Australia is in the middle of a once-in-a-generation housing slump that is set to continue throughout 2019.

This followed a boom over the past several years which led to housing prices in capital cities spiralling by up to 80 per cent.

But the market is in the middle of a correction and it seems the real estate small caps sector has followed suit in 2019.

Stockhead’s analysis has found only a third of ASX real estate small caps have made gains in 2019.

The top seven of these are all real estate developers, having returned an average of 20 per cent to date in 2019.

However, only one of these has made substantial gains.

Velocity Property Group (ASX: VP7) has gained over 90 per cent this year.

The only news out of the company was a mere estimation of its net profit after tax for the most recent half year — expected to be $1m-$1.5m.

Although it could be up to three weeks for the results to be final, investors approved: the announcement was clearly more than an appetiser.

Velocity Property Group (ASX:VP7) shares have gone for a run.
Velocity Property Group (ASX:VP7) shares have gone for a run.

Even though 240 million shares have been released from escrow, the stock’s 14-day Relative Strength Index (RSI) of 57 suggests any recent sellers were more than balanced out by confident buyers.

The RSI measures the buying and selling momentum. Anything above 70 is usually overbought.

It can be puzzling when one group of stocks in a sector outperforms all of its peers in the way these property developers have.

Perhaps investors don’t care about housing prices and just believe Australia has a housing shortage and property developers can benefit — although whether there actually is a housing shortage is a hot topic of debate among academics and economists.

Despite this, the majority of real estate stocks have fallen this year and some property developers fall into this category.

Nevertheless, only 6 are down by 10 per cent or more. Two of these are China-connected stocks — Lionhub Group (ASX:LHB) and Boyuan Holdings (ASX:BHL), down 20 per cent and 38 per cent respectively.

Boyuan has not had any news, whereas Lionhub has had poor cash flows for several quarters.

Its most recent quarter was no different with the only revenue ($217,000) coming from the issue of convertible notes.

Arguably both have been hit by sentiment that the threats of crackdowns on Chinese ASX-listings will come to fruition.

Among the other big losers was the Agency Group (ASX: AU1), down by nearly 30 per cent this year.

However, all its losses occurred on January 10, when its share price halved. The company halted trading for five days then announced it had acquired a competitor, Top Level Real Estate, and raised $8.4m in a placement. Its share price has slowly recovered since then.

Here’s a list of ASX real estate small caps and their performance to date in 2019: 

ASX Code Company Specialisation Market Cap Price Feb 7 Year to Date Return
VP7 VELOCITY PROPERTY GROUP LTD Developer - residential 21.35M 0.06 0.9032
SDG SUNLAND GROUP LTD Developer - residential 231.98M 1.52 0.1381
FRI FINBAR GROUP LTD Developer - residential 230.54M 0.85 0.1118
VLW VILLA WORLD LTD Developer - residential 238.54M 1.9 0.0826
AVJ AVJENNINGS LTD Developer - residential 231.55M 0.57 0.0755
HGL HUDSON INVESTMENT GROUP Developer - commercial 23.74M 0.04 0.0526
EGH EUREKA GROUP HOLDINGS LTD Developer - retirement villages 66.71M 0.29 0.0357
DVN DEVINE LTD Real estate agents 34.92M 0.22 0.0233
CRR CONVENIENCE RETAIL REIT Trust 225.71M 2.86 0.007
SRV SERVCORP LTD Serviced Offices 301.20M 3.06 0.0066
APW AIMS PROPERTY SECURITIES FUN Fund 70.89M 1.58 0.0064
MPX MUSTERA PROPERTY GROUP LTD Developer - mixed 31.88M 0.32 0
AXI AXIOM PROPERTIES LTD Developer - mixed 18.22M 0.04 0
RNY RNY PROPERTY TRUST Trust 1.58M 0.01 0
IBN IBUYNEW GROUP LTD Agent 4.36M 0 0
QPR QUATTRO PLUS REAL ESTATE Trust 58.17M 0.01 0
GDF GARDA DIVERSIFIED PROP FUND Fund 207.56M 1.31 -0.0076
SSL SIETEL LTD Investor 56.85M 7.1 -0.0139
TGP 360 CAPITAL GROUP LTD Investor 236.64M 1.02 -0.0238
BWR BLACKWALL PROPERTY TRUST Trust 96.62M 1.45 -0.0333
ERF ELANOR RETAIL PROPERTY FUND Fund 154.48M 1.2 -0.04
TIA TIAN AN AUSTRALIA LTD Property Developer - residential 50.23M 0.58 -0.0413
LMW LANDMARK WHITE LTD Valuation consultants 37.46M 0.44 -0.0435
APZ ASPEN GROUP Holiday park operator 88.61M 0.93 -0.0462
AGJ AGRICULTURAL LAND TRUST Investor - rural WA 3.90M 0.04 -0.0476
MEA MCGRATH LTD Agent 47.02M 0.28 -0.0508
DGH DESANE GROUP HOLDINGS LTD Developer & Investor 51.34M 1.25 -0.0704
FE8 FASTER ENTERPRISES LTD Developer - mixed 2.22M 0.02 -0.1304
LHB LIONHUB GROUP LTD Developer - tech parks (China) 6.61M 0.01 -0.2
LHM LAND & HOMES GROUP LTD Developer - residential 13.64M 0.01 -0.2353
AU1 AGENCY GROUP AUSTRALIA LTD Real estate financial services 19.72M 0.19 -0.2963
UUL ULTIMA UNITED LTD Developer - residential 1.23M 0.04 -0.3538
BHL BOYUAN HOLDINGS LTD Developer - mixed 54.90M 0.16 -0.3846