OCA - Oceania Group - retirement villages

[thegreatestben]

Beagle: https://www.google.com/amp/s/www.new...anges.amp.html

[Beagle]

Beagle: https://www.google.com/amp/s/www.new...anges.amp.html

Thanks, missed that. That gives me some much needed hope.

[clearasmud]

Overreaction Beagle!
England has done the same thing in regards to interest deductibility.
When you think about it housing investors can borrow at close to the inflation rates so there is no real cost of borrowing much of the time, hopefully, anyway.

[Beagle]

Surely you're not so naïve to think interest rates will start with a 2 handle indefinitely ? Who cares what England has done ? They completely messed up the Corona virus response, should we follow their methodology with that too ?

30 out of 45 houses passed in without a single bid at a major auction on Wednesday. I'm not overreacting, I'm calling it that the market has already turned and there's already very clear auction room market evidence to confirm my prognosis.

[Waltzing]

Staying On Thread....

Is MR B forecasting a big hit to OCA sale and resale asking prices?

Who would buy at the moment when you can wait 6 months and bet you can buy what percent lower?

Very pleased to have down sized to 1.6 from 20% overweight.

[James108]

What worries me is the hordes of ignorant "have nots" who this extremist socialism appeals too. These people have no understanding of the tax system and what an extreme and egregious breech of fundamental rights this is. There's probably millions of them. This is what worries me. If this sledgehammer to bust down the real estate market doesn't work, what's next ? What sector is next, the retirement sector ?

It irks me that you label those that see the appeal of fixing an out of control housing market as ignorant. A few points.

1. It was disingenuous to call this a closing of a tax loophole.

2. Most New Zealanders believe that housing is a human right. Further most New Zealanders believe that if you work hard and earn an average wage you should be able to buy your own house.

3. Given the above is no longer possible it follows that house prices are far too high and that the market has not delivered a solution to this over the last 5-10 years. This is too long to wait for the market to come up with a solution. You yourself factored in a 3%-4% rise in house prices going forward.

4. A 3%-4% p.a rise from an extremely unaffordable level is unacceptable when wages are growing at 2%. The government had to intervene, lest we return to a time when society is split into serfs and landed gentry. I prefer a land tax and corresponding reduction in income tax, would you prefer this? (I assume not..).

5. ACT would have you believe that building more would cause prices to drop. What they don't tell you is building in NZ has been increasing for the last 10 years as fast as the construction industry can ramp it up. Further, unless supply increases to the point where rents start falling this is unlikely to impact on house prices which are driven primarily by return on equity, just like all assets. Can supply increase enough for rents to fall? In my view its possible but remember you cannot make more land close to the city so demand for this will continue to increase as long as we have a population increase. Rents didn't really fall in Christchurch when they were oversupplied with houses.

6. How else do you decrease returns on equity? In my view unless you are the reserve bank the easiest/best way and a way that is guaranteed to succeed will involve some sort of tax. I would like to see a corresponding decrease in income tax (you would assume LABOUR would be for this but apparently they will never reduce a tax..) but in any case at least they got half the equation right.

7. Is this bad for renters? Potentially they will face a small increase in rent. In my view the government need to step up to ensure that a strong pipeline of new dwellings is coming through (they have partially done this with the tax carve outs for new builds) to balance supply and demand which could keep rents flat - like they have been in Auckland over the last year (meanwhile property prices have increased by 20%.. go figure).

In essence I find it ignorant of the 'haves' to care more about tax law (which the government, democratically elected by the people in an overwhelming majority and responding to a housing crisis, have the absolute right to change) than the disintegration of New Zealand society into a country of serfs and land owners.

[Beagle]

I think its fair to say at this stage unit and resale price appreciation is a missed opportunity. OCA were far too slow to capture the ~ 20% rise in the market this year and with this radical shifting of the real estate goalposts they appear to have missed the opportunity altogether. I used to have Earl's ear so too speak...but he never really listened.

At least Brent speaks my language and the magic words of "underlying eps accretive" apply to the new acquisitions. Maybe the change in leadership is a REALLY good thing ?

[Beagle]

It irks me that you label those that see the appeal of fixing an out of control housing market as ignorant. A few points.

1. It was disingenuous to call this a closing of a tax loophole. It was worse than that, its blatant propganda.

2. Most New Zealanders believe that housing is a human right. Further most New Zealanders believe that if you work hard and earn an average wage you should be able to buy your own house. We have one of the most generous social welfare systems in the world including significant accommodation supplements. Its always been incredibly hard to buy your first home. As a young person i lived like a hermit for three years, never going out to any social occasion that would cost me money, no fancy car, no travel, no entertainment and saved every cent for three whole years and then got a mortgage on a very modest house in a low decile suburb at 18% interest. How many young people are prepared to do that these days ? You can still buy an apartment in Auckland for around $450K and get a 2.5% mortgage.

3. Given the above is no longer possible it follows that house prices are far too high (young people need to understand you start at the bottom of the real estate ladder, not half way up) and that the market has not delivered a solution to this over the last 5-10 years. This is too long to wait for the market to come up with a solution. You yourself factored in a 3%-4% rise in house prices going forward.

4. A 3%-4% p.a rise from an extremely unaffordable level is unacceptable when wages are growing at 2%. The government had to intervene, lest we return to a time when society is split into serfs and landed gentry. I prefer a land tax and corresponding reduction in income tax, would you prefer this? (I assume not..). There are other far more reasonable ways they could have intervened, such limits around the amount of interest only lending, freeing up vast tracks of land around major cities, raising deposit requirements for investors even further.e.t.c. Attacking fundamental rights to business interest deductibility that have probably existed for over a century is draconian and an egregious breech of fundamental tax principles, what's next, a wealth tax, inheritance tax ? Raise GST to 30% ?

5. ACT would have you believe that building more would cause prices to drop. What they don't tell you is building in NZ has been increasing for the last 10 years as fast as the construction industry can ramp it up. Further, unless supply increases to the point where rents start falling this is unlikely to impact on house prices which are driven primarily by return on equity, just like all assets. Can supply increase enough for rents to fall? In my view its possible but remember you cannot make more land close to the city so demand for this will continue to increase as long as we have a population increase. Rents didn't really fall in Christchurch when they were oversupplied with houses. Have a look at how the BNZ see the oversupply going forward https://www.interest.co.nz/property/...+26+March+2021

6. How else do you decrease returns on equity? In my view unless you are the reserve bank the easiest/best way and a way that is guaranteed to succeed will involve some sort of tax. I would like to see a corresponding decrease in income tax (you would assume LABOUR would be for this but apparently they will never reduce a tax..) but in any case at least they got half the equation right. Labour reducing any tax is exceptionally unlikely in my opinion. Remember how they would back the fiscal creep tax adjustment National were proposing ? New tax rate of 39%, now this thing this week, what's next ?
Remember their pledge of no new taxes this term ?

7. Is this bad for renters? Potentially they will face a small increase in rent. Honestly you have no idea. I am talking to clients with rental properties and renters are facing a grim future. Investors will pass on whatever extra tax imposts the Govt create In my view the government need to step up to ensure that a strong pipeline of new dwellings is coming through (they have partially done this with the tax carve outs for new builds) to balance supply and demand which could keep rents flat - like they have been in Auckland over the last year (meanwhile property prices have increased by 20%.. go figure).

In essence I find it ignorant of the 'haves' to care more about tax law (which the government, democratically elected by the people in an overwhelming majority and responding to a housing crisis, have the absolute right to change) than the disintegration of New Zealand society into a country of serfs and land owners.

There are other ways to address the problem that have been ignored. Govt ignored the advice of Treasury, the RBNZ and even the IRD

[Greekwatchdog]

This is what For Bar had to say on "Aged Care Sector" after last weeks events. They still have as outperform $1.70

Potential significant impacts to the Aged Care sector
This announcement is likely to have the most significant near term impact on the Aged Care sector through three vectors. Firstly,
expectations with regards to long term residential house price inflation is likely to moderate. Secondly and related, significant
uncertainty with regards to near term house prices may result in increased lead times for selling residential homes, and by
implications lead times to settle on acquired aged care units. Finally, looking at fundamentals, versus a counterfactual of no tax
change there is likely to be more modest price increases put through by the aged care operators in the near term. We estimate that
a 1% change in unit price growth impacts sector annuity EBITDA by c.1%.

[Waltzing]

Yes we have access to the reports from FOBAR...

FOBAR VarObject

FOBAR = inrange or some function ( data )

we will wait for the next 12 months to pass before we believe FOBAR has got it right.

the next 2 weeks auctions will give us a picture.

We can always increase our weighted position in OCA if the data starts to look like it conforms to the forecast.

If housing is a basic right it needs to be placed in statue form and accounting definitions can then be used accurately.

Once you cross this line the economy resets and other potential problems emerge.