ASX property shares buoyed by latest market data

There is at last some good news for the property sector. 

This morning, the Australian Bureau of Statistics (ABS) released its building approvals data for the month of September. 

According to the release, building approvals soared during the month following relaxation of COVID-19 restrictions, with Western Australia and South Australia leading the way. The data show that building approvals rose 15.4%, significantly beating expectations of a 1.5% rise. In August, that number had declined 1.6%.

ABS director of construction statistics Daniel Rossi said: “The rise was driven by private sector dwellings excluding houses, which increased 23.4%. Private sector houses rose for the third consecutive month, increasing by 9.7% in September.”

“These results indicate continued demand for detached housing following the relaxation of COVID-19 restrictions in most states and territories. A range of Federal and state-based incentives are also providing support for the housing sector,” he added.

ASX property shares rose following the release

The news was well received by real estate sector investors with nearly all of the large cap ASX property shares gaining in today’s trading.

Australia’s biggest property company, the Goodman Group (ASX: GMG), is up by 1.8% to $18.74 at the time of writing. Investors in the next two biggest property companies also shared the positive sentiment, with the Scentre Group (ASX: SCG) share price gaining 1.68%, and Dexus Property Group (ASX: DXS) shares rising by 2.4% at the time of writing.

Other good news for the property sector

The announcement today followed a declaration made last week by the Reserve Bank of Australia (RBS) that we are “technically out of recession”.  An impending rate cut on 3 November by the RBA will also help to buoy the market further.

In addition, surveys show that property values across the nation have increased by an average of 0.4% in October. Properties in Darwin, Adelaide, Hobart, Canberra, Perth, Brisbane, and Sydney showed growth between 0.1% to 1.2% during the month. Melbourne was the only outlier having fallen by -0.2%.

An interesting part of this survey is that the growth is skewed towards smaller cities, with Darwin and Adelaide showing the largest growth at 1.2%.

What’s ahead for the property market

There is still a long way to go until the sector fully recovers to pre-COVID-19 levels. The ASX 200 Real Estate Sector Index (ASX: XRE) still shows a decline of almost 20% YTD. 

With JobKeeper and mortgage payment deferrals expiring, the property market is still standing on shaky ground for the foreseeable future.

More reading

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• These beaten-up shares are about to pick up: Moody’s
• 3 of the best blue chip ASX shares to buy in November

Motley Fool contributor Eddy Sunarto has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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