Summary
- The momentum in Australian housing markets continues as policy support is driving consumer confidence and appetite for homeownership.
- Investors are presented with an opportunity to assess the companies which could benefit from the underlying momentum in the housing markets.
The Australian housing markets are on fire as low-interest rates are encouraging Aussies to look for homes. This is evident from the recent home loan commitment data released by the Australian Bureau of Statistics (ABS).
On a seasonally adjusted basis, the November data showed housing loan commitments rose 5.6% over the previous month, but over the year, the gain was a whopping 23.7%. During the months, lenders disbursed loans worth $24 billion, which is a record.
Source © Kalkine Group 2021
The loan commitments for new owner-occupied homes rose to $18.34 billion, which was a hike of 5.5% over the previous month and a 31.4% spike over the previous year. On the other hand, investor home loans registered 6% increase over the previous year.
Earlier this month, the building approval data for November showed private home approval rose 6.1% over the previous month, while they were up 33.6% over the last month.
In addition to low mortgage rates, the Australian Federal Government and State Governments are also running various schemes to promote homeownership. Owning a roof overhead also adds to the wealth of a person.
Source © Kalkine Group 2021
In the light of above, let’s look at few Australian companies which are favourably positioned to benefit from the current environment. At the outset, it is essential to note that banks and non-bank housing lenders would be in sweet spot amid a surge in home loans disbursements.
Meanwhile, it is not that only below-mentioned companies could be in a favourable position. There could be many companies in an advantageous position, including furniture and fixtures, building materials, and consumer electronics.
AVJennings Limited (ASX:AVJ)
After a slump in the activity amid national lockdown, the company has noted that enquiries increased, and new contract signings jumped in the three months to September 2020. AVJennings said that demand was being driven by government stimulus.
The company also said that earnings will be more weighted towards the second half of FY21, while new projects were getting underway in the first half of FY21.
Finbar Group Limited (ASX:FRI)
Western Australia-based apartment developer Finbar Group has some projects under construction. It also has development approvals for several projects, and some are in planning and design phase.
In December, the company reported three consecutive months of record sales. It noted that homes are selling at the fastest pace since 2006. In October, it sold 45 apartments having a value of $31.1 million.
The company sold 56 apartments having a value of $30.88 million in November. Finbar also launched the largest residential development project in WA – Civic Heart Project. It was noted that consumer confidence had returned to pre-pandemic levels.
Resimac Group Ltd (ASX:RMC)
Resimac Group is a non-bank residential loan lender. At its Annual General Meeting, the company revealed that the market share of non-bank lenders had experienced double-digit growth post the pandemic.
Growing home loans are likely to benefit Resimac. The shares of Resimac are hovering near their 52-week highs, reflecting the market conviction.
