Originally Posted by
Sauce
Hi Rocketman11,
How would another property debacle effect RYM? I totally agree with your assessment that it would probably be good for RYM in the longer run. They require a replenishing landbank of quality sites to continue their expansion. The current environment is ideal for them because development land has been the hardest hit - competition is light and finance is harder - if this continues or gets worse it will be great for RYM.
When it comes to their own sales; RYM have waiting lists for their villages and practically zero vacancy. That tells you something very important about the demand for their villages. In my experience, the elderly moving into retirement villages, and usually their families who are facilitating the process, are the most motivated home sellers. It is a very need driven demand. Older folks, and their families, simply have to do something when they cannot care for themselves. So if property is hard to sell, they will be the first to meet the market prices. And RYM have such strong demand that even if some do not meet the market, or cannot find a buyer, another one will.
Of course, there is some relationship between house prices and profits, because RYM base their initial unit prices on the surrounding suburbs real estate prices, and that also affects the re-sale prices and capital gains that go to RYM, but because the demand side is so strong, I strongly suspect they have more inherent pricing power than people realise (evidenced during recent downturn).
I believe the best way analyse the potential impact is to see how the collapse in housing demand effected them during the lows of 2008/2009 - When they managed to book profitable growth in the worst housing market for decades. They have also increased unit prices since then, even with declining property prices in some areas (Wellington most notably).
Contrastingly Metlifecare got smashed.