SUM - Summerset Group

[bull....]

Possibly the bottom yesterday. I'm a nervous in.

yes i have a punt in now to for a bounce of support area

[Beagle]

Looks like the bottom is in, Bull has converted from being a Bear, even some people have added to their OCA holding so they can't keep skiting about their average float price anymore.

SUM property "experts" on here don't understand that over many decades now, national average housing prices when they have corrected, (assuming they even do which some people are taking as a done deal already), usually do so by flatlining in nominal dollars for several years and only reduce in real inflation adjusted terms. But this doesn't suit their cataclysmic thesis so they conveniently ignore past evidence as well as evidence that current housing is increasing at 2.5% per annum. They also fail to account for and conveniently overlook the fact that historically in times of a flat market, bare land corrects faster in inflation adjusted terms so developers are able to buy land at much cheaper prices than in a booming market and this can be earnings accretive in terms of boosting development margins both because the land is much cheaper to start with, builders and contractors are easier to find and at more attractive prices and also because by the time the development is selling down often the market has already turned up.

I think the fun is over for those that shorted SUM.

[winner69]

You sure the 30 houses Labour might be building per year will make such a big difference ?

Overseas buyers - lets see. Kiwi dollar still pretty strong (which is an indication that overseas buyers are still in).

As well - what to you think is going to happen with all the Kiwisaver funds which will get a big boost with increased minimum wages et all? Are the respective managers putting these funds under their mattresses or are they going to invest them? Hmm - difficult.

Attachment 10464

And don’t forget punters can even contribute more into Kiwisaver each week now and ANZ survey suggested many will

Need to find a home for extra cash like buying sum more shares eh ...no matter whether it’s a good investment or not .,.is good

[bull....]

bounce levels im watching 573 , 588 , 6 , 6 being the breakdown level from support , often when you get a breakdown it may retest the around the level to see if it was a valid level and not a fake breakdown.
also rsi is way oversold and price currently sits outside the weekly bollinger band all these and others may help bounce anyway see what happens

[winner69]

SUM property "experts" on here don't understand that over many decades now, national average housing prices when they have corrected, (assuming they even do which some people are taking as a done deal already), usually do so by flatlining in nominal dollars for several years and only reduce in real inflation adjusted terms. But this doesn't suit their cataclysmic thesis so they conveniently ignore past evidence as well as evidence that current housing is increasing at 2.5% per annum. They also fail to account for and conveniently overlook the fact that historically in times of a flat market, bare land corrects faster in inflation adjusted terms so developers are able to buy land at much cheaper prices than in a booming market and this can be earnings accretive in terms of boosting development margins both because the land is much cheaper to start with, builders and contractors are easier to find and at more attractive prices and also because by the time the development is selling down often the market has already turned up.

I think the fun is over for those that shorted SUM.

From Dec07 to Mar09 NZ property prices fell by 10% (or 9.7% which sounds better) --they then essentially 'flatlined' through to end of 2011 ... data from HPI from RBNZ


House prices praked in Dec 07 quarter and after the fall didn't recover back to that peak until Sep 12 quarter ... nearly five years


If this happened again (and if it did probably be worse this time) a 10% reduction in the value of sum investment properties would impact profit and balance sheet. SUM properties currently va;ued ay $2.5 billion.

Maybe thats what sum punters are worried about ....remember markets are forward looking

And yes prices are currently up 2.5% but this is lower than the 4% a year earlier so this next year might be flatlining before a few years of declining

But it may never happen .....

[Beagle]

You're an honest bloke so I won't ask you to post a link substantiating that...Perhaps excluding the GFC then... but you already know RYM increased their underlying earnings throughout the GFC. If we were valuing these companies based on all inclusive earnings IFRS, then they would have been substantially higher as single digit PE's is completely nonsensical for a company with a CAGR in IFRS profit of 70% per annum since it listed.

[winner69]

You're an honest bloke so I won't ask you to post a link substantiating that...Perhaps excluding the GFC then... but you already know RYM increased their underlying earnings throughout the GFC. If we were valuing these companies based on all inclusive earnings IFRS, then they would have been substantially higher as single digit PE's is completely nonsensical for a company with a CAGR in IFRS profit of 70% per annum since it listed.

The numbers are here https://www.rbnz.govt.nz/statistics/...e-price-values

For the data junkies there's a link to a excel file with heaps of numbers in it

[BlackPeter]

Here is a long trend chart of average NZ house prices (Auckland in red, rest of the country in grey):

Analysis_of_NZ___Akl_pricing_since_1992_HPI___Median.jpg

And yes, winner is right - looks like they dropped after a 2008 peak by roughly 10% (over 2 years).

Will the next drop be now? Will it be as bad as the GFC? Who knows ... but whatever it is - who cares?

While I notice that this forum is called "sharetrader" ... are there really no investors around with an attention span longer than that of a fruit fly?

Auckland house prices doubled according to this chart (and despite sharemarket crashes, GFC's and whatever else) every 10 years.

"Rest of NZ" house prices doubled every 12 years.

Doomsday preachers have been active since the beginning of time.

So - why should this "downcycle" be different?

Ah yes - and what is your investment horizon?

[Beagle]

Analysis_of_NZ___Akl_pricing_since_1992_HPI___Median.jpg

And yes, winner is right - looks like they dropped after a 2008 peak by roughly 10% (over 2 years).

... are there really no investors around with an attention span longer than that of a fruit fly?

Rest of NZ" house prices doubled every 12 years.

Doomsday preachers have been active since the beginning of time.

So - why should this "downcycle" be different?

Ah yes - and what is your investment horizon?

Fruitfly Comment One drop of 10% over 2 years in the middle of the Global Financial Crisis, arguably the biggest stress test since the Great Depression of 1929.

Of course it so obvious there's another GFC about to hit us directly in the face
These are rather inconvenient FACTS for some and will be ignored by those who think their opinion about the future matters far more vast periods of historical FACTS.

RYM's underlying profit went up throughout the GFC. I doubt this additional historical FACT matters to people with a myopic opinion that we're going into a property crash.

[winner69]

Fruitfly Comment One drop of 10% over 2 years in the middle of the Global Financial Crisis, arguably the biggest stress test since the Great Depression of 1929.

Of course it so obvious there's another GFC about to hit us directly in the face

RYM's underlying profit went up throughout the GFC. I doubt this FACT matters to people with a myopic vision that we're going into a property crash.

NZ didn’t do too badly through this global GFC thing ....as we were already in recession when that hit

Whatever we did have 5 years of house price ‘recession’ (duration to get back to previous peak)

But the likes of Ryman kept building things and selling things and it’s company value (book value) kept increasing in spite of lower property prices. Better measure of value than this fandangled underlying earnings thing