RYM - Ryman Healthcare

[longy]

I do wondering if people would delay going into these villages while the property market is cooling?

[traineeinvestor]

I do wondering if people would delay going into these villages while the property market is cooling?

If anything, I would think the opposite. For some, moving is not a choice – their physical and mental needs dictate when they will make the move. For many of those who have some flexibility in timing, the value of their current home exceeds the value of the unit in the retirement home they will buy with the proceeds leaving cash left over which they can use for other things (like travel).

IMHO, the risk of house prices falling would be likely to encourage people to move sooner rather than later rather than have watch the excesses cash decline (with adverse consequences for post-move plans) or, in a worst case scenario, fall below the buy-in price.

[troyvdh]

trainee...Bang on mate...the issue of falling house prices and its effect has been discussed ad nauseam..,.folk will move anyways...Its almost like the anti vac./1080/fluoride debate...some folk never "get it"..cheers.

[Beagle]

They can only move if they can afford it. If they can't afford it they'll choose a lesser "Rolls Royce" alternative if they still have to move. Check out the prices of RYM units in Auckland and then consider that the median house price is $850K. Then there's the decline in house prices in Melbourne which nobody seems to want to talk about. Consider also the forward PE of about 24-25 when you can buy OCA who also have a stellar reputation for care on a forward PE of less than half that and still get great growth and in OCA's case a decent dividend yield too.

I think RYM's business model has been underwritten by steadily rising house prices. What if house prices face many, many years of slight annual declines ?

[BlackPeter]

They can only move if they can afford it. If they can't afford it they'll choose a lesser "Rolls Royce" alternative if they still have to move. Check out the prices of RYM units in Auckland and then consider that the median house price is $850K. Then there's the decline in house prices in Melbourne which nobody seems to want to talk about. Then there's the forward PE of about 24-25 when you can buy OCA who also have a stellar reputation for care on a forward PE of less than half that and still get great growth a in OCA's case a decent dividend yield.

Hmm - so why are you comparing top prices for super luxury units with the average house prices? Somebody owning an average priced house (which still might be quite nice) surely only needs to be able to afford a median priced unit (which are still quite nice)? Apples - Pears?

[Beagle]

Hmm - so why are you comparing top prices for super luxury units with the average house prices? Somebody owning an average priced house (which still might be quite nice) surely only needs to be able to afford a median priced unit (which are still quite nice)? Apples - Pears?

Not doing that BP. Apples with apples. Discussions I have had with village managers suggest most people want to move into a village within 7-10 km's of where they used to live. Typically an average village unit has been somewhere around 75-80% of the houses in the suburb in which the village is located.
What I'm suggesting is simply this. RYM's units are typically toward the top end of the scale. If we start to see declines in house prices in N.Z. like we're already seeing in Sydney and Melbourne as the cost of construction moves inexorably higher the margin between what the resident can sell their house for, (if indeed they can sell) and the cost of the new unit will probably get a lot tighter. I think RYM as the top end developer are more vulnerable than others.

[troyvdh]

Like I say some folk "never get it ".
Never stand in front of a moving train.

[macduffy]

Like I say some folk "never get it ".
Never stand in front of a moving train.

I notice that the RYM train gained 6.2% today.

[Vaygor1]

... Discussions I have had with village managers suggest most people want to move into a village within 7-10 km's of where they used to live. Typically an average village unit has been somewhere around 75-80% of the houses in the suburb in which the village is located...

For independent living (approx 42% of Ryman's portfolio) , it's between 60% to 70% of the local house price.
For serviced units (approx 20% of Ryman's portfolio), it's between 45% to 50% of the local house price.
For aged care beds (approx 38% of Ryman's portfolio), I am unsure but believe it to be equal to or less than services units.

Attachment 10116

I can't see house priced dropping by 30% anytime soon.
Even if they halved, it wouldn't have any real impact.
When ya gotta go, ya gotta go.

[nizzy]

They can only move if they can afford it. If they can't afford it they'll choose a lesser "Rolls Royce" alternative if they still have to move. Check out the prices of RYM units in Auckland and then consider that the median house price is $850K. Then there's the decline in house prices in Melbourne which nobody seems to want to talk about. Consider also the forward PE of about 24-25 when you can buy OCA who also have a stellar reputation for care on a forward PE of less than half that and still get great growth and in OCA's case a decent dividend yield too.

I think RYM's business model has been underwritten by steadily rising house prices. What if house prices face many, many years of slight annual declines ?

Selling parent's unit (occupation rights) at a well regarded Auckland Ryman village. Remains unsold after 6 months, as are others. 2 main reasons given to me are the slow housing market plus a temporary surplus of new units coming onto E Auckland market from various companies - Ryman, Summerset, Oceania and others. To Ryman's credit they pay you out regardless after 6 mths - a big plus in current market.