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  1. #7451
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    Possibly the bottom yesterday. I'm a nervous in.

  2. #7452
    Legend Balance's Avatar
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    The retirement village operators have been paying huge prices (premiums in many cases) to secure suitable sites for the retirement villages to be built for the demand out there.

    In that sense, they are no different from many of the developers who are now caught with expensive land and costly developments.

    Meanwhile, the customers they are relying upon to buy into the more expensive units in their villages are facing declining property values which will impact on what they can pay.

    The property cycle has turned and it's now in reverse gear - tough times ahead for all developers sitting on expensive land, developments and stock.

    3 to 5 years of downtrend ahead.
    Last edited by Balance; 11-04-2019 at 07:48 AM.

  3. #7453
    IMO
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    People dont like the message so are shooting the messenger.
    I was trivialised too Balance, when i pointed out this possibility last year, with comments like" SUM or OCA is not a property company".

    Really appreciate you sharing from your field of knowledge and experience with your finger on the pulse.

    I dont know how to verify 3 to 5 years or how far the property cycle will drop though, but i believe drop it will.
    Cant see it dropping like australia though as the housing stock is in oversupply there is my understanding plus many other metrics.
    I plan to maintain my holding in OCA through this cycle atp having a low 79c entrypoint (for you know who.

    Another thing that concerns mea little is how the Govt can keep funding the care villages with this avalanche of elderly people coming, will margins drop/tighten for the care facilities for one, getting enough trained quality staff another.

  4. #7454
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    Quote Originally Posted by Balance View Post
    The retirement village operators have been paying huge prices (premiums in many cases) to secure suitable sites for the retirement villages to be built for the demand out there.

    In that sense, they are no different from many of the developers who are now caught with expensive land and costly developments.

    Meanwhile, the customers they are relying upon to buy into the more expensive units in their villages are facing declining property values which will impact on what they can pay.

    The property cycle has turned and it's now in reverse gear - tough times ahead for all developers sitting on expensive land, developments and stock.

    3 to 5 years of downtrend ahead.
    well, your cyristal ball regarding mPg was pretty bad. Are you still buy mpg?
    btw, nobody can predict future right? that's what i learned from this forum.
    "when the price goes down everyone predict it go down further, and vice versa."

  5. #7455
    Speedy Az winner69's Avatar
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    Quote Originally Posted by Balance View Post
    The retirement village operators have been paying huge prices (premiums in many cases) to secure suitable sites for the retirement villages to be built for the demand out there.

    In that sense, they are no different from many of the developers who are now caught with expensive land and costly developments.

    Meanwhile, the customers they are relying upon to buy into the more expensive units in their villages are facing declining property values which will impact on what they can pay.

    The property cycle has turned and it's now in reverse gear - tough times ahead for all developers sitting on expensive land, developments and stock.

    3 to 5 years of downtrend ahead.
    So should we be worrying debt levels of these operators / developers as well ....it was the debt that was the main problem for developers in last property crash
    “ At the top of every bubble, everyone is convinced it's not yet a bubble.”

  6. #7456
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    Quote Originally Posted by winner69 View Post
    So should we be worrying debt levels of these operators / developers as well ....it was the debt that was the main problem for developers in last property crash
    have you considered future rate cut?
    https://www.nzherald.co.nz/business/...ectid=12216934

  7. #7457
    always learning ... BlackPeter's Avatar
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    Quote Originally Posted by winner69 View Post
    So should we be worrying debt levels of these operators / developers as well ....it was the debt that was the main problem for developers in last property crash
    Sometimes you are really hard to read when you are taking the p*ss; Remember - there might be less experienced readers who might panic and sell their shares when they come across nonsense like this.

    You obviously know that the retirement villages have hardly any bank debts - they do finance themselves mainly through the interest free loans they get from their clients when they buy into their right to occupy.

    No risk for them - the only way for these clients to get back part of their money is when they leave their nice units in droves and pay Summerset (or whomever) the 30% DMF - and hey - why would they want to leave?

    So - if we can avoid it - could we keep this senseless scaremongering off the forum? I thought you can do better ...
    ----
    "Prediction is very difficult, especially about the future" (Niels Bohr)

  8. #7458
    Alley Cat Brain's Avatar
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    Best to remind everybody of this cartoon at this point
    Attached Images Attached Images
    Last edited by Brain; 11-04-2019 at 08:46 AM.

  9. #7459
    ShareTrader Legend Beagle's Avatar
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    Quote Originally Posted by Brain View Post
    Best to remind everybody of this cartoon at this point

    Link doesn't work. I think everyone is in need of some comic relief on this thread. Please fix and share.
    Ecclesiastes 11:2: “Divide your portion to seven, or even to eight, for you do not know what misfortune may occur on the earth.
    Ben Graham - In the short run the market is a voting machine but in the long run the market is a weighing machine

  10. #7460
    Legend Balance's Avatar
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    Quote Originally Posted by tuaman View Post
    have you considered future rate cut?
    https://www.nzherald.co.nz/business/...ectid=12216934
    Believe you me - an interest rate cut is the best indication you can ever get that the property sector is in big trouble.

    Banks pull the plug on developers because they cannot top up with equity to maintain acceptable leverage ratio and/or pay interest due to lack of sales.

    If you want an example of how quickly things can turn in the real estate market for developers, there's a huge multi-billion dollar housing project (incorporating a massive retirement village) in South Auckland (developer has spent over $350m so far developing the infrastructure and sections for sale according to NZ Herald) - they have not been able to sell one single section since July 2018! Fortunately for the developers, there is no bank debt so they are okay and will survive. The billion dollar profit will not be there anymore however.

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