Australia’s facing its ‘biggest property boom in a generation’; these ASX real estate agency stocks may benefit
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When COVID-19 broke out there were fears Australia’s property market would crash but currently the reverse is happening – ASX real estate agency stocks are benefiting.
Interest rates are currently at record lows and unlikely to rise anytime soon. And according to the Australian Bureau of Statistics, the total value of new loan commitments for housing hit a record high in December.
Another indicator is that auction volumes in capital cities rose by 44.1 per cent in the December quarter.
The boom has been predicted to last into 2021 and beyond, with even the RBA estimating in internal research that house prices could rise by 30 per cent.
Propertyology’s head of research Simon Pressley said that this will be Australia’s biggest property boom for a generation.
While not everyone can buy a house right now, there are other ways to jump on the bandwagon.
There are only a handful of ASX real estate agency stocks with a focus on Australia but they’re all up in the last six months.
Here’s a list of ASX real estate agency stocks and their performance in the last 12 months…
The top stock is McGrath (ASX:MEA). It’s also the smallest (by market capitalisation), but is nonetheless up 49 per cent in 12 months and 150 per cent in the last six months.
While this company hasn’t given a trading update since last November, it reported the first four months of FY21 were better than in FY20.
It anticipates underlying earnings between $6 million and $6.5 million in the first half of FY21.
This company told shareholders yesterday it now had 100,000 real estate agents on its platform in the US and is targeting 200,000.
While being based in Melbourne meant it was hit by COVID-19 restrictions, it noted the pandemic has caused more people to use the internet than ever before.
“This has meant that agents have never had a greater need to have a strong and clear online presence and digital marketing capability,” CEO Michael Davey said at its recent AGM.
The other two are large cap classified sites REA Group (ASX:REA) – which owns realestate.com.au – and Domain (ASX:DHG).
Domain’s growth was more modest in the first four months of FY21. Its digital revenues only rose by 4 per cent and total revenue fell 7 per cent. It blamed that performance on the pause on printing during Victoria’s lockdown.
In FY20 it copped a revenue and earnings hit of 10 per cent due to property listing declines as the bushfires and COVID-19 hit.
REA Group saw a slight hit as well, even in Q1 of FY21, with revenue after broker commissions falling 3 per cent, although it saw significant online growth metrics in site visits and monthly app downloads.
If you want exposure outside Australia, there is Frontier Digital Ventures (ASX:FDV) which owns various classified sites (including but not limited to real estate) in Latin America and the Asia-Pacific.
Another peculiar stock potentially relevant to a typical real estate agency is PropTech Group (ASX:PTG), which owns customer relationship management software for real estate agents.