OCR rise would actually be good for RYM target demographic - typically they would have paid off their mortgage (so no impact there) and have money in the bank so an OCR rise would actually make them feel wealthy.
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Makes Sense-They are basically a very well run property rental company.
Their greatest asset is property,along with the buildings and expertise.
They make very good use of it in terms of cash flow.
If property values decrease,they would still get cash flow ,but would certainly lose some asset worth.
Not sure how that would affect further purchases,but as long as their equity is good ,I would imagine they would be able to weather the storm,even if the share price suffered a bit.
As a landlord myself,Im hoping this scenario doesn't eventuate.
Winner - another thing. you have correlated it with share price, not profit. That just means that RYM was a steal at the point when the property market, and I assume the share market were at a low. If you compared to the NZX50, is there a similar correlation? Don't the finance guys call it the beta as apposed to the alpha?
$6.00:t_up:
At least somebody asking whether there was a relationship between house prices and RYM share price sparked a bit of debate.
Somebody asked so I dis the sums and since 2005 the correlation is 82% - and because I wasn't really thinking I should have said that the variances in one set of data (either one) explains 67% of the variability in the other set of data(not 82% as I said because I forgot to square it)
I made no mention of the causality or anything but that could be an interesting discussion
Haven't got the full numbers of people in different cohorts on me but it would appear that the house price / shareprice correlation is far stronger than than number of people over 60 and the shareprice ... but i leave that to another day.
Sparks ... do you have any numbers around the number of people who live in retirement villages?
No poetry here - nice one, Moosie! - but if an OCR increase has a negative effect on the property market it would affect potential RYM customers, either by making it more difficult to sell an existing home or by reducing the price, whether sold on the open market or via RYM's sale facility. Overall, probably a neutral effect?
or whether theycan afford anything after student loan repayments come out of the pension
Thanks Winner.I would have thought the co-relation would be about what you said.Not only house prices but over all confidence to invest.It all adds up.Cheers