RYM - Ryman Healthcare

[Bjauck]

Perhaps all the retirement stocks have been affected by press reports that Chinese buyers are now staying away from the Auckland property market with the result that auction clearance rates are below 50%. Funny that - a few months back, I thought that the government and real estate agents had been assuring us that overseas buyers had negligible effect on the overheated market...

[Zaphod]

Perhaps all the retirement stocks have been affected by press reports that Chinese buyers are now staying away from the Auckland property market with the result that auction clearance rates are below 50%. Funny that - a few months back, I thought that the government and real estate agents had been assuring us that overseas buyers had negligible effect on the overheated market...

You can't conclude anything from a press report based upon little to no actual evidence.

[trader_jackson]

You can't conclude anything from a press report based upon little to no actual evidence.

I also don't think they have had an affect on the retirement villages, yet at least...

Maybe Auckland house auctions, but then again, it is probably the whole market weakening as a result of new restrictions coming in tomorrow... but as per usual with the property industry, where information is NOT transparent at all, they [real estate agents and most property websites etc] will tell us "its probably overseas buyers" to try and reassure all the kiwis fully leveraged that the 20% gains will continue and "property is the way to get ahead!"

[skid]

I think the property market slowing is a good thing (if that is what happens) otherwise you get firmly into the crash territory--This IMO is a good time for a breather--US stocks are also getting back into the overbought territory (but that can still have legs)expect volatility

[Zaphod]

I also don't think they have had an affect on the retirement villages, yet at least...

Maybe Auckland house auctions, but then again, it is probably the whole market weakening as a result of new restrictions coming in tomorrow... but as per usual with the property industry, where information is NOT transparent at all, they [real estate agents and most property websites etc] will tell us "its probably overseas buyers" to try and reassure all the kiwis fully leveraged that the 20% gains will continue and "property is the way to get ahead!"

I agree; Real-estate agents are as bad as politicians and will tell each party involved in the transaction what they want to hear! If property prices do decline or hopefully just remain static/slowing (as per Skid's post) for some time, at least RYM are generating a decent underlying profit.

[Biscuit]

I agree; Real-estate agents are as bad as politicians and will tell each party involved in the transaction what they want to hear! If property prices do decline or hopefully just remain static/slowing (as per Skid's post) for some time, at least RYM are generating a decent underlying profit.

I think you will find that even if the entire residential property market moved sideways or down for a few years, Rymans would still make a profit from property revaluations on top of the underlying profit as their property revaluations are not linked to short term movements in the residential market.

[Beagle]

Friend of ours tried auctioning their modest West Auckland home on Saturday 31st October. A classic basic 3 bedroom property at the affordable end of the market for Auckland, (reserve was under $600K).
After spending several thousand dollars on advertising and promotion no buyers showed up to the auction at 2.00 p.m.
I spoke with the general manager N.Z. of one of the major real estate franchises last week. Market's turned completely on its head Rodge was what he told me. Its now a buyers market.
I spoke with another client / real estate agent the week before and got the same story.

Thing is, our friend now can't move into the retirement village she wanted too and was counting on a sale to eliminate her remaining mortgage and have a comfortable retirement. She's so broke, (can't really afford her remaining $150k mortgage mortgage), that she put the $4K marketing and promotion costs on her credit card and now she's really snookered. Just one example, granted, but valuable feedback from others at the coal face that should know.

Hmmm...If people can't sell their homes they can't move into the retirement villages can they ?...and then if that happens en masse stocks priced for perfection in this sector on a PE of circa 30 might find their operating environment isn't perfect anymore. After many years of increases in the Auckland market it won't surprise me if there's a decent sized correction.

BUT retirement sector stocks are immune to a housing downturn supposedly so you guys will be alright...too early for a Tui ?

[Biscuit]

Hopefully there is a correction in the Auckland residential market, and soon. I doubt rest homes would be the first part of the economy affected by that. Increasing property prices leads to feelings of wealth that increase discretionary spending - cars, boats, overseas vacations. It will affect individual decisions about moving into a rest home but most demand is likely from people who have been in the market for a long time and have real equity. They are not going to grimly hold on just to maximize the inheritance for the kiddies IMHO.

[stoploss]

Friend of ours tried auctioning their modest West Auckland home on Saturday 31st October. A classic basic 3 bedroom property at the affordable end of the market for Auckland, (reserve was under $600K).
After spending several thousand dollars on advertising and promotion no buyers showed up to the auction at 2.00 p.m.
I spoke with the general manager N.Z. of one of the major real estate franchises last week. Market's turned completely on its head Rodge was what he told me. Its now a buyers market.
I spoke with another client / real estate agent the week before and got the same story.

Thing is, our friend now can't move into the retirement village she wanted too and was counting on a sale to eliminate her remaining mortgage and have a comfortable retirement. She's so broke, (can't really afford her remaining $150k mortgage mortgage), that she put the $4K marketing and promotion costs on her credit card and now she's really snookered. Just one example, granted, but valuable feedback from others at the coal face that should know.

Hmmm...If people can't sell their homes they can't move into the retirement villages can they ?...and then if that happens en masse stocks priced for perfection in this sector on a PE of circa 30 might find their operating environment isn't perfect anymore. After many years of increases in the Auckland market it won't surprise me if there's a decent sized correction.

BUT retirement sector stocks are immune to a housing downturn supposedly so you guys will be alright...too early for a Tui ?

Roger I think the point here is when you say "people can't sell their house " They can sell them it is just not at the unrealistic price they want to sell at or have been told be a estate agent they can get ..... Bearing in mind people in Auckland have effectively been living off their property revaluations with ever increasing mortgages to boot for a number of years now . This is a much bigger problem than retirees not being able to sell to get into a retirement home . As biscuit has pointed out the retirees would have on average much more equity in their homes and more realistic expectations on sale prices as they are effectively "trading down" not looking to trade up .....
If the whole Auckland housing market is stuffed I'd be shorting the big 4 Aussie bank stocks ..in particular CBA..how much of the Auck mortgage market does ASB hold ? Used to be something crazy , reminiscent of AMI and the CHCH insurance market .
Anyway I am more of a believer in a 15/20 % pull back in the market ( that probably only takes us back to last years prices ) Of course there will be some extreme examples where people have paid a ridiculous price in not the best area where the bank wants there money at all costs and they
may take a 30/40 % hit .... that will always make it into the press .
But to bash RYM ..(still a long way from your $ 6.50 Roger ) on a property correction , maybe take the argument to the FBU threat .

[couta1]

99% of all retirees buying Ryman units are mortgage free and most have houses worth more than the intended unit purchase.