House prices are soaring, building approvals are rising, household finance is in check, home-loan approvals are booming, and consumers are spending. These are all facts revealed by data released by the ABS in recent weeks, which is simply a great sign for Australian investors and homeowners. But how can investors take advantage of this?
A stock for renovators
Rising house prices tend to bring out the renovation specialists. A key first step (or last, depending on the budget) in any renovation or home improvement is a new lick of paint. There’s almost no better way to get exposure to a new generation of renovators than to invest in Australia’s dominant paint brand, DuluxGroup Limited (ASX: DLX). The company’s not cheap but has a dominant market share and international brands have thus far struggled to have any success in Australia, which should protect Dulux’s position.
A stock for builders
Building products group CSR Limited (ASX: CSR) is already up over 40% in 2014 as investors seek exposure to the increase in housing construction. CSR sells a huge range of building products ranging from bricks, plasterboard, insulation, glass to aluminium, cement and roof tiles. Being exposed to all phases of house construction is a massive plus and should see the share price strength continue.
A stock for decorators
Lighting group Beacon Lighting Group Ltd (ASX: BLX) ended last week at $1.08 after listing on Tuesday at 66 cents. Beacon sells lighting, ceiling fans and light globes which are a necessity in most Australian homes. I believe it will head higher over time as investors search for companies exposed to new home sales.
I don’t believe the theory that Australia is headed for a housing crash. The Australian banking system is well regulated and does not have the same weaknesses that lead to the US housing bust during the GFC. Additionally, after spending the last five years paying down the mortgage, many Australians are in a great position to buy investment properties or improve existing homes. This should support the share prices and profits of Australia’s best building and home wares companies.
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Motley Fool contributor Andrew Mudie does not own shares in any companies mentioned. You can find Andrew on Twitter @andrewmudie