The Australian property market continues to run hot, bolstered by demand which is outstripping supply and supportive government policies.
Given the macroeconomic outlook and the fact that the housing shortage isn't going to be fixed anytime soon, it's worth looking at what stocks can give exposure to the market.
A company that the team at Macquarie has an outperform rating on is Pexa Group Ltd (ASX: PXA), which operates the Pexa Exchange, a property settlement platform used by conveyancers and lawyers to manage property settlements.
Building on a solid base
Pexa had a steady year last financial year, reporting in August that group revenue had increased by 16% to $393.6 million, while underlying net profit fell 6% to $41.1 million.
The statutory result was a net loss of $76.1 million, impacted by $78.2 million in significant items "primarily arising from impairments as a result of changing market conditions'', the company said at the time.
During the year, the company expanded its geographical reach, increasing coverage in Western Australia and initiating coverage in Tasmania in FY25, as well as in the Northern Territory in August.
Managing director Russell Cohen said while announcing the result that Pexa was "a truly unique organisation, operating a world-first piece of national critical infrastructure that has transformed property transactions for millions of Australians''.
He went on to say:
The Exchange in Australia now has 90% market coverage, and in the UK our product suite is ready for launch in early FY26. Looking ahead to FY26, our strategy centres on improving customer and employee experiences while driving shareholder value.
Pexa's guidance, which it reiterated when reporting first-quarter results last week, was for revenue to increase to $405 to $430 million in FY26, with net profit to come in at $5 to $15 million.
This was despite the company saying that Australian property market volumes had softened slightly in the early part of the second quarter.
Mr Cohen said when releasing the quarterly results that:
We delivered a solid trading performance in the first quarter of FY26 across both Australia and the UK. In Australia property transaction volumes grew 6%, driven by strong refinancing activity. The UK market is gaining momentum, showing clear signs of growth after a period of subdued activity.
Shares looking cheap
The team at Macquarie ran the ruler over the first quarter update and liked what they saw.
Macquarie reiterated its outperform rating on Pexa shares and has a $19.10 price target on the shares, compared with Friday's close of $15.23.
If this price target were reached, it would constitute a 25.4% shareholder return.
And Macquarie said the "key pick" in the sector had the potential to drive rapid market share gains.
As the analysts told their clients:
Any formal commitments from additional Tier-1 lenders are likely to incentivise the other four Tier-1 lenders to onboard with PXA quickly, driving rapid market share gains.
Pexa will hold its annual general meeting on 13 November.
