2 ASX shares to buy today for house price rise

House prices are predicted to rise in the second half of 2021. Here are 2 large cap ASX real estate shares selling cheaply

| More on:

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The Commonwealth Bank of Australia (ASX: CBA) recently reviewed its forecast for house prices. Instead of the potential for up to 30% falls in residential house prices, the bank believes there will be a recovery in the second half of 2021. This means that ASX shares which have been sold down, are likely to see renewed interest over the next 6 months. I think this is pretty exciting and gives investors a chance to be in on the ground floor as prices rise.

Interestingly, CommBank has an empirical track record for accuracy.

ASX shares for communities

Stockland Corporation Ltd (ASX: SGP) is the glaring choice for best value ASX share in residential real estate. With a market cap of $8.6 billion, Stockland has a development pipeline of 76,000 lots of residential real estate. The company estimates this has an end market value of $21.4 billion.

Only 52% of these lots have been settled. However, the company has reported a level of pent up demand. Moreover, it has reported that since mid-May, residential real estate demand has recovered to above pre-COVID levels.

At the time of writing Stockland has a price to earnings ratio (P/E) of 13.14. It also has a trailing 12 month (TTM) dividend yield of 6.6%. The company is still down in year to date trading by 21.6%. Its share price has remained depressed due to the uncertainty in the housing market. I think this is a great entry point for this ASX share.

Residential houses and apartments

Another ASX share, Mirvac Group (ASX: MGR) has an an estimated value of $18.8 billion of residential real estate in progress, with a further $2 billion planned. According to the company's H1 Analyst toolkit, it has only settled 37% of these houses. As with Stockland, the company posted disappointing FY20 results, including a drop in net profit after tax of 45%. However, this is to be expected considering most of the country was in lockdown from March to May, and into June.

Right now, Mirvac is selling at a P/E of 14.52, with a TTM dividend yield of 4.42%. This is another well-managed company that has been oversold on uncertainty, with a window of opportunity ahead of it. 

Foolish Takeaway

Both Stockland and Mirvac are great large cap ASX shares with a track record of delivering results. Stockland in particular is selling at a cheaper price, as compared to earnings, than it has done for the past 5 years. In addition, both pay solid dividends and have an existing pipeline of work ready to sell as conditions improve.

Motley Fool contributor Daryl Mather has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. 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.

More on Share Market News

Stock market chart in green with a rising arrow symbolising a rising share price.
Share Gainers

Here are the top 10 ASX 200 shares today

It was a massive day for the ASX 200, with a new all-time high recorded.

Read more »

A man sits thoughtfully on the couch with a laptop on his lap.
Technology Shares

This ASX tech stock rocketed 60% in March! Can it keep on delivering?

After soaring in March, the ASX tech stock is now up 169% since this time last year.

Read more »

Broker Notes

Brokers name 3 ASX shares to buy now

Here's why brokers are feeling bullish about these three shares this week.

Read more »

A young man clasps his hand to his head with his eyes closed and a pained expression on his face as he clasps a laptop computer in front of him, seemingly learning of bad news or a poor investment.
Share Fallers

Why Burgundy Diamond Mines, Clarity Pharmaceuticals, EML, and Zip are sinking today

These ASX shares are ending the week in the red. But why?

Read more »

A young women pumps her fists in excitement after seeing some good news on her laptop.
Share Gainers

Why Mesoblast, Newmont, Pilbara Minerals, and Platinum shares are jumping

These ASX shares are ending the week strongly. But why?

Read more »

a young boy dressed up in a business suit and tie has a cute grin and holds two fingers up.
Opinions

2 of my top ASX 200 shares to consider buying before April

I would happily exchange dollars for these two shares right now.

Read more »

Father in the ocean with his daughters, symbolising passive income.
Dividend Investing

I'd spend $8k on these ASX 200 shares today to target a $6,102 annual passive income

I believe these ASX 200 shares will continue rewarding passive income investors for years to come.

Read more »

Three businesspeople leap high with the CBD in the background.
Share Market News

Boom! ASX 200 blasts to new record highs

ASX 200 investors just sent the benchmark index into uncharted territory.

Read more »