6 stocks for an expanding housing construction market

How can you benefit from the rising demand in housing?

The Sydney property market is still going strong. Foreign buyers are also getting in on the action, making up one out of ten buyers for established homes and one out of seven for new homes. This is according to the Australian residential property survey of National Australia Bank Ltd (ASX: NAB).

Foreign buyers of new homes were stronger in Queensland than NSW. It may be that prices there are cheaper and rentals yields may be better. The Brisbane and Gold Coast property markets typically follow Sydney and Melbourne.

Now Queensland is leading NSW in expected house price rises. Over the next year to March 2015, the survey estimates Queensland will lead all the states in price increases.

Alongside this is the building data put out by The Australian Bureau of Statistics, which shows the number of residential dwelling building commencements was up 8.7% over the 12 months to 31 December. The house commencement trend estimate was up 7.6% and the unit trend estimate was up 12.7% for the period.

Following the rising building approvals figures that came out earlier this month, this paints a picture of a growing housing construction market. Amongst housing companies, we have seen Lend Lease Group (ASX: LLC) and Australand Property Group (ASX: ALZ) hit new 52-week highs recently.

Stockland Group (ASX: SGP) and Mirvac Group (ASX: MGR) are approaching new high territory, so most of the main players in the industry are moving upwards now.  Mirvac and Lend Lease have record amounts of pre-sale revenue for homes to be constructed, so as those homes are completed, this will be added to group revenue.

Foolish takeaway

I would also watch the smaller tier of builders like AV Jennings Limited (ASX:AVJ), the house builder, and Sunland Group Limited (ASX: SDG), which does both land and high-rise unit development.

They will probably see more business and the stock market could push their share prices up because of the general industry move. As the old saying goes, “all ships rise with the tide”.

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