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3 ways share market investors are betting house prices have bottomed

Beaten down ASX shares

Which way house prices will go next is the most popular topic in all of Australia and it seems share market investors are betting Sydney and Melbourne’s house price falls may be over for a long time yet.

The theory that the bottom could be in for house prices in general is no secret, after the surprise federal election win for the Coalition and amid mounting expectations that the Reserve Bank is readying to cut lending rates to 1% or lower over the 12 month ahead.

Elsewhere the prudential regulator APRA has loosened important lending restrictions on the banks and property investors recently.

Overall then you’d be forgiven for thinking it could be time to pile into the property market.

While it seems investors in three residential-property leveraged ASX companies are thinking along the same lines.

Shares in real estate agent Mcgrath Ltd (ASX: MEA) are up 9% to 29 cents today despite no news coming out of the loss-making real estate agent.

While the valuations of Australia’s dominant two residential property sales internet platforms have also raced higher recently.

Today Domain Holdings Australia (ASX: DHG) shares are up 2.5% to $3.39 and up 22% over the last month despite the operator of releasing no specific news to the market.

While shares in REA Group Limited (ASX: REA) are also up over 12% over the past month as investors bet on residential property listings rising.

Man who said buy Kogan shares at $3.63 says buy these 3 ASX stocks now

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Motley Fool contributor Tom Richardson owns shares of REA Group Limited.

You can find Tom on Twitter @tommyr345

The Motley Fool Australia has recommended REA Group Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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