties and renters are facing a grim future. Investors will pass on whatever extra tax imposts the Govt create In my view the government need to step up to ensure that a strong pipeline of new dwellings is coming through (they have partially done this with the tax carve outs for new builds) to balance supply and demand which could keep rents flat - like they have been in Auckland over the last year (meanwhile property prices have increased by 20%.. go figure).

In essence I find it ignorant of the 'haves' to care more about tax law (which the government, democratically elected by the people in an overwhelming majority and responding to a housing crisis, have the absolute right to change) than the disintegration of New Zealand society into a country of serfs and land owners. There are other ways to address the problem that have been ignored. Govt ignored the advice of Treasury, the RBNZ and even the IRD

[Greekwatchdog]

This is what For Bar had to say on "Aged Care Sector" after last weeks events. They still have as outperform $1.70

Potential significant impacts to the Aged Care sector
This announcement is likely to have the most significant near term impact on the Aged Care sector through three vectors. Firstly,
expectations with regards to long term residential house price inflation is likely to moderate. Secondly and related, significant
uncertainty with regards to near term house prices may result in increased lead times for selling residential homes, and by
implications lead times to settle on acquired aged care units. Finally, looking at fundamentals, versus a counterfactual of no tax
change there is likely to be more modest price increases put through by the aged care operators in the near term. We estimate that
a 1% change in unit price growth impacts sector annuity EBITDA by c.1%.

[Waltzing]

Yes we have access to the reports from FOBAR...

FOBAR VarObject

FOBAR = inrange or some function ( data )

we will wait for the next 12 months to pass before we believe FOBAR has got it right.

the next 2 weeks auctions will give us a picture.

We can always increase our weighted position in OCA if the data starts to look like it conforms to the forecast.

If housing is a basic right it needs to be placed in statue form and accounting definitions can then be used accurately.

Once you cross this line the economy resets and other potential problems emerge.

[peat]

Beagle picked it again...
and I bailed as soon as he said so.....

wrt the whole market I've been reducing ultimate exposure quite significantly over time .... some trades here and there , but the size of the portfolio has been getting smaller and smaller ......... the market overall it just seems exhausted to me.....

and yet SP500 up strongly at close , almost (not quite) a new ATH!


PS sorry to the admins for my outbursts , and thx to all those who helped me get a voice back on this site. ... I will try to be less vociferous in future.

[alokdhir]

There are other ways to address the problem that have been ignored. Govt ignored the advice of Treasury, the RBNZ and even the IRD

Treasury / RBNZ / IRD dont have bosses who need to be elected buddy ...also their advise has got us in this place ...So I care 2 hoots for their advise ....Will see how it effects her popularity ...She has taken a " Queens gambit " sensing public opinion IMHO

[Maverick]

This is what For Bar had to say on "Aged Care Sector" after last weeks events. They still have as outperform $1.70

We estimate that
a 1% change in unit price growth impacts sector annuity EBITDA by c.1%.

Thanks for posting Greekwatchdog. The snippet about Forsyth predicting “a 1% change in unit price growth impacts sector annuity EBITDA by c.1%.” makes perfect logical sense. Of course I've obviously spent this week considering and reworking the implications and various scenarios for OCA`s model when considering a possible HPI fall.

I've already mentioned the 3 income streams OCA has;

Care Profit- this tax change affects nothing.

New build margins- This may be affected in the short term should new build sale prices fall but then country wide supply will shut off until the market rebalances and it's worth building again. So long term, no worries. Besides , new build prices are set by general wages not landlords.

DMF profit (this is the big one also at the core of OCAs growth strategy.) If one agrees with Forsyth, I certainly do, their correlation of 1% HPI fall = 1% fall in EBITDA then should a theoretical fall of say 20% HPI happen (you decide for yourself) then this will take years to fully materialise on the bottom line. That would have only unwound the current 20% HPI gain which has not yet even started to materialise yet as it also needs years to work through. These changes are realized by unit churn and backed up by charting Summersets performance during some sizable HPI rises over the last decade.

In this case of HPI possibly falling 20% from here the impact on the bottom line would be neutral and won't even cause a noticeable ripple to their bottom line.

OCA`s model is certainly enhanced by but not dependent on HPI increases. I know most believe retirement stocks are dependent on HPI rises but they simply are not. Consider RYM or SUM and their sizable CAGRs. The HPI rises, over whatever period you like, have always been significantly lower than the annual profit gains. Profit has always been mostly about the ORA`s and it seems people will never get that.

While HPI rises offer a great tailwind they are only a percentage of the story. While the HPI run has been incredibly rewarding for the sector, this logically had to end at some point.
HPI levelling or falling back from the unsustainable rise this year was inevitable in my opinion and expected.
This is not a game changer for me as a long term OCA holder. I personally have only ever factored in a HPI +2.5% long term anyway- including this year. Don't overlook that interest rate rises are still yet to come too which IMO is really what is going to hurt the HPI.

Onto the acquisition, remember that old topic? It seems logical. It's not OCAs normal style of purchase but where else can they buy old villages in high end areas any more? I suspect all the low hanging fruit is well gone by now. This is close enough to ticking most of the boxes for them and indicates their willingness to extend the pipeline. This bodes well for shareholders looking for growth 5-6 years out from here which is when they have indicated they will start the value add construction stuff to these purchases.

Once the new supply of $100m of fresh shares settles in and the current negative retirement sentiment inevitably fades once good numbers keep rolling through things will be back to upwards , with some catchup now to boot. ( I do acknowledge market sentiment is a powerful force to the share price in the interim).

While my confidence remains in the science of all this , the sentiment of the sector is anybody's guess and my own expectation is that it will only change from here when good numbers prove the story…..its already started at 1HY21 but still quite embedded to see, but the analysts do now. The bottom line numbers should get really nice for most who don't do the deep and very difficult analyst stuff on this company will see 1HY22 , about 8 months from now.

Disc, I'm a long term investor so any fancy ideas of getting out and back in before then is not something I'm interested in.

[Greekwatchdog]

Thank you Maverick for your constructive analysis on this past week. I signed off for the next truck load for capital raise. Still good value at these levels.

[James108]

Maverick, very good post agree that the recent 20% rise in HPI (house price index?) hasn't even shown up in the books yet and will take many years to flow completely through (although in my view will be moderated by recent tax change).

As an aside some of my colleagues had a site visit to the Waimarie Street development and were very impressed (unfortunately I couldn't make it), it is a major and very involved development.

[Waltzing]

"Treasury / RBNZ / IRD" got NZ to this place?

is it that simple, RUBBISH!

Some very good points also James.

Unless GDP outperforms the need for tax payer support across a huge numbers of sectors is only going to increase. From health, education to fast trains and roads.

we await the next 12 months numbers for OCA. Its still got a well thought out model according to Mr M.

Time will tell.

[winner69]

The relationship between retirement sector share prices and HPI is interesting - see graph

Rises and falls in HPI might not always impact bottom lines (sort of what Mav was saying this time around) it appears to impact market sentiment and as a consequence sector share prices

The perception that HPI impacts share prices is strong and enduring - is this time different

Was a screen shot - cant remember from whose report.

[Baa_Baa]

Cracking post @Maverick thanks, the voice of reason for long holders

[Maverick]

The relationship between retirement sector share prices and HPI is interesting - see graph

Rises and falls in HPI might not always impact bottom lines (sort of what Mav was saying this time around) it appears to impact market sentiment and as a consequence sector share prices

The perception that HPI impacts share prices is strong and enduring .
We can always count on you Winner for a tidy graph to save a lot of words.
I just want to clarify one point you obviously know yourself but in case others miss it.
Your graph demonstrates HPI vs share price reflects market sentiment. Whereas my calcs and personal Summerset graph reflect HPI vs underlying profit.
So regarding HPI changes , a trader would care more about the market sentiment aspect while an investor would care more about the profit affect.

Sorry to be a bit anal but it's a huge difference if others didn't pick it up. Nice graph as always Winner.

[winner69]

We can always count on you Winner for a tidy graph to save a lot of words.
I just want to clarify one point you obviously know yourself but in case others miss it.
Your graph demonstrates HPI vs share price reflects market sentiment. Whereas my calcs and personal Summerset graph reflect HPI vs underlying profit.
So regarding HPI changes , a trader would care more about the market sentiment aspect while an investor would care more about the profit affect.

Sorry to be a bit anal but it's a huge difference if others didn't pick it up. Nice graph as always Winner.

Appreciate that Mav

Changes in sentiment short term but generally market sees the long term value

Bit like that sporting adage - Form is temporary but class is permanent

[RupertBear]

Thanks for posting Greekwatchdog. The snippet about Forsyth predicting “a 1% change in unit price growth impacts sector annuity EBITDA by c.1%.” makes perfect logical sense. Of course I've obviously spent this week considering and reworking the implications and various scenarios for OCA`s model when considering a possible HPI fall.

I've already mentioned the 3 income streams OCA has;

Care Profit- this tax change affects nothing.

New build margins- This may be affected in the short term should new build sale prices fall but then country wide supply will shut off until the market rebalances and it's worth building again. So long term, no worries. Besides , new build prices are set by general wages not landlords.

DMF profit (this is the big one also at the core of OCAs growth strategy.) If one agrees with Forsyth, I certainly do, their correlation of 1% HPI fall = 1% fall in EBITDA then should a theoretical fall of say 20% HPI happen (you decide for yourself) then this will take years to fully materialise on the bottom line. That would have only unwound the current 20% HPI gain which has not yet even started to materialise yet as it also needs years to work through. These changes are realized by unit churn and backed up by charting Summersets performance during some sizable HPI rises over the last decade.

In this case of HPI possibly falling 20% from here the impact on the bottom line would be neutral and won't even cause a noticeable ripple to their bottom line.

OCA`s model is certainly enhanced by but not dependent on HPI increases. I know most believe retirement stocks are dependent on HPI rises but they simply are not. Consider RYM or SUM and their sizable CAGRs. The HPI rises, over whatever period you like, have always been significantly lower than the annual profit gains. Profit has always been mostly about the ORA`s and it seems people will never get that.

While HPI rises offer a great tailwind they are only a percentage of the story. While the HPI run has been incredibly rewarding for the sector, this logically had to end at some point.
HPI levelling or falling back from the unsustainable rise this year was inevitable in my opinion and expected.
This is not a game changer for me as a long term OCA holder. I personally have only ever factored in a HPI +2.5% long term anyway- including this year. Don't overlook that interest rate rises are still yet to come too which IMO is really what is going to hurt the HPI.

Onto the acquisition, remember that old topic? It seems logical. It's not OCAs normal style of purchase but where else can they buy old villages in high end areas any more? I suspect all the low hanging fruit is well gone by now. This is close enough to ticking most of the boxes for them and indicates their willingness to extend the pipeline. This bodes well for shareholders looking for growth 5-6 years out from here which is when they have indicated they will start the value add construction stuff to these purchases.

Once the new supply of $100m of fresh shares settles in and the current negative retirement sentiment inevitably fades once good numbers keep rolling through things will be back to upwards , with some catchup now to boot. ( I do acknowledge market sentiment is a powerful force to the share price in the interim).

While my confidence remains in the science of all this , the sentiment of the sector is anybody's guess and my own expectation is that it will only change from here when good numbers prove the story…..its already started at 1HY21 but still quite embedded to see, but the analysts do now. The bottom line numbers should get really nice for most who don't do the deep and very difficult analyst stuff on this company will see 1HY22 , about 8 months from now.

Disc, I'm a long term investor so any fancy ideas of getting out and back in before then is not something I'm interested in.



Epic post thanks Maverick :)

[winner69]

We can always count on you Winner for a tidy graph to save a lot of words.
I just want to clarify one point you obviously know yourself but in case others miss it.
Your graph demonstrates HPI vs share price reflects market sentiment. Whereas my calcs and personal Summerset graph reflect HPI vs underlying profit.
So regarding HPI changes , a trader would care more about the market sentiment aspect while an investor would care more about the profit affect.

Sorry to be a bit anal but it's a huge difference if others didn't pick it up. Nice graph as always Winner.

In other words traders (beagle included) sees share price decline as HPI falls and sell

But investors like you know that in a year or so the share price will be 3 bucks .....and that there will be a few dips along the way.

[justakiwi]

Exactly. Which is precisely why anyone new to investing needs to be very mindful of what they read here. Before taking someone’s opinion as gospel, one needs to know whether that opinion is coming from a trading or investing point of view. If you are a longer term investor, take what someone who is primarily a trader, says, with a grain of salt. What they believe is right for them may not actually be right for you (and vice versa).


In other words traders (beagle included) sees share price decline as HPI falls and sell

But investors like you know that in a year or so the share price will be 3 bucks .....and that there will be a few dips along the way.

[justakiwi]

Thank you Maverick! 👍🏽👍🏽👍🏽👍🏽👍🏽


Thanks for posting Greekwatchdog. The snippet about Forsyth predicting “a 1% change in unit price growth impacts sector annuity EBITDA by c.1%.” makes perfect logical sense. Of course I've obviously spent this week considering and reworking the implications and various scenarios for OCA`s model when considering a possible HPI fall.

I've already mentioned the 3 income streams OCA has;

Care Profit- this tax change affects nothing.

New build margins- This may be affected in the short term should new build sale prices fall but then country wide supply will shut off until the market rebalances and it's worth building again. So long term, no worries. Besides , new build prices are set by general wages not landlords.

DMF profit (this is the big one also at the core of OCAs growth strategy.) If one agrees with Forsyth, I certainly do, their correlation of 1% HPI fall = 1% fall in EBITDA then should a theoretical fall of say 20% HPI happen (you decide for yourself) then this will take years to fully materialise on the bottom line. That would have only unwound the current 20% HPI gain which has not yet even started to materialise yet as it also needs years to work through. These changes are realized by unit churn and backed up by charting Summersets performance during some sizable HPI rises over the last decade.

In this case of HPI possibly falling 20% from here the impact on the bottom line would be neutral and won't even cause a noticeable ripple to their bottom line.

OCA`s model is certainly enhanced by but not dependent on HPI increases. I know most believe retirement stocks are dependent on HPI rises but they simply are not. Consider RYM or SUM and their sizable CAGRs. The HPI rises, over whatever period you like, have always been significantly lower than the annual profit gains. Profit has always been mostly about the ORA`s and it seems people will never get that.

While HPI rises offer a great tailwind they are only a percentage of the story. While the HPI run has been incredibly rewarding for the sector, this logically had to end at some point.
HPI levelling or falling back from the unsustainable rise this year was inevitable in my opinion and expected.
This is not a game changer for me as a long term OCA holder. I personally have only ever factored in a HPI +2.5% long term anyway- including this year. Don't overlook that interest rate rises are still yet to come too which IMO is really what is going to hurt the HPI.

Onto the acquisition, remember that old topic? It seems logical. It's not OCAs normal style of purchase but where else can they buy old villages in high end areas any more? I suspect all the low hanging fruit is well gone by now. This is close enough to ticking most of the boxes for them and indicates their willingness to extend the pipeline. This bodes well for shareholders looking for growth 5-6 years out from here which is when they have indicated they will start the value add construction stuff to these purchases.

Once the new supply of $100m of fresh shares settles in and the current negative retirement sentiment inevitably fades once good numbers keep rolling through things will be back to upwards , with some catchup now to boot. ( I do acknowledge market sentiment is a powerful force to the share price in the interim).

While my confidence remains in the science of all this , the sentiment of the sector is anybody's guess and my own expectation is that it will only change from here when good numbers prove the story…..its already started at 1HY21 but still quite embedded to see, but the analysts do now. The bottom line numbers should get really nice for most who don't do the deep and very difficult analyst stuff on this company will see 1HY22 , about 8 months from now.

Disc, I'm a long term investor so any fancy ideas of getting out and back in before then is not something I'm interested in.

[Baa_Baa]

In other words traders (beagle included) sees share price decline as HPI falls and sell

But investors like you know that in a year or so the share price will be 3 bucks .....and that there will be a few dips along the way.

A momentum trader will only occasionally align with a long hold investor, usually when the SP is going up. Otherwise the long hold just accumulates more when the SP gifts an asset at a low price while the momentum traders will be waiting for the TA signal to reload their position. The market is a great place, leveling the playing field creating opportunities for all types of investors. Long … is obviously a relative thing depending on ones horizon and investing goals,

[Beau]

Thanks Maverick good to have post from investor with long term horizon unlike a few posters that seem to be hot and cold like the weather.and quick to run down when their financial position change .

[Beagle]

Good to have opposing views Mav.
Its also good to keep an eye on what the brokers are thinking. https://www.marketscreener.com/quote/stock/OCEANIA-HEALTHCARE-LIMITE-103506268/financials/
I note average analyst view (before the Govt dropped this weeks financial nuke) was for 10 cps this year, (must be annualized surely ?) and just 7 cps in FY22 :eek2:

Makes you wonder what they are seeing about FY22 that we're not foreseeing doesn't it :eek2: I was thinking very little growth for FY22 (before this week) but brokers were thinking earnings decline ? Wonder what the real result will be for FY22 after this weeks events ? I really struggle to see what the catalyst is for OCA to break out of its correction ? It could be quite some time before this breaks back up through the 100 day moving average. A really long time if the housing market crashes.

Disc: I still hold a decent sized stake, (free carry off previous profits), in the hope (perhaps a little bit of desperate hope), that I am wrong and everything will be fine. Long term they should be O.K...or maybe we will have steep house price falls for a few years in a row and OCA continue to struggle to grow earnings like they have ever since they listed ? I for one am not convinced they can contain wage costs within the framework of the annual MOH care fee increase. I call B.S. on that, they have never even got close to it before.

So if wages costs continue on their rampant spiral and house prices decline OCA won't have much room to weather the increasing losses from their care services. The increased DMF fees gradually coming through from their business transformation could easily get eaten up by ongoing high wage cost inflation and a falling housing market and we could find OCA stuck in high single digit underlying eps for several more years. Couldn't happen, or could it ?

I am an old dog now and find it much easier to swim with the tide than against it...if that makes me a bad dog then so be it. I reckon this is on 16-17 times FY22 underlying eps as at Friday's $1.34 close and I think that's as good as its going to get for quite some time, (I backed that opinion up by selling tens of thousands more into Friday's closing price) until they really prove they can grow underlying eps above the 9 cps they had when they listed 3 years ago, (not just tell good stories about how they intend to do it at some stage in the future). I've reached a point with OCA where I am basically saying show me the money, prove you can grow underlying earnings before I'll invest more. (Count me out for the retail capital raise)

[Greekwatchdog]

You are no more than a trader who disguises himself as an Investor with all your trendy analysts. You have shot down over the years OCA, WHS,SUM, HGH and reinvested when it suits. This time last year you were saying the economy was in for a hiding yet it quietly defied your predictions as well as other so called economists. You turn the page like I read a Dan Drown/Terry Brooks Novel. Thankfully for me I never listened to your predictions or thou have valued your input at times. Thankfully for me I made my dosh on ATM and smile with Smug comfit with the dribble the so called "BBB" brigade put on the thread. I will back my analysis over yours any day like I play Black Jack and any other bunny that turns over like you do. Beagle 3 weeks ago before Earl left you were Bullish. He jumped ship big deal, it happens. He left for money. I am happy with moving on and who replaced him. This weeks Govt Tax grab will have minimal effect long term. See you a the winning post. Greg

[Beagle]

I am very content with my portfolio performance, very content indeed and always happy to follow my own nose for a feed because it really works !

When a major event occurs I am proactive about protecting my capital.. I do this because I hate losses and risk management and loss mitigation is an essential part of achieving market outperformance.

There are no winners in Blackjack except the house, haven't you even worked that out yet :p

I sold ATM for $13 3 years ago...you think I might have made just a "few bucks" with the proceeds since then ;)

The anecdotal market evidence is already really mounting up that this weeks "dirty tax bomb" will have a major impact https://www.nzherald.co.nz/nz/investors-stay-away-from-south-auckland-open-homes-after-govt-housing-shake-up/AQQAF6WEFLH7ZOBU26UL3N2V4Q/.
https://www.nzherald.co.nz/business/how-far-do-prices-need-to-fall-to-make-housing-affordable/KQIIR7STLO5QKYSJ7FVZ4Q4SRU/ Paywalled Excerpt
Changes to the tax treatment of interest payments for investors, an extension of the bright-line test for treating capital gains as income (from five to 10 years) and another multibillion-dollar boost to encourage new building have already caused some very real ripples in financial markets.

[Bjauck]

You are no more than a trader who disguises himself as an Investor with all your trendy analysts. You have shot down over the years OCA, WHS,SUM, HGH and reinvested when it suits. ... I think that encapsulates this forum which is Share trader for investors! All long term investors are share traders when it comes to buying or selling their investment. Some companies shoot themselves, sometimes repeatedly...maybe Beagle just points that out.

I have invested in Oceania for the long haul. So with respect to my holding in OCA I am prepared to ride out the potential effect from the loss of a year's house price growth as a result of change in government policy. However it is an evolving situation, especially given that some of the change was unexpected and major. I am still prevaricating over whether I will apply for some new shares.

Sometimes events unfold rapidly affecting a company in either its short or long term prospects. I have found both Maverick's and Beagle's posts insightful from both long-term and shorter term points of view - and certainly with a depth of understanding exceeding my own.

[tommy_d]

You are no more than a trader who disguises himself as an Investor with all your trendy analysts. You have shot down over the years OCA, WHS,SUM, HGH and reinvested when it suits. This time last year you were saying the economy was in for a hiding yet it quietly defied your predictions as well as other so called economists. You turn the page like I read a Dan Drown/Terry Brooks Novel. Thankfully for me I never listened to your predictions or thou have valued your input at times.

I just want to say a huge thank you to Mav, Beagle, and others who have provided valuable analysis through this thread.
OCA remains the largest chunk of my little portfolio, average price still far under $1. I doubt I would have picked it myself. Sure, it would have been nice to have sold at $1.60 and locked in those gains, but even at $1.34 those percentage gains are high. Not sure why selling when a share feels over-valued, and buying when it feels under-valued, is something to be disparaged.

edit: and agree entirely with bjauck's post directly above

[blackie]

"I just want to say a huge thank you to Mav, Beagle, and others who have provided valuable analysis through this thread."

WOOE WOOF , totally agree

[Balance]

Thankfully for me I made my dosh on ATM and smile with Smug comfit with the dribble the so called "BBB" brigade put on the thread. Greg

I am genuinely intrigued & very keen to
learn how you made your dosh on ATM when the sp has more than halved since the first profit downgrade in September 2020.

Care to enlighten us?

Thx in advance.

[Curly]

You are no more than a trader who disguises himself as an Investor with all your trendy analysts. You have shot down over the years OCA, WHS,SUM, HGH and reinvested when it suits. This time last year you were saying the economy was in for a hiding yet it quietly defied your predictions as well as other so called economists. You turn the page like I read a Dan Drown/Terry Brooks Novel. Thankfully for me I never listened to your predictions or thou have valued your input at times. Thankfully for me I made my dosh on ATM and smile with Smug comfit with the dribble the so called "BBB" brigade put on the thread. I will back my analysis over yours any day like I play Black Jack and any other bunny that turns over like you do. Beagle 3 weeks ago before Earl left you were Bullish. He jumped ship big deal, it happens. He left for money. I am happy with moving on and who replaced him. This weeks Govt Tax grab will have minimal effect long term. See you a the winning post. Greg

That sums it up nicely Greg. Be mindful of of the Beagle pump being a a prelude to his exit.

[Balance]

Good perspective on what should happen with the property market - a sharp correction is needed in the short term & the occasional price falls are perfectly healthy.

Just as it is the case with the sharemarket :

“Smart investors remain constantly alert to the turn of the cycle. They have strategies in place for when it inevitably occurs.

They'll tell you that a sharp correction or crash is really just an opportunity to go bargain hunting.

Growth still wins.

So, smart or not, sharemarket investors make money over time.

You just have to do the basics right and not panic when prices fall.”

https://www.nzherald.co.nz/business/liam-dann-the-great-new-zealand-house-price-delusion/6CNNR3GAPVP7PLYTICAVX4E734/

Paywalled

[justakiwi]

My sentiments exactly. Well said.


You are no more than a trader who disguises himself as an Investor with all your trendy analysts. You have shot down over the years OCA, WHS,SUM, HGH and reinvested when it suits. This time last year you were saying the economy was in for a hiding yet it quietly defied your predictions as well as other so called economists. You turn the page like I read a Dan Drown/Terry Brooks Novel. Thankfully for me I never listened to your predictions or thou have valued your input at times. Thankfully for me I made my dosh on ATM and smile with Smug comfit with the dribble the so called "BBB" brigade put on the thread. I will back my analysis over yours any day like I play Black Jack and any other bunny that turns over like you do. Beagle 3 weeks ago before Earl left you were Bullish. He jumped ship big deal, it happens. He left for money. I am happy with moving on and who replaced him. This weeks Govt Tax grab will have minimal effect long term. See you a the winning post. Greg

[Ggcc]

You are no more than a trader who disguises himself as an Investor with all your trendy analysts. You have shot down over the years OCA, WHS,SUM, HGH and reinvested when it suits. This time last year you were saying the economy was in for a hiding yet it quietly defied your predictions as well as other so called economists. You turn the page like I read a Dan Drown/Terry Brooks Novel. Thankfully for me I never listened to your predictions or thou have valued your input at times. Thankfully for me I made my dosh on ATM and smile with Smug comfit with the dribble the so called "BBB" brigade put on the thread. I will back my analysis over yours any day like I play Black Jack and any other bunny that turns over like you do. Beagle 3 weeks ago before Earl left you were Bullish. He jumped ship big deal, it happens. He left for money. I am happy with moving on and who replaced him. This weeks Govt Tax grab will have minimal effect long term. See you a the winning post. Greg
However one perceived investment style looks like to us, is irrelevant and I do find Beagle’s analysis great.

The only one who could bother about investment strategies is the IRD, if the correct amount of tax was not paid. Share trading is income taxable. Investing may be as well, if the IRD feel you are trading, even though your impression you may feel that you are investing.

[winner69]

Well done Beagle for doing what traders do - when things turn ‘bad’ of the story changes you sell and move on to something else.

What pisses your critics / disciples off is that you paint yourself as a ‘investor’ and give the impression you ‘invest’ for the long term when you are just a trader. You can’t blame some for feeling you have betrayed them.

Never mind your trading strategy works well for you so stick with it and no doubt you will do well in the future.


Bit surprised that you still hold a decent sized stake in OCA (even if free carry) in the hope (perhaps a little bit of desperate hope), that I am wrong and everything will be fine.

Hope doesn’t seem to part of your trading strategy and DNA, esp in this case where you are so disparaging about OCA and what may happen with property prices. Seems to be going against your own preachings here. A bob each way is it?


And what about the opportunity cost you talk about on the A2 thread ......hoping OCA will increase in price when you feel it won’t instead of using the cash and taking a further no lose punt on WHS could be expensive. Then again I should be teaching grandma to suck eggs should I

Keep up the good work on this thread - valuable insights

[Waltzing]

"Be mindful of of the Beagle pump being a a prelude to his exit."

A fully qualified ACA with many decades of financial accounting and tax accounting will always be mindful of the changing nature of an economy.

Rebalancing a portfolio based on macro and fiscal policy is a prudent and sophisticated practise when you have knowledge of the implications and ramifications of those policies.

[alokdhir]

" Time in the market decides your returns more then timing the market "

One can make small bucks with smallish corpus by trading frequently but if one really wants to make big corpus work for you while u enjoy life then one need to invest in 5-10 stocks with conviction and stay there for years if not decades ...too much diversification also can reduce overall long term returns while being called the cost of risk management . If you have the skills to analyse mature companies then doing real long term investment in 5 is enough to make a fortune without the need to do " Micro management "

No trader would have made more money then a long term investor in stocks like FPH / MFT or even KFL / NZG ( Just a index fund )

Unless u use trading for retired entertainment as well as ego boost purposes I think long term investment in good long term stories work much better then frequent trading based on day to day news

Maybe one can combine both to fit your all needs with main portfolio invested for long term and some trading on margin lending account to fulfil other needs

[Curly]

Accountants are trained to be conservative and can paint a worst case outcome. Beagle has pumped OCA while being a significant holder of shares. As soon as he off loads he down ramps the stock. Nothing has changed with forward prospects of OCA. The market is down on all health care stocks, no different with RYM and SUM. Forsyth Barr forecast $1.70, Market Screener’s 4 analyst, 3 have OCA as a buy and 1 as out perform.
Target price $1.57. No one has any beef with anyone making a buck selling into the trends but predicting gloom and doom as soon as one sells is a bit pointed. Call for what it is. Greg did.

[Habits]

Accountants are trained to be conservative and can paint a worst case outcome. Beagle has pumped OCA while being a significant holder of shares. As soon as he off loads he down ramps the stock. Nothing has changed with forward prospects of OCA. The market is down on all health care stocks, no different with RYM and SUM. Forsyth Barr forecast $1.70, Market Screener’s 4 analyst, 3 have OCA as a buy and 1 as out perform.
Target price $1.57. No one has any beef with anyone making a buck selling into the trends but predicting gloom and doom as soon as one sells is a bit pointed. Call for what it is. Greg did.

If you now say the advice is wrong or misleading why didn't you say so at the time and clarify it for others. I do hate when people try and shift blame

[Greekwatchdog]

Balance, how long has ATM been on the sharemarket? Years remember when it was a penny stock? Sold 3 quarters of my holding @ $16.50 back in Sept 2019 I think. The rest aren't for sale. I can't lose whatever happens and I will back the management team to sort the issues as they are fixable as long as they look at the 'Root Cause" Back to OCA.

[winner69]

Oceania being past the point of inflection must be good when looking at future prospects.

Put this weeks sentiment aside and once cap raise over and done with and Brent announces a good full year result in May the share price will be $1.60 odd and we will say what was all the bother about.

[Balance]

Balance, how long has ATM been on the sharemarket? Years remember when it was a penny stock? Sold 3 quarters of my holding @ $16.50 back in Sept 2019 I think. The rest aren't for sale. I can't lose whatever happens and I will back the management team to sort the issues as they are fixable as long as they look at the 'Root Cause" Back to OCA.

One way of looking at things and good on you for taking such an approach as long as it works for you.

I went negative on ATM and started warning about further downgrades after the first downgrade - so it is difficult to reconcile your assertion that the B team has added no value to views on ATM.

Sp has halved and many an investor have saved heaps by selling or avoiding the stock.

[Beagle]

OCA has doubled since May last year off the back of rampant house price increases. This weeks tax bomb is a real game changer for investors, you either get that or you don't.

[Greekwatchdog]

Its worked enuf said and I still work and give 100% everyday. Charitable Trust set up too help those less fortunate so when it comes time to retire and travel its not wasted.
Yes you guys have nagged it down rightly/wrongly. Its investing up to individual to decide on there approach. Enjoy your Sunday Balance. Cricket and Soccer on and some study to be done. Good Luck to you all.

[Beagle]

Its worked enuf said and I still work and give 100% everyday. Charitable Trust set up too help those less fortunate so when it comes time to retire and travel its not wasted.
Yes you guys have nagged it down rightly/wrongly. Its investing up to individual to decide on there approach. Enjoy your Sunday Balance. Cricket and Soccer on and some study to be done. Good Luck to you all.

Nobody has "nagged it down", the Govt didn't just shift the goal posts they collapsed them on top of residential investors. If this doesn't do the job they will use a different sledgehammer to stop house prices growing. Once you let the rampant socialist Genie out of the bottle its not going back in until the job is well and truly done. This has implications for OCA's ability to try and grow earnings in the years ahead of a similar magnitude in my opinion to the huge caregiver wage settlement several years ago which has resulted in rampant wage cost inflation eating up all of OCA's increased revenue and then some.

The tide has turned and is starting to go out. OCA may be able to make some headway in terms of eps growth, (none so far since listing) but I think it will be materially less than what would have been the case otherwise. I have been able to adjust my position easily and quickly, the effects of property investors adjusting their position are likely to be felt for many years in my opinion.

Think about it. With this radical change to interest deductibility, the brightline extension to 10 years, inability to claim depreciation, close scrutiny by the IRD on major repairs and maintenance, tenancy act changes and new regulations regarding insulation, have I forgotten anything ?...oh yes, major new initiatives for Govt housing and a projected oversupply of new home builds in the years ahead almost certainly kneecapping much prospect of capital gains why would anyone in their right mind now choose a new path of becoming a landlord ?
You think tens and tens of thousands of landlords might want to quit the game seeing as the rules are now so heavily stacked against them ?

The laws of supply and demand are going to play out here as sure as night follows day, in my opinion.

[Habits]

OCA has doubled since May last year off the back of rampant house price increases. This weeks tax bomb is a real game changer for investors, you either get that or you don't.

Low of 38 cents so sp more than tripled which surely cannot be all attributed to house price HPI gain of 25ish percent. How many swallowed last years hype and rhetoric coming from the beehive podium which is why I am strong on self responsibility of ones decisions. It must have been quite a few that did swallow the govts forecast death and sickness stats judging by the comments made by curly and gwd's nativity and sh!t throwing

[Beagle]

Low of 38 cents so sp more than tripled which surely cannot be all attributed to house price HPI gain of 25ish percent. How many swallowed last years hype and rhetoric coming from the beehive podium which is why I am strong on self responsibility of ones decisions. It must have been quite a few that did swallow the govts forecast death and sickness stats judging by the comments made by curly and gwd's nativity and sh!t throwing

People start losing money and many look for someone else to blame. Its one of the most ugly aspects of human nature. Unfortunately it doesn't take much intelligence to throw stones.

I doubt many were quick enough to get in under 60 cents, to those that were, well done to you !!

[Greekwatchdog]

Didn't sell and won't be. For whats its worth I bought lots during the uncertain times because I backed my self!!

[justakiwi]

.....the huge caregiver wage settlement several years ago which has resulted in rampant wage cost inflation eating up all of OCA's increased revenue and then some.

You were, until recently, the one who was praising OCA for their dedication to and focus on the care aspect of their business. You expressed your admiration for them being different to the others, and understanding the importance of quality care.

You should know by now that quality care comes from people like me. I have shared my personal passion for what I do, so you know how dedicated to my job I am. Yet you seem to believe my dedication, passion, and the quality care I provide, is not worth paying for. Without caregivers, you have no business. We are the concrete blocks at the foundation of every retirement sector business. Not only with regards to care beds/suites, but across the entire business. Caregivers support those in villas (where needed) hospital and dementia wings. Every segment of a retirement village relies on us.

I think you should get right out of OCA, and any other retirement sector holding you have. You are clearly only in it for the money you can make, and not for any of the social conscience/ethical/concern for our elderly, reasons you have mentioned in the past. If you genuinely don’t believe in the OCA care model, this is not the company for you.

Some of us are invested for more reasons than just money.

One other thing. I don’t profess to fully understand the changes the government has made, or whether they will in fact, have any significant impact on the retirement sector. But maybe OCA is not as stupid as you think. As has been discussed often, their prices for apartments/villas have been lower than their competitors. So if the cost of housing comes crashing down, which operators stand to lose more profit? Not OCA. Maybe they have been sensible and priced in anticipation of that happening at some point. The impact of a major drop in house prices, will be much less for OCA than for RYM or SUM.

Or I could be talking complete shyte because what do I know? I’m just a caregiver.

[RTM]

Nobody has "nagged it down", the Govt didn't just shift the goal posts they collapsed them on top of residential investors. If this doesn't do the job they will use a different sledgehammer to stop house prices growing. Once you let the rampant socialist Genie out of the bottle its not going back in until the job is well and truly done. This has implications for OCA's ability to try and grow earnings in the years ahead of a similar magnitude in my opinion to the huge caregiver wage settlement several years ago which has resulted in rampant wage cost inflation eating up all of OCA's increased revenue and then some.

The tide has turned and is starting to go out. OCA may be able to make some headway in terms of eps growth, (none so far since listing) but I think it will be materially less than what would have been the case otherwise. I have been able to adjust my position easily and quickly, the effects of property investors adjusting their position are likely to be felt for many years in my opinion.

Think about it. With this radical change to interest deductibility, the brightline extension to 10 years, inability to claim depreciation, close scrutiny by the IRD on major repairs and maintenance, tenancy act changes and new regulations regarding insulation, have I forgotten anything ?...oh yes, major new initiatives for Govt housing and a projected oversupply of new home builds in the years ahead almost certainly kneecapping much prospect of capital gains why would anyone in their right mind now choose a new path of becoming a landlord ?
You think tens and tens of thousands of landlords might want to quit the game seeing as the rules are now so heavily stacked against them ?

The laws of supply and demand are going to play out here as sure as night follows day, in my opinion.

Probably a good thing in my opinion. For years we have been going on about how NZ'ers obsession with housing as an investment has distorted our investment landscape. Jacinda / Grant had to address this, low interest rates etc have pushed house prices up to much, otherwise Housing for Labour would be what COVID was to DT. Judging by the sectors that are squealing, it would seem that the changes they have made might have an effect. What will be the major beneficiary of less speculation (investing ?) in housing ? Over time it could well be the productive sector in NZ, our sharemarket.

If people have a well diversified portfolio, then this change should not be overly significant. I'm at 9% and sitting on significant gains, might trim a bit but not overly concerned about this over the longer term. However I do tend to mostly hold rather than sell at the first sign of the wind changing. So far so good....

[davflaws]

OCA has doubled since May last year off the back of rampant house price increases. This weeks tax bomb is a real game changer for investors, you either get that or you don't.

And my problem with that lies in separating your professional analysis from your visceral hatred of Cindy and the current Govt and it's policies.

[RTM]

And my problem with that lies in separating your professional analysis from your visceral hatred of Cindy and the current Govt and it's policies.

What was it again...pale male and stale ?

[Beagle]

Please don't put words in my mouth davflaws. I have never said I hate Cindy or Grant. I think Cindy and Ashley Bloomfield have done a very good job with leading the charge against controlling the spread of Covid but I think this latest goalpost collapse is an egregious breech or fair and reasonable tax polices targeted against residential landlords. That is not "hate" by any stretch of the imagination. Up until this change I thought Grant Robertson has done a good job managing the books in a pretty reasonable way.

Why remain holding a modest stake Winner ? Fair question. I'm not completely immune to emotional attachment especially when its free carry but I think my position is more fairly characterized by the old broker expressions of "Underperform" and "Underweight".

[BlackPeter]

You were, until recently, the one who was praising OCA for their dedication to and focus on the care aspect of their business. You expressed your admiration for them being different to the others, and understanding the importance of quality care.

You should know by now that quality care comes from people like me. I have shared my personal passion for what I do, so you know how dedicated to my job I am. Yet you seem to believe my dedication, passion, and the quality care I provide, is not worth paying for. Without caregivers, you have no business. We are the concrete blocks at the foundation of every retirement sector business. Not only with regards to care beds/suites, but across the entire business. Caregivers support those in villas (where needed) hospital and dementia wings. Every segment of a retirement village relies on us.


With all due respect (and independent of what I think about beagles latest change of mind) ... I don't think it helpful if you take every mention of too high care costs as a personal attack against yourself. This is a traders / investors forum, and no matter whether we as individuals think care staff deserve more money than others or not, the costs are very relevant for our investments as well as for society as a whole.

The blow out of care staff salaries (no matter whether justified or not) clearly will impact on our society - and unless we find a way to make care more efficient somebody else will need to reduce their income instead - no society can over the long term spend more money than it makes. Give it another 2 decades and the number of people needing care will be twice the number it is now, but the number of people paying society to afford the care will drop. Something will need to give - and hey, society should also value children's nurses, teachers, policemen (and women), road workers, farmers, bakers, and all these other people doing useful work. Just ask yourself where the money will be coming from if everybody guards their food bowl like a hawk or a beagle?



One other thing. I don’t profess to fully understand the changes the government has made, or whether they will in fact, have any significant impact on the retirement sector. But maybe OCA is not as stupid as you think. As has been discussed often, their prices for apartments/villas have been lower than their competitors. So if the cost of housing comes crashing down, which operators stand to lose more profit? Not OCA. Maybe they have been sensible and priced in anticipation of that happening at some point. The impact of a major drop in house prices, will be much less for OCA than for RYM or SUM.

Or I could be talking complete shyte because what do I know? I’m just a caregiver.

From what I 've seen and heard so far does it appear some investors / traders react as emotional and negatively related to the recent tax changes as you do related to any comments related to increased care giver salaries. Fair enough, humans everywhere. Personally do I think that the impact of the tax changes on OCA's and other companies earning potential will be significantly smaller than the changes of the care givers salaries over recent years (whether they deserve them or not :) ) ... but I think it is fair to say that as long as society wants and needs care places, retirement villages will survive both.

For what it is worth - I noticed that analyst consensus for OCA did rise over the last couple of months from $1.42 in January to $1.57 today. I think the recent discussion is just another storm in a tea cup.

But I guess not just beagles don't like it if somebody else looks hungry at their food bowl, no matter whether they are able to eat the whole portion or not :) ;

[Bjauck]

Probably a good thing in my opinion. For years we have been going on about how NZ'ers obsession with housing as an investment has distorted our investment landscape. Jacinda / Grant had to address this, low interest rates etc have pushed house prices up to much, otherwise Housing for Labour would be what COVID was to DT. ...I agree that NZ relies too much on housing investment. However it is a rational response by investors who seek a tax efficient investment, for which debt financing was readily available, and which governments of all colours ensured would continue to inflate in value.

The Labour government in order to get into power promised the electorate that it would not introduce a CGT, increase the bright line CGT or introduce other new taxes. Obviously it has now back-pedalled on some of those promises. It would be sophistry to pretend that totally eliminating a deduction for interest for landlords, while ostensibly increasing liability for an existing tax, is not a material new tax burden on property investors. Covid and the Labour Party covid response should not be the excuse to throw democracy in the bin.

It could have quickly increased investors deposit requirements (up to 100% if necessary) and then sought cross-party support on other reforms. It could then have faced another election with an array of reforms including introducing stamp duties on investor house purchases, a comprehensive CGT (with concessions for share investments to encourage diversity of investment away from real estate) etc.

[winner69]

What was it again...pale male and stale ?

Reply deleted ...........after all it is Sunday so should be nice

[Beagle]

Reminds me of the time I put too much food into my Beagles bowl and then tried to take some out. My much loved Kelly nearly bit my hand right off lol

Yeah, you take things far too personally on here justakiwi. People who count beans for a living are going to notice that the annual wage cost for OCA is up 30% since they listed 3 years ago and that's eaten up all of the business transformation gains and then some. All investors are left with is the hope that all the talk and all the plans will one day translate to earnings growth. When is something I am seriously beginning to question ? I think there's a very real chance that underlying earnings for FY22 will be less than when the company listed more than 4 years ago when they report them in May 2022. Growth company or hope company with staff getting the lions share of the rewards ?

Its hard to be fat and content eating crumbs. Only reason I have done well is I bought really cheap and people have believed all the talk and have hope that it will translate to earnings growth.

If wages keep going up at the pace they have been and house prices start to materially decline shareholders are effectively on a hiding to nothing and eps could stay stuck in high single digits, maybe for several years more ? Its not like investors get decent yield to keep them enthused and the forward metrics are not that compelling unless there is decent earnings growth.

Waiting for earnings growth with this one is an excruciatingly painful exercise in extreme patience. This dog is no good at waiting years and years between decent feeds. One needs to work within their own limitations.

[Curly]

You were, until recently, the one who was praising OCA for their dedication to and focus on the care aspect of their business. You expressed your admiration for them being different to the others, and understanding the importance of quality care.

You should know by now that quality care comes from people like me. I have shared my personal passion for what I do, so you know how dedicated to my job I am. Yet you seem to believe my dedication, passion, and the quality care I provide, is not worth paying for. Without caregivers, you have no business. We are the concrete blocks at the foundation of every retirement sector business. Not only with regards to care beds/suites, but across the entire business. Caregivers support those in villas (where needed) hospital and dementia wings. Every segment of a retirement village relies on us.

I think you should get right out of OCA, and any other retirement sector holding you have. You are clearly only in it for the money you can make, and not for any of the social conscience/ethical/concern for our elderly, reasons you have mentioned in the past. If you genuinely don’t believe in the OCA care model, this is not the company for you.

Some of us are invested for more reasons than just money.

One other thing. I don’t profess to fully understand the changes the government has made, or whether they will in fact, have any significant impact on the retirement sector. But maybe OCA is not as stupid as you think. As has been discussed often, their prices for apartments/villas have been lower than their competitors. So if the cost of housing comes crashing down, which operators stand to lose more profit? Not OCA. Maybe they have been sensible and priced in anticipation of that happening at some point. The impact of a major drop in house prices, will be much less for OCA than for RYM or SUM.

Or I could be talking complete shyte because what do I know? I’m just a caregiver.

Intelligent response Good Kiwi. Interesting to see a beagle’s response when cornered by a watchdog.
I to won’t be selling. I wont be losing money till sp goes down to .75c. When I do sell I hope to retire and buy a couple of properties for my kids.
Intelligence and stone throwing? I work in a sector where I have a lot of contact with financial advisers, accountants, solicitors etc, people our society would class as “intelligent”.
My observation is their prime concern is the bottom line, whats in it for me. That’s not very bright in my view.

[mike2020]

I'm at 10% of my portfolio and I will hold my OCA shares long term, shares move on emotion and the words here are expressing many. The results are not in on the housing market yet. Will attacking the investment market change the market for homeowners? Not as much as increased supply will and at this stage you can barely complete a dwelling. I have worried about the effect of rising house prices on generations to come, I have seen this in my time as a dairy farmer, a two tiered society. Will your parents need to own a home for you to have a chance of it? I was glad our kids had bought homes already but now there are grandkids on the way. I cant see this govt killing off the housing market they have done all they can to push it along.

[Beagle]

I agree that NZ relies too much on housing investment. However it is a rational response by investors who seek a tax efficient investment which governments of all colours ensured would continue to inflate in value.

The Labour government in order to get into power promised the electorate that it would not introduce a CGT, increase the bright line CGT or introduce other new taxes. Obviously it has now back-pedalled on some of those promises. It would be sophistry to pretend that totally eliminating a deduction for interest for landlords, while ostensibly increasing liability for an existing tax, is not a material new tax burden on property investors. Covid and the Labour Party covid response should not be the excuse to throw democracy in the bin.

It could have quickly increased investors deposit requirements (up to 100% if necessary) and then sought cross-party support on other reforms. It could then have faced another election with an array of reforms including introducing stamp duties on investor house purchases, a comprehensive CGT (with concessions for share investments to encourage diversity of investment away from real estate) etc.

That hits the nail directly on the head.

[Beagle]

My observation is their prime concern is the bottom line, whats in it for me. That’s not very bright in my view.

When you start investing using something other than earnings (like the current ESG and bitcoin craze for example), you're building your house on sand.

[justakiwi]

Just to clarify ... I don’t always take every mention of too high care costs personally. My comments/reaction now are specifically related to Beagle’s abrupt “about turn” on OCA. As I said, he has frequently upsold OCA on their care model and their focus on providing quality one on one care. I felt he was genuine about that, but apparently not. He didn’t bitch about care costs back then - he has only recently started doing that, which is why I have now reacted the way I have. If care costs weren’t an issue for him months ago, why are they suddenly an issue? Go back through this thread and look at some of his positive (about OCA and care) posts.

People can believe what they like. I know next to nothing. But I know one thing. NZ is heading for an aged care/dementia crisis. Future needs are going to be much less focused on independent living situations, and much more on care facilities. Even one of my organisation’s managers commented to me the other day, that she thinks in 10-15 years (probably much less) rest home level care will be obsolete. Rest homes like the one I work in, will no longer exist. People will receive community based assistance for longer and by the time they need a higher level of care, it will be hospital level care they need. I don’t even need to mention dementia level because anyone with half a brain can already see where that is heading. OCA is the only one that I can see, who seems to have any comprehension of this. Yes, care is expensive, but it will always be needed. More so in the future than ever before. The government will always subsidise it - they have no choice. Regardless of which party is in power.

Right now OCA come out on top as being the most forward focused provider and if they continue to stick to their care focus/model, they will be successful. Patience is a virtue. Good things take time.


With all due respect (and independent of what I think about beagles latest change of mind) ... I don't think it helpful if you take every mention of too high care costs as a personal attack against yourself. This is a traders / investors forum, and no matter whether we as individuals think care staff deserve more money than others or not, the costs are very relevant for our investments as well as for society as a whole.

The blow out of care staff salaries (no matter whether justified or not) clearly will impact on our society - and unless we find a way to make care more efficient somebody else will need to reduce their income instead - no society can over the long term spend more money than it makes. Give it another 2 decades and the number of people needing care will be twice the number it is now, but the number of people paying society to afford the care will drop. Something will need to give - and hey, society should also value children's nurses, teachers, policemen (and women), road workers, farmers, bakers, and all these other people doing useful work. Just ask yourself where the money will be coming from if everybody guards their food bowl like a hawk or a beagle?



From what I 've seen and heard so far does it appear some investors / traders react as emotional and negatively related to the recent tax changes as you do related to any comments related to increased care giver salaries. Fair enough, humans everywhere. Personally do I think that the impact of the tax changes on OCA's and other companies earning potential will be significantly smaller than the changes of the care givers salaries over recent years (whether they deserve them or not :) ) ... but I think it is fair to say that as long as society wants and needs care places, retirement villages will survive both.

For what it is worth - I noticed that analyst consensus for OCA did rise over the last couple of months from $1.42 in January to $1.57 today. I think the recent discussion is just another storm in a tea cup.

But I guess not just beagles don't like it if somebody else looks hungry at their food bowl, no matter whether they are able to eat the whole portion or not :) ;

[winner69]

.....

Patience is a virtue. Good things take time.

Beagle often said on this thread Rome wasn’t built in a day :)

[Beagle]

Quality care and earnings growth need not be mutually exclusive things and that's what I thought we had justakiwi.
Its no longer a level playing field. I get it that many people on here don't understand the enormity of the changes this week, that much is perfectly obvious. What I have tried to clearly articulate based on my ~ 40 years professional experience acting for residential property investors is these latest changes will profoundly undermine any motivation for fresh capital to be applied to residential property investment.

Take away depreciation and now even more importantly interest deductibility as well as impose a quasi capital gains tax with a 10 year brightline test, add in all the compliance with reforms of the tenancy act, increased risks of dealing with problematic tenants and methamphetamine contamination, (which has happened to many of my clients at costs usually around $30,000 - $50,000 to repair) why would anyone bother applying fresh capital to residential property investment now ? The short answer is they won't. All the fuel that's powered the market higher has been snuffed out overnight. Why would anyone remain a residential property investor if they are highly leveraged ?

To a large extent, in my opinion, rampant house price gains in the last (6 months at least) have powered OCA up from ~ $1 to where it is now. Those tailwinds have gone and its a new ball game.

I get it that some people hate that I have changed my position. If you want to win in any game you need to adapt quickly when the rules change. If all I wanted was a market performance I'd just buy a bunch of ETF's and go boating.

[justakiwi]

Yeah, you take things far too personally on here justakiwi.

If you say so.



If wages keep going up at the pace they have ...

This was the first major aged care pay rise for many years. I have no expectation whatsoever that we will get another one anytime in the foreseeable future.

[Ggcc]

Quality care and earnings growth need not be mutually exclusive things and that's what I thought we had justakiwi.
Its no longer a level playing field. I get it that many people on here don't understand the enormity of the changes this week, that much is perfectly obvious. What I have tried to clearly articulate based on my ~ 40 years professional experience acting for residential property investors is these latest changes will profoundly undermine any motivation for fresh capital to be applied to residential property investment.

Take away depreciation and now even more importantly interest deductibility as well as impose a quasi capital gains tax with a 10 year brightline test, add in all the compliance with reforms of the tenancy act, increased risks of dealing with problematic tenants and methamphetamine contamination, (which has happened to many of my clients at costs usually around $30,000 - $50,000 to repair) why would anyone bother applying fresh capital to residential property investment now ? The short answer is they won't. All the fuel that's powered the market higher has been snuffed out overnight. Why would anyone remain a residential property investor if they are highly leveraged ?

To a large extent, in my opinion, rampant house price gains in the last (6 months at least) have powered OCA up from ~ $1 to where it is now. Those tailwinds have gone and its a new ball game.

I get it that some people hate that I have changed my position. If you want to win in any game you need to adapt quickly when the rules change. If all I wanted was a market performance I'd just buy a bunch of ETF's and go boating.

I don’t hate it, but have you paid the correct tax on your trading. That is not an answer for me, but for the IRD

[Beagle]

The next installment of provisional tax for FY21 is not due until 7 May 2021.

[davflaws]

Please don't put words in my mouth davflaws. I have never said I hate Cindy or Grant. I think Cindy and Ashley Bloomfield have done a very good job with leading the charge against controlling the spread of Covid but I think this latest goalpost collapse is an egregious breech or fair and reasonable tax polices targeted against residential landlords. That is not "hate" by any stretch of the imagination. Up until this change I thought Grant Robertson has done a good job managing the books in a pretty reasonable way.

Why remain holding a modest stake Winner ? Fair question. I'm not completely immune to emotional attachment especially when its free carry but I think my position is more fairly characterized by the old broker expressions of "Underperform" and "Underweight".

True - you have never said you hated anyone - you just call her "Taxcinda", rail against "Socialism", and put the Govt and left wingers in general down every chance you get.

So suppose I withdraw and apologise for referring to "visceral hatred".

Let's simply say that your recent posts are redolent with so much obvious and strong emotion that I find it hard to evaluate the worth of your conclusions.

[winner69]

True - you have never said you hated anyone - you just call her "Taxcinda", rail against "Socialism", and put the Govt and left wingers in general down every chance you get. So suppose I withdraw and apo0logise for referring to "visceral hatred".
Let's simply say the your recent posts have so much obvious and strong emotion that I find it hard to evaluate the worth of your conclusions.

Learnt a new word today - visceral

[tim23]

When you start investing using something other than earnings (like the current ESG and bitcoin craze for example), you're building your house on sand.

Quite right - they don't qualify as investments just pure speculation

[Snow Leopard]

Fascinating reading this thread and it's posts over the last few days.

A psychologists dream.

Meanwhile OCA will probably reward the patient and rational as time goes by.

[traineeinvestor]

When you start investing using something other than earnings (like the current ESG and bitcoin craze for example), you're building your house on sand.

Quicksand.

[winner69]

Fascinating reading this thread and it's posts over the last few days.

A psychologists dream.

Meanwhile OCA will probably reward the patient and rational as time goes by.

Indeed, pointed my mate at London School of Ecomics to this thread (and a couple of others. He’s always after raw material for his Behavioral Ecomics students to study.

He thanked me and commented that our Jacinda seems more hated than their Boris

[Benny1]

Helped my parents move into a Metlifecare Village last week.
So far the level of service provided by the Village manager and the rest of the staff has been first class, even providing a free lunch, dinner and drinks on their first day as official residents! ( They have had access to their villa all week to start moving and get setup).
I got talking to the Village Manager and asked her about the new owners and she says so far they have been wonderful, they have big expansion plans including buying established smaller villages and bringing them into the Metlifecare umbrella.
She also said they have a program to add care facilities to a lot of their villages which don't have them at the moment over the next 5 years, which would explain their grabbing Earl!

[bull....]

mean while the picture for retirement stocks gets more clouded with the double wammy of rising building costs for materials and labour and also the potential falling property values. not a conducive environment for them to be making improved margins more likely the opposite.

Warning cost of timber may rise as major supplier halts local sales
https://www.nzherald.co.nz/business/warning-cost-of-timber-may-rise-as-major-supplier-halts-local-sales/WWHYAGXE7OL5K5AXPGPSL3VKOA/

far better propositions for investment else where

[Habits]

Indeed, pointed my mate at London School of Ecomics to this thread (and a couple of others. He’s always after raw material for his Behavioral Ecomics students to study.

He thanked me and commented that our Jacinda seems more hated than their Boris

LOLZ ... the beauty of the internet!

[Leftfield]

Fascinating reading this thread and it's posts over the last few days.

A psychologists dream.

Meanwhile OCA will probably reward the patient and rational as time goes by.

Agree. Same could be said over on the ATM thread IMHO.

One moment it’s back up the truck and you can’t have enough

Next minute it is imminent bankruptcy and the sky is falling.

[dobby41]

He thanked me and commented that our Jacinda seems more hated than their Boris

Only by this group.

[850man]

Only by this group.

Wouldn't be so sure

[bull....]

OCA has doubled since May last year off the back of rampant house price increases. This weeks tax bomb is a real game changer for investors, you either get that or you don't.

correct beagle people should read this news report on what happened in the UK from similar decisions

In the UK property prices went up less than inflation after the introduction of similar policies
rents never spiked higher
there were the same bunch of people whining in the UK as in NZ that the opposite was to happen

https://www.newshub.co.nz/home/politics/2021/03/housing-tax-changes-what-happened-when-the-uk-tried-the-same-thing-and-how-we-re-doing-it-differently.html

[Bjauck]

Indeed, pointed my mate at London School of Ecomics to this thread (and a couple of others. He’s always after raw material for his Behavioral Ecomics students to study.

He thanked me and commented that our Jacinda seems more hated than their Boris She may have some way to go before she builds up the same back catalog of lies and bigotry as right-wing "F*ck Business" Boris Johnson, who thinks African Commonwealth countries provide the Queen with "flag waving piccaninnies*". However her recent campaign promise breaking and broad brush deceptive demonising of an investor group, which government after government have encouraged with their policy settings, will help her with her "smiling assassin" left-wing version of BoJo MoJo.

* https://edition.cnn.com/2019/07/23/africa/boris-johnson-africa-intl/index.html

[Balance]

She may have some way to go before she builds up the same back catalog of lies and bigotry as right-wing "F*ck Business" Boris Johnson, who thinks African Commonwealth countries provide the Queen with "flag waving piccaninnies*". However her recent campaign promise breaking and broad brush deceptive demonising of an investor group, which government after government have encouraged with their policy settings, will help her with her "smiling assassin" left-wing version of BoJo MoJo.

* https://edition.cnn.com/2019/07/23/africa/boris-johnson-africa-intl/index.html

https://www.stuff.co.nz/life-style/weddings/124683624/about-time-wedding-plans-made-for-prime-minister-jacinda-ardern-and-fiance-clarke-gayford

Nothing like a wedding to bring back some love, kindness and sentimentality driven emotions to boost Cindy’s sagging popularity?

Don’t think it will do much good with the property owning investors’ fraternity but she does not really care about them anyway. ‘Class warfare’ with her leading the charge against the oppressive moneyed NZers - that’s her cry for next election.

Not good for the retirement village sector but hi, National with a new leader could be back next election?

And National has pledged to reverse said tax changes.

Take the long term view - she’ll be right.

[850man]

https://www.stuff.co.nz/life-style/weddings/124683624/about-time-wedding-plans-made-for-prime-minister-jacinda-ardern-and-fiance-clarke-gayford

Nothing like a wedding to bring back some love, kindness and sentimentality driven emotions to boost Cindy’s sagging popularity?

Don’t think it will do much good with the property owning investors’ fraternity but she does not really care about them anyway. ‘Class warfare’ with her leading the charge against the oppressive moneyed NZers - that’s her cry for next election.

Not good for the retirement village sector but hi, National with a new leader could be back next election?

And National has pledged to reverse said tax changes.

Take the long term view - she’ll be right.

All part of the plan from the Jacinda PR machine. Smokescreen the lies, unfullfilled promises and ill considered decisions with a whole lot of social media likes, glossy magazine swooning, foreign leader inviting wedding hype. Second child just before next election and the reds will be in for another term.

[dobby41]

All part of the plan from the Jacinda PR machine. Smokescreen the lies, unfullfilled promises and ill considered decisions with a whole lot of social media likes, glossy magazine swooning, foreign leader inviting wedding hype. Second child just before next election and the reds will be in for another term.

Wrong thread - nothing to do with OCA or housing (which has hijacked the thread).

[Balance]

Wrong thread - nothing to do with OCA or housing (which has hijacked the thread).

Absolutely everything to do with OCA & the property sector :

https://www.nzherald.co.nz/business/hamish-rutherford-governments-shift-on-tax-resurrects-doubts-it-has-battled-to-shake-off/L73KPUHJTBCPKUOA6VAKYNPO5I/

paywalled

You cannot separate this government's incompetent housing policies & its impact on property values.

[mike2020]

I am partially inclined to agree, its mostly about OCA and some politics. The rise of house prices did seem to stoke some interest in OCA, who it seemed were slow to capitalize on it. Govt policy changes have not played out yet and from what I have seen locally prices wont drop. An agent said to me yesterday still on the rise but they were not investment properties, so, which property are you selling to buy a unit? And if that's the case and OCA is only 30% up from 2 years ago, when it was often quoted as being under selling pressure, where are we now?

This thread reads like an exit poll ;-)

[Zaphod]

It would not surprise me if a new regulatory regime was announced for retirement village charges, and sharing of the capital gain. That would fit well with the current stream of populist policies emanating from the government.

[RTM]

I think most / all politicians lie. See below. I don't trust any of them.
Jacinda's lot need to try to rein in house prices. "We" might not all agree with the course of action that they have taken.
But at least they are burning some political capital and having a go. Couldn't continue as it was.
If this works...I doubt National will unwind this completely.
We now need to adjust our investment decisions accordingly. I would guess that the share market will be a recipient.
What else is there ?


https://www.nzherald.co.nz/nz/pm-defensive-after-video-reveals-gst-flip-flop/YQK5BBSGGSDW4RPHONZC2P2WZE/

"Prime Minister John Key has come under fire in Parliament this afternoon after a Herald video revealed he had ruled out a GST rise during his election campaign in 2008.

Mr Key outlined the Government's 2010 agenda to Parliament yesterday and signalled it was likely to raise GST from 12.5 per cent to 15 per cent in May's Budget.

But in a 2008 press conference, Mr Key said raising taxes would not happen under a National Government.

"National is not going to be raising GST. National wants to cut taxes, not raise taxes." "

[Zaphod]

I think most / all politicians lie. See below. I don't trust any of them.
Jacinda's lot need to try to rein in house prices. "We" might not all agree with the course of action that they have taken.
But at least they are burning some political capital and having a go. Couldn't continue as it was.
If this works...I doubt National will unwind this completely.
We now need to adjust our investment decisions accordingly. I would guess that the share market will be a recipient.
What else is there ?


https://www.nzherald.co.nz/nz/pm-defensive-after-video-reveals-gst-flip-flop/YQK5BBSGGSDW4RPHONZC2P2WZE/

"Prime Minister John Key has come under fire in Parliament this afternoon after a Herald video revealed he had ruled out a GST rise during his election campaign in 2008.


Not quite the same, with the difference being that general taxation was lowered simultaneously. We haven't received any similar benefit from the current policy. But I do agree with the gist.

Perhaps we the kids should by some family homes in their name seeded with capital from Mum & Dad? The only winners on this policy will be lawyers and accountants. Nothing will stop property investment and rising prices. Governments just want to be seen to be doing something, not actually achieving anything.

[850man]

I am partially inclined to agree, its mostly about OCA and some politics. The rise of house prices did seem to stoke some interest in OCA, who it seemed were slow to capitalize on it. Govt policy changes have not played out yet and from what I have seen locally prices wont drop. An agent said to me yesterday still on the rise but they were not investment properties, so, which property are you selling to buy a unit? And if that's the case and OCA is only 30% up from 2 years ago, when it was often quoted as being under selling pressure, where are we now?

This thread reads like an exit poll ;-)

Thinking about this from the perspective of a future OCA resident - they will not be effected by CGT (labelling brightline what it really is) nor interest deductability. There will not be as many buyers for their current property and maybe they will not net as much but will this actually stop them from selling and moving to a OCA residence? I suggest the drivers to move into an OCA residence will still be there and maybe even with more urgency if indeed there is a downward trend in house prices on the way.
Could this in fact work in OCA's favour to expedite sales in this climate of uncertainty?

[nztx]

All part of the plan from the Jacinda PR machine. Smokescreen the lies, unfullfilled promises and ill considered decisions with a whole lot of social media likes, glossy magazine swooning, foreign leader inviting wedding hype. Second child just before next election and the reds will be in for another term.


More like no chance in hell of controlling a Supply & Demand property market - which will do the opposite
regardless like it has everywhere else globally .. Our own special breed of political nutcases IMo
have even lesser chance of controlling anything .. for starters they cant even identify the core problem .. ;)
Have to find some targets instead to blame for Govt's ongoing failures .. how will that go down with
the ballooning queues of homeless going nowhere fast ? ;)

[Blue Skies]

At the risk of stepping into an angry hornets nest on this thread, Kiwibank economists are still predicting double digit house price growth this year, despite the govt's new policies designed to reduce the appeal of the existing housing stock to speculators and direct those wishing to invest in housing into new builds.

That's got to be good news for OCA shareholders & while the SP might take a breather while impact of new policies are digested, with the support of massive demographics, its onwards and upwards long term.

https://www.stuff.co.nz/business/124686399/kiwibank-forecasts-house-price-growth-of-25-per-cent-with-rent-hikes-possible

[RTM]

If people have a well diversified portfolio, then this change should not be overly significant. I'm at 9% and sitting on significant gains, might trim a bit but not overly concerned about this over the longer term. However I do tend to mostly hold rather than sell at the first sign of the wind changing. So far so good....

Cut both in half, now sector at ~5% of portfolio. I consider this a real estate play. And am thinking it will be somewhat successful.

[Waltzing]

"Kiwibank economists are still predicting double digit house price growth this year"

well that will be interesting.

We are looking back over the last 15 years at RYM and the relation to the OCR and the 10-year both here and in the US.

Markets are just numbers. fiscal policies come and go over decades.

Inside the number processing factories for taxation Kick Nick names for the players in the market are just "Du Jour" and have no particular emotion attached to them.

DISC: Holding small. Awaiting numbers and stats.

[tommy_d]

correct beagle people should read this news report on what happened in the UK from similar decisions

In the UK property prices went up less than inflation after the introduction of similar policies
rents never spiked higher
there were the same bunch of people whining in the UK as in NZ that the opposite was to happen

https://www.newshub.co.nz/home/politics/2021/03/housing-tax-changes-what-happened-when-the-uk-tried-the-same-thing-and-how-we-re-doing-it-differently.html

if that happens here, then people like me will retrospectively view this set of changes as the best thing that could ever have happened in our society. Fingers crossed. I understand that there are others in this thread who will think an outcome of stabilising, or even decreasing house prices is bad. Here's one for ya, house prices have increased about 20% in the last 12 months. I'm not sure what the last three years version of that is, but if they decreased 30-40% from where they are now that would be great in my view, would suck for my net worth, but great for society and those who don't want divergence yet further from equality. Guess it depends on world-view.

Won't be great for OCA share price though.

[Waltzing]

Variances in asset price classes is merely rebalancing awaiting to happen.

Professional investors know not to react to policy by another means than to rebalance.

For those with decades in the markets emotions have long since been replaced by systems for managing transactions and capital.

For those on the blogs these helm over policies simple provide opportunities to write more articles.

If house prices do move up well OCA will be prove to be a good investment even if your allocations are not large.

https://www.interest.co.nz/opinion/109719/orthodox-new-zealand-initiative-has-launched-stinging-attack-what-it-clearly-regards

[Sideshow Bob]

Received offer document yesterday.

Undecided if will bother applying - just from an admin perspective, and likely only to get a small portion.