Despite all of the challenges in the property market over the last couple of years, including inflation, increased interest rates, and tightening of bank lending, it’s surprising that CoreLogic's recent data shows consistent growth in residential property over the last 14 months, writes Wealth Within chief analyst Dale Gillham.
Interest rates are likely to fall later this year, and with insufficient property to house the population, property prices are expected to surge over the next few years. Given this, I want to highlight three property stocks I believe have the potential to provide fantastic growth in the future.
The industrial property market is doing very well. According to the Australian Financial Review, it is now worth $300 billion and is forecast to reach $400 billion in the next 10 years. It’s no wonder the real estate sector index has risen over 40% since November last year. The good news is that property prices are expected to continue rising, given the housing shortage and the potential decline in interest rates later this year.
Three property stocks to watch
Lendlease
One of the best real estate companies right now is Lendlease Group (ASX: LLG), whose share price has fallen 70% since August 2018. The share price is currently around $7, which is its historical fair value level, so the signs are good. The company has plans to deleverage in the second half of FY24, which might be the catalyst for the price to rise. There is a potential upside of over 150%, although I think it's still too early to pull the trigger but I would be watching this one like a hawk.
Dexus
Dexus (ASX: DXS) is another household name. It has strong fundamentals and maintains a solid capital position, which means good things if property prices rise. The price of Dexus is currently trading around 50 per cent of its all-time high, which would be attractive to the value investor. If the stock can continue to hold above $7, it will likely begin a new growth phase.
Pexa
If you’ve bought or sold a house recently, it’s likely you paid your Pexa Group Ltd (ASX: PXA) fee. The company facilitates property transactions, and while it’s a fairly new company that was listed in July 2021, it provides huge potential, given its current share price is near its all-time low. As with most stocks that are newly listed, it's quite normal for the price to decline after listing; however, given the share price has experienced the longest consecutive rise in recent history, now is a good time to take a serious look at this stock for potential buying opportunities.
Dale Gillham is the Chief Analyst at Wealth Within and the international bestselling author of How to Beat the Managed Funds by 20%. He is also the author of Accelerate Your Wealth—It’s Your Money, Your Choice, which is available in bookstores and online at www.wealthwithin.com.au