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ASX shares rising on booming Australian house prices

Real estate

Some ASX shares are rising this morning after house prices in Australia continued to boom during November 2019.

Every month CoreLogic releases its national Home Value Index for the overall country, as well as capital and regional areas.

The release of these numbers has sent banks and property businesses alike up. The Commonwealth Bank of Australia (ASX: CBA) share price is up 1.1%, the Westpac Banking Corp (ASX: WBC) share price is up almost 1%, the Australia and New Zealand Banking Group (ASX: ANZ) share price is up around 0.9% and the National Australia Bank Ltd (ASX: NAB) share price is up 0.9%.

Construction businesses are also seeing rises. The Boral Limited (ASX: BLD) share price is up 0.9%, the Stockland Corporation Ltd (ASX: SGP) share price is up 0.4% and the Mirvac Group (ASX: MGR) share price is up 0.5%.

The property portal businesses are also having a solid day, the REA Group Limited (ASX: REA) share price is up nearly 2% and the Domain Holdings Australia Ltd (ASX: DHG) share price is up 0.3%.

What happened to property prices in November 2019?

In one month national house prices rose by 1.7%, Sydney house prices increased by 2.7%, Melbourne prices surged 2.2%, Hobart prices jumped 2.3% and Canberra prices went up 1.7%.

Looking at the other capital cities, Brisbane, Adelaide and Perth all increased by between 0.4% to 0.8%.

Darwin was the only city to register a decline, but it was a pretty hefty one with a decline of 1.2%.

It has been a pretty strong recovery for Sydney and Melbourne prices, over the past three months the two largest cities have seen growth of 6.2% and 6.4% respectively, causing national prices to show a gain of 3.8%.

What now?

FOMO certainly seems to be heavy in the housing market at the moment. It seems to be good news for property owners. It’s good news for property-related businesses. It’s good news for states relying on stamp duty. But, it’s not so good news for first home buyers and for Australian debt levels.

It will be interesting to see if discretionary spending steps up with people feeling the ‘wealth effect’. Or, will people fear what record low interest rates mean for the economy? Time will tell. At the current prices I’d much rather invest my money in shares over an investment property.

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Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of National Australia Bank Limited. 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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