ASX property groups like Charter Hall Group (ASX: CHC) and Mirvac Group (ASX: MGR) are trading higher today, possibly due to renewed positivity around the housing market.
REIT’s Trading Higher
While the S&P/ASX 200 (INDEXASX: XJO) is up 0.5% today, REIT’s are trading nearly 2% higher.
Charter Hall shares are up 5.08% while Mirvac shares are nearly 1.5% higher. Both companies have been raising equity for big acquisitions recently, with Charter Hall Long WALE REIT (ASX: CLW) coming out of a trading halt today after raising $200 million. Mirvac recently made a $333 million acquisition after an equity raising as well.
Why are REIT’s Looking Bullish?
New CoreLogic data came out recently, showing that, while house prices still look to be falling, the decline is slowing.
Other recent news, like APRA’s proposed changes to the minimum serviceability rate, has also raised hopes that property could be on the way back up.
ASX property shares also received a boost following the election result, which crushed all chances of negative gearing reform.
Time to Buy REIT’s?
The recent acquisitions and equity raising from the big ASX property companies would suggest that those in the sector are feeling confident. There are certainly signs that the property market decline is slowing, but the figures also suggest we haven’t seen the bottom just yet.
The CoreLogic data mentioned above showed that Sydney house prices fell 0.5% in May while Melbourne prices fell 0.3%. While the decline has slowed, those are still significant drops for monthly figures.
Where Charter Hall may have an advantage over Mirvac is the fact that Mirvac invests quite heavily in residential projects, whereas Charter Hall tends to focus on commercial and industrial investments. A decline in house prices doesn’t necessarily translate to a decline in commercial property prices, so Charter Hall might benefit from lower rates while dodging most of the price declines.
Even so, if you’re looking for income from your portfolio, there may still be better options. The three high-quality, dividend-paying companies in the free report below might be a good place to start.
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Disclosure: At the time of writing, Max does not own shares in any of the companies mentioned.
