Housing fall-off unlikely to be bother: Ryman

Ryman Healthcare doesn’t expect that housing market downturns in Melbourne and possibly Auckland will affect it.

Residential property prices in Melbourne have dropped 4.7 per cent in the past year while Auckland prices have been flat to slightly down.

Chief executive Gordon McLeod said prices in the two cities would have to drop 20-30 per cent before there would be any affordability issues for people buying an independent-living townhouse in one of Ryman’s retirement villages.

Independent-living units account for about half Ryman’s portfolio, with about 30 per cent of the other half serviced apartments and the rest hospital or dementia-care beds.

For a potential resident looking at buying a serviced apartment, the cost is about 50-60 per cent of the house they’re selling. For the majority of residents, the most important factor is that Ryman offers a continuum of care, so they will never have to move out of the village they buy into, McLeod says.

Ryman’s history bears out what he is saying. During the global financial crisis, transactions in the New Zealand housing market fell by two-thirds and house prices by 10 per cent but “the stuff of life continued” and Ryman’s profitability continued to increase.

It just reported a near 14 per cent rise in first-half net profit to $97.1 million, excluding property valuations, and expects a full-year result 10-17 per cent up on last year.

Ryman shares closed at $11.48, and have gained about 10 per cent year-to-date compared with the benchmark NZX 50 index’s 3.9 per cent gain, although down from their record high of $14.09 on August 31.