Summerset Group sales up 18pc in latest quarter despite declining residential market

Summerset's latest sales set a new record. Photo / NZME

New Zealand’s second-largest listed retirement business pushed sales up in its latest quarter to hit a new record, despite falling house values and prices.

Scott Scoullar, chief executive of Summerset Group which is second to Ryman Healthcare, said sales for the three months to the end of December rose 18 per cent compared with the same quarter in 2021.

“The result is pleasing, particularly given the tough market conditions that arose in the last few months of the year. The declining property market has meant it’s taking longer for some of our prospective residents to sell their homes to join a Summerset village, so our sales team are working hard to facilitate settlements,” Scoullar said today.

The company, with a $2.1 billion market capitalisation and $5.4b in assets, had 277 settlements for the quarter to December 31: 139 new sales and 138 resales.

Total settlements for the fourth quarter were 18 per cent up on Q4 2021 when there were 234 total settlements.

Real Estate Institute data last month showed national sales volumes fell 12.4 per cent annually in the year to November. The REINZ House Price Index fell 13.7 per cent annually. At the end of November, 28,449 properties were for sale, up 47.7 per cent. Listings were down 26 per cent annually to 10,185. All regions saw listings decrease compared with November 2021, although Marlborough’s remained static. The median number of days to sell a property in November was 41, up 12 days annually.

The market peaked last November 2021, REINZ said.

Auckland house prices which rose 24 per cent in 2021 fell annually by just over 18 per cent or $235,000. The November data revealed the city’s house prices fell 18.1 per cent from the end of November 2021 to the end of November last year. That compares to a national annual house price drop of 12.4 per cent from $925,999 to $810,000 in the same period, REINZ said.

Summerset made 1007 sales of villas, apartments and care suites in the year to December 31, 2022, up on the 978 sales during the 2021 year.

The company said 35 per cent of sales were in the southern region and the rest spread evenly across the rest of the North Island via Auckland with 21 per cent, the central North Island with 22 per cent and Hawke’s Bay and greater Wellington region with 22 per cent.

Independent living units made up 64 per cent of annual settlements. The remaining 36 per cent were new and resales of property in care and memory care suites.

But the company has not been immune to the falling housing market. It deferred the development of a big Parnell site late last year. Falling house prices and rising building costs prompted delay of the controversial new eight-building $300 million high-rise village.

Scoullar said plans to build the scheme announced two years ago were delayed due to changing circumstances.

“Following a new construction cost estimate for the Parnell village, we have decided to put it on hold while we undertake a review,” he said in December.

“Construction cost pressures coinciding with a declining property market make for a relatively complex project. We consider it prudent to just pause in this environment while we do the review,” Scoullar said.

Retirement village stocks have been hammered on the NZX lately.

Ryman Healthcare hit a nine-year low last month, down a further 17c or 2.93 per cent to $5.63. A price that low was last seen in 2013, before the company moved steadily ahead to a peak of $15.80 in September last year.

Summerset is trading today around $9.30, down 33 per cent annually.