CDL & CDI ... Another Great Result

[Snoopy]

Some consider we are due for a long period of sideways house prices while incomes catch up like what happened to the national average price in the period between 2007 and 2013, see page 4

https://www.reinz.co.nz/Media/Defaul...ber%202019.pdf

We have arguably one of the most comprehensive social welfare systems in the world, with accommodation supplements and extremely generous family support packages for low and middle income families.

All long term data I have seen on the national average property price and some goes way further back than 1992, shows at worst the market goes slightly down to sideways for 5-6 years

No time to get into social debates about housing affordability. If people can't stand the heat get out of the kitchen.

You have to consider that while REINZ comments are interesting, they come from the perspective of wanting to promote sales of property.

These comments are along the lines of 'this is what happened in the past' so 'this is what we will expect in the future'. This is akin to drawing a price timeline graph and showing the line going steadily upwards, punctuated by flattish periods without any understanding of what is driving that line up. Yes there is no doubt most residential property rental owners are heavily subsidized, whether that is through tax concessions (making a cash loss so they enjoy a tax free capital gain later) or through the government topping up the income of their tenants. But is there a political appetite to increase those subsidies further?

Working for families has got to the stage where the average couple with a couple of kids pay no income tax. To grow the housing market further we are going to have to:

1/ Send children out to work to get that 'third income stream'.
2/ Increase family support so that not only do families pay no net income tax, but they are subsidized by other taxpayers to have children.
3/ Continue to consider that by living in Auckland people will be content to be 10% worse off in financial terms than if they lived in London or 20% worse off than if they lived in Sydney or Vancouver.
4/ Make sure Interest rates continue to track lower.
5/ Make sure houses continue to become larger and larger.
6/ Check wages are raised by 20% over and above normal wage growth from productivity and inflation.
7/ Reopen the housing market to foreign non-residents.

I suggest that none of the above is likely (except maybe 4 in the short term), and this is why some of the pent up demand for property by Aucklanders has spilled out into the regions boosting prices there. Auckland itself has reached its limit.

If the 'market value' of CDI shares is $1.50 (Mr Slothbear post 261) and not 78c as in the CDI published results then those market values must be inflated. I think at a minimum a market correction of 10% is inevitable. House prices have got too far out of synch to just flatline while wages catch up. And with a property pull back like that what will that do to the demand for new houses as developed by CDI?

SNOOPY

[macduffy]

And with a property pull back like that what will that do to the demand for new houses as developed by CDI?

As far as I know, CDI develop and sell residential sections/subdivisions, not houses. Yes, there may be a property price pullback, although I would expect this to be minor and more in the nature of a sluggish market for a time, but the fact remains that parts of NZ, particularly Auckland, need more housing which will be built, sooner or later, on the land being developed by CDI and others.

[blackcap]

No complaints from me. Record profit result:

https://www.nzx.com/announcements/348161

Note 8 states that Fair Value of development property is $315.6m on book value of $182.7m. (so add another $132.9m to the NTA if you like)

[macduffy]

No complaints from me. Record profit result:

https://www.nzx.com/announcements/348161

Note 8 states that Fair Value of development property is $315.6m on book value of $182.7m. (so add another $132.9m to the NTA if you like)

And no complaints either from this relatively new holder! CDI may prove to be one of my best stocks if the coronavirus "downturn" continues and worsens.

[BlackPeter]

Certainly a nice surprise:

https://www.nzx.com/announcements/348161

Revenue and EPS did rise in a year in which everybody expected a quite significant drop (based on a rather muted first half year and all these terrible forecasts about property markets crashing).

Alone the value of the land bank they are now holding reflects $1.13 per share ... at a share price of 92 cents. But who knows - SP might change as soon as the markets wake up from their slumber ?

Disc: very happy holder.

[Beagle]

They talk slowing market and slowing outlook but REINZ figures and many market commentators suggest the market is going gangbusters again, what gives ?

[BlackPeter]

They talk slowing market and slowing outlook but REINZ figures and many market commentators suggest the market is going gangbusters again, what gives ?

Well, this years outlook is certainly better than last years outlook, and look what they achieved last year!

I could live with another terrible year like 2019 , but think they are just good in the discipline of under-promising and over-delivering. Love it.

[macduffy]

I was hoping the bear would bear some more gifts with CDI. Topped up at $0.82 but it has since climbed back to $0.89 when I was hoping to pick up some more. Will try to be patient and see if the bear gets grizzlier.

Me too, Mogul! Now don't be greedy when/if we get another opportunity!

[BlackPeter]

Me too, Mogul! Now don't be greedy when/if we get another opportunity!

Bad luck ... too many people waiting for the same opportunity

But really - I think these bearish opportunities are easier to realize with higher liquidity stocks. Better buy AIR, HGH and similar if & when the time is right (in my view not yet ... a good panic just needs to run its due course), there will be more of them around.

[Vaygor1]

[This post deleted and immediately resent] with the image-chart intact