ASX shares involved in the housing sector are set to boom this year, according to a fund manager — but one company looks especially attractive.
Near-zero interest rates and the dumping of responsible lending laws have put a rocket under Australian real estate.
UBS has predicted a 10% increase in prices this year. The RBA calculated a low cash rate could inflate the market by 30% over the next 3 years.
Tribeca Investment Partners portfolio manager Jun Bei Liu told a GSFM briefing last week that the housing industry has recovered very sharply from the COVID-19 recession.
"Building approvals have been positive. Who would've thought it would turn positive so quickly?" she said.
"We have finance approvals, credit growth has started picking up, we have housing prices starting to improve, listing volumes have started picking up and we have a very strong consumer market at this point."
4 ASX shares set to cash in on housing boom
But investors still need to be discriminating among the ASX shares playing in that field.
"I like to keep with quality and I like to stay with companies that have proven [they can] generate long-term value," Liu said.
"CSR Limited (ASX: CSR) is one that's directly linked to housing approvals."
There are also retailers that will cash in from a housing boom, with Australians buying goods to fill up new spaces.
"JB Hi-Fi Limited (ASX: JBH) and Harvey Norman Holdings Limited (ASX: HVN) are examples of housing retailers [and] how much they will benefit," said Liu.
"Analysts are absolutely underestimating the operating leverage these businesses will have. I think the [positive] operating environment for the housing retailers will go on for quite some time."
But there is one specific company that Liu's team is really licking their lips about.
"We are big believers in Domain Holdings Australia Ltd (ASX: DHG)," Liu said.
"This business will double its earnings in the next 12 months. It's actually one of the highest growth businesses within the Australian market."
The Domain share price is currently trading 3.31% higher at $4.66 on Wednesday (at the time of writing). It was going for $3.80 exactly 12 months ago, just before the coronavirus market crash.
