Despite all the concerns of a falling property market as a consequence of COVID-19, the Australian dream appears to be alive and well. Although the most obvious, residential property investors are not the only ones benefitting from the boom. Savvy investors holding shares in companies with exposure to the sector are also rubbing their hands together.
We take a look at three ASX shares that are benefitting from the rampant boom.
Browsing for your next humble abode?
The government’s utilisation of various monetary assistance programs throughout the past year has provided protection to the downside. Meanwhile, ongoing record low-interest rates have maintained a low bar for loan serviceability.
Consequently, as the Australian economy rebounds and unemployment rates start returning to pre-pandemic levels, homebuyers have been stampeding to grasp the keys to a dwelling they can call their own.
In Australia, the two most likely places people will look for their new dream home are online residential property marketplaces realestate.com.au and domain.com.au. And these platforms are operated by none other than ASX shares REA Group Limited (ASX: REA) and Domain Holdings Australia Ltd (ASX: DHG) respectively.
In REA’s most recent investor presentation, the company noted record audience levels. Monthly visits in the first half of FY21 spiked to 115 million, an increase of 36% compared to the year prior. Despite a slight dip in revenue, the group managed to drive a 13% increase in its earnings per share (EPS).
Comparatively, Domain holdings shaved 4% off the top-line, while growing its EPS by 52%. The company’s residential revenue segment lifted by nearly 10% on a like-for-like basis during the first half.
Both platforms benefit from the heightened traffic to their respective sites through advertiser monetisation. However, the tight market supply works against them, given a large portion of revenue is derived from sale listing fees.
Notwithstanding this, the increased interest in property has led to impressive share price gains for these businesses. The REA Group share price has increased by 77% in the past year, while Domain shares are up an astounding 130%.
ASX small cap share taking on the renting niche
Not everyone wants to be a property owner. For some, renting fits their lifestyle. Roughly 32% of householders were recorded as renters in the 2016 Census. Rent.com.au Ltd (ASX: RNT) is targeting this demographic through its range of products specifically for renters. These include rental checks, rental resume help, payment options, etc.
During the half-year ended December 2020, the group experienced a 24% revenue increase. According to the half-year report, ongoing growth in organic traffic allowed the company to roll back marketing expenditure – leading to a reduced loss for the period.
This ASX share gained attention after it received a $2.75 million investment from tech entrepreneur Bevan Slattery in February. Slattery made the investment to assist in accelerating the company’s transformation of the renting experience.
Rental prices continue to rise at a record pace, as reported by CoreLogic. As a result, renters are searching for tools to help them find the right residences and then manage the costs associated with them. Rent.com.au offers such technology with products like RentPay and RentConnect.
National #rent prices reached the largest annual gain since 2016 in January, as supply and demand challenges in the for-sale market continue to fuel growth in the rental market.
Read more from the latest Single-Family Rent Index: https://t.co/LHXnjBsIOP pic.twitter.com/K9ABoKHacf
CoreLogic (@CoreLogicInc) March 16, 2021
Whether or not the booming property market is responsible for the surge, the Rent share price has been skyrocketing. In the past 12 months, Rent shares have increased by more than 850%.
