3 ASX shares benefitting from a booming property market

These 3 ASX shares with exposure to the property market have been skyrocketing while property prices continue to move higher.

| More on:
A man holds up his hand with 3 fingers up

Image source: Getty Images

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

sdf

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.

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%.

Motley Fool contributor Mitchell Lawler owns shares of Rent.com.au Ltd. The Motley Fool Australia has recommended REA Group Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on Share Market News

A businessman stacks building blocks.
Share Gainers

Here are the top 10 ASX 200 shares today

ASX shares hit a new record high today.

Read more »

A man sees some good news on his phone and gives a little cheer.
Share Gainers

Why Auckland Airport, Australian Ethical, Breville, and Clarity shares are charging higher

These shares are having a better day than most on Thursday. But why?

Read more »

Shot of a young businesswoman looking stressed out while working in an office.
Share Fallers

Why 29Metals, CAR Group, DroneShield, and Santana Minerals shares are falling today

These shares are missing out on the good times on Thursday. But why?

Read more »

Cheerful businessman with a mining hat on the table sitting back with his arms behind his head while looking at his laptop's screen.
Broker Notes

Macquarie tips 50% upside for this ASX 200 miner, and it's not BHP!

Unheralded miner poised to surge?

Read more »

A woman sits at a table with notebook on lap and pen in hand as she gazes off to the side with the pen resting on the side of her face as though she is thinking and contemplating while a glass of orange juice and a pair of red sunglasses rests on the table beside her.
Share Market News

Will these ASX 100 shares surge or sink in July?

These are two ASX favourites to watch closely this month. 

Read more »

a man in a business suite throws his arms open wide above his head and raises his face with his mouth open in celebration in front of a background of an illuminated board tracking stock market movements.
Share Market News

3 ASX ETFs for smart investors

Let's see what makes these funds top picks for Aussie investors.

Read more »

A woman sits on sofa pondering a question.
Broker Notes

Guess which ASX All Ords media stock Macquarie expects to rise 17% over the next 12 months?

The broker is expecting big things from this media company.

Read more »

A happy male investor turns around on his chair to look at a friend while a laptop runs on his desk showing share price movements
Share Market News

5 things to watch on the ASX 200 on Thursday

It looks set to be a good session for Aussie investors on Thursday.

Read more »