Australian RV industry attracting international interest despite weakened housing market

Home sales have dropped for two consecutive months, according to figures released by the Housing Industry Association.

Sales of private houses dropped 6.6 per cent in July from a year earlier, and new home sales fell 5.1 per cent in seasonally adjusted terms to a 17-month low in June and a monthly gauge of inflation dropped to 2.8 per cent in July.

The multi-unit sector is considered volatile and large projects that are proposed and marketed can swing housing data significantly.

In June, detached new home sales fell by 10 per cent in Victoria, 5.2 per cent in Western Australia and 5.1 percent in Queensland.

In South Australia they fell by 4.2 per cent and by 2.2 per cent in NSW.

Building approvals have also fallen for the third consecutive month, dropping 3.3 per cent in June. That follows on from a revised 6.4 per cent fall in May.

“Out of all property sectors, changes in the housing market can have repercussions for the retirement village industry. The older demographic will continue to hold onto their assets for as long as possible with the aim of riding out any slump in the market. The longer this continues, the increased possibility that individual unit sales in villages will continue to remain on hold or decrease,” said RVA CEO Andrew Giles.  

However, fears of a house-price collapse are likely to be unfounded, despite the signs that the market has cooled. Yesterday’s decision by the Reserve Bank not to increase interest rates and a return of demand from first home buyers are likely to prevent a price rout.

In addition, the industry is also attracting interest from overseas investors with New Zealand’s foremost aged care and retirement home company, Ryman Healthcare reporting that it is keen on developing a village in Australia as it seeks expansion beyond New Zealand. The company is looking for a site for the establishment of the retirement village, its first in Australia.

Ryman Healthcare is scouring Melbourne and Victoria for a site to build an A$100 million (NZ$124m) retirement village and prove it can successfully enter the Australian market.

Managing director Simon Challies said shareholders at Ryman’s annual meeting, had been told of the retirement village operator’s plans to move across the Tasman.

Ryman had engaged real-estate agents to find a site within the next 12-18 months though it was unlikely that building would start in the next 24 months.

The A$100m estimated figure included the building and site cost for a completed village.

“We’re looking for a site and we’ve got to execute right on the first site and prove to everyone we can do it, and then you might see more,” Mr Challies said.

A site could be 1 hectare in a Melbourne metropolitan location or 4 hectares (or of similar size to Ryman’s Anthony Wilding or Ngaio Marsh villages) in a regional Victorian situation.

ENDS

The RVA welcomes your feedback on this story and encourages you to leave a comment. You can submit your comment at the bottom of this post.