OCA - Oceania Group - retirement villages

[Cyclical]

Backward looking. A recent survey in the UK showed a whopping 44% of ex pats there intended to return to N.Z. either in the next year or the one thereafter. Bottleneck at the border is the issue at this point in time.

I'll believe it when I see it. There was something questioning the validity of the kea survey but I can't find it right now. Even so, by the time said bottleneck abates, it'll probably be because the covid threat has been mostly dealt with (ie vaccine success) and all these people queuing to come home will be having second thoughts. On top of that there'll be all those kiwis that have put overseas plans / OE's on hold just chomping at the bit to get out of here, plus those that did come home wanting to get back to their more interesting lives abroad. Yeah, nah, I reckon it'll all balance out and we'll just get back to the circa 50-60k net immigration again.

[wagwan]

An alternative RBNZ could use to control appreciation of asset prices - DTI ratios.

However are they already implicitly in play through servicing sensitivity bank use when assessing home lending?

Below a good summary:

The RBNZ believes that debt-to-income (DTI) ratio limits would be a useful addition to the macro prudential toolkit. They should be given that tool quickly.

The Bank of England’s DTI cap is 4.5, with some flexibility for a portion of lending above that. In NZ, latest data shows more than 40 percent of new lending to first home buyers is at a DTI above 5. The figure is close to 60 percent for Auckland.
DTI limits cut to the chase; the heart of financial system resilience is debt. People are taking on lots.

Banks have a quasi DTI in play as they employ a higher interest rate [~5%] as an interest rate in their mortgage affordability calculations when looking at mortgage applications.

At some stage houses become unaffordable as Banks are unable to extend large enough mortgages under their self-imposed metrics. So overtime the serviceability equation, that has improved markedly due to significantly lower interest rates, will work its way through asset prices and the capacity to leverage.

...there is an implication for first home buyers in the DTI equation.


----

On a related note, also interesting to see that Orr noted in press conference that "RISING HOUSEHOLD WEALTH IS IMPORTANT MONPOL CHANNEL"

----


The more fundamental question at hand is, even if debt is cheap, do SME's and small businesses want more of it?

Attached would suggest not, with these parts of the business sector prioritising liquidity and debt reduction in these uncertain times

Evidently the case would be different for listed companies - cheaper debt is better.

However the sentiment and actions in the school of small fish does have a material impact on the economy in which the big fish swim.
Attachment 12111
Business Credit Limits.png

[Blue Skies]

I'll believe it when I see it. There was something questioning the validity of the kea survey but I can't find it right now. Even so, by the time said bottleneck abates, it'll probably be because the covid threat has been mostly dealt with (ie vaccine success) and all these people queuing to come home will be having second thoughts. On top of that there'll be all those kiwis that have put overseas plans / OE's on hold just chomping at the bit to get out of here, plus those that did come home wanting to get back to their more interesting lives abroad. Yeah, nah, I reckon it'll all balance out and we'll just get back to the circa 50-60k net immigration again.

Agreed, a few months ago Covid free NZ looked very appealing but with vaccines being rolled out shortly there's no reason, & anecdotal evidence revealing NZ property prices & rents making NZ look quite unappealing to anyone considering returning.

[dreamcatcher]

Agreed, a few months ago Covid free NZ looked very appealing but with vaccines being rolled out shortly there's no reason, & anecdotal evidence revealing NZ property prices & rents making NZ look quite unappealing to anyone considering returning.

Totally agree a vaccine will change peoples previous decisions.

[Habits]

Who listens to Louis Navellier podcast ... latest one attached ... https://navellier.com/wp-content/upl...er-24-2020.m4a
https://navellier.com/wp-content/upl...er-24-2020.m4a

Apparently US fed funds rate will stay at zero for a while yet, which will be good for equities in general and I think especially for retirement operators

[Entrep]

Agreed, a few months ago Covid free NZ looked very appealing but with vaccines being rolled out shortly there's no reason, & anecdotal evidence revealing NZ property prices & rents making NZ look quite unappealing to anyone considering returning.

Good points

[Beagle]

Like any survey there will be those that follow through and those that don't. It could be well into the back half of 2021 before a vaccine is widely available. As far as I know fear of death is still a compelling motivational force !!

Aside for that there could be 101 other reasons ex pats stuck in crowded, congested London or any other major city around the world with all its problems wants to swap that lifestyle for something more relaxed e.g. https://www.realestate.co.nz/3882351...a-lane-kinloch

In the meantime we have record low interest rates.

[iceman]

I'll believe it when I see it. There was something questioning the validity of the kea survey but I can't find it right now. Even so, by the time said bottleneck abates, it'll probably be because the covid threat has been mostly dealt with (ie vaccine success) and all these people queuing to come home will be having second thoughts. On top of that there'll be all those kiwis that have put overseas plans / OE's on hold just chomping at the bit to get out of here, plus those that did come home wanting to get back to their more interesting lives abroad. Yeah, nah, I reckon it'll all balance out and we'll just get back to the circa 50-60k net immigration again.

Completely agree with you. The KEA survey holds no water. Of course everyone will say "yes" they will consider returning to NZ but as soon as things turn to some normality, the young people that are enjoying their living in London, New York and China are not going to come back to a clogged up and boring Auckland. According to statistics NZ, in the 7 months to October 2020 (Apr-Oct) , we had 23,391 people arriving in NZ and of those only 14,285 not requiring visa, so most likely Kiwis returning.
For the same 7 months, 96.929 people left the country. Most of them were obviously foreign nationals. But both departing and arriving people needed housing so it is simply a complete myth that house price increases this year have anything to do with a flood of Kiwis returning home. And they won't, too many were running away from student loans and COVID poses a lot less risk to them than repayment of student loans :-) :-)

[Beagle]

I was right up the top of the sky tower the other day Iceman and enjoyed the stunning vista looking out over the harbor and cityscape. We really are blessed here to have access to such a wide array of islands to visit in the Hauraki Gulf. Little bit over fished now. I remember the days you could count on getting a decent feed of snapper just off the northern tip of Waiheke Island...sadly now days you'd need perseverance and a vast amount of burley.

Got chatting to a client this morning about their Waimarie consent on a volcanic cone with outstanding feature overlay. I'm a trustee and we're trying to get consent on his land for a normal subdivision on a site with outstanding natural feature overlay. Local Iwi are kicking up a big storm as well as the Volcanic society and every greenie and his dog barking up a storm.

I still can't believe they got that consent at Waimarie St. Might have to ask management what's their "secret sauce" recipe. OCA's consenting is the exact opposite of the 6 year fiasco SUM had with Boulcott street which finally achieved consent the other day. Whatever OCA's secret consenting methodology is (86% of their entire future redevelopment program is already consented) the market is ascribing no value to it.

[iceman]

I was right up the top of the sky tower the other day Iceman and enjoyed the stunning vista looking out over the harbor and cityscape.

I understand and agree but I don't think tens of thousands of young Kiwis living it up in big cities around the World will be flocking home to do that, especially when all the roads around the Sky Tower are blocked or clogged so they can't get back to the nightclub !