The Stockland Corporation Ltd (ASX: SGP) share price is a on a tear, up 3.1% in intraday trading and up 13.1% so far this week. A smashing start to November. And one that far outpaces the performance of the S&P/ASX 200 Index (ASX: XJO), up 1.0% today and 3.1% this week.
Following on this week’s gains, the Stockland share price is now only down 6.9% for the year, compared to an 8.6% loss on the ASX 200.
That’s particularly impressive, as Stockland shares fell much further during the COVID-19 panic selling earlier this year, down 61% year to date on 23 March. Shares are now up 141% since the March lows.
What does Stockland do?
Stockland develops, owns and manages retail, logistics, office and residential properties.
Stockland’s residential footprint is by far its largest. The company focuses on master-planned communities and medium density housing in growth areas across Australia. Its portfolio consists of 51 communities, with 74,000 lots remaining. Stockland estimates the end value is worth approximately $19.8 billion.
The Stockland share price began trading on the ASX in 2005.
Why is the Stockland share price surging this week?
The Stockland share price has been trending steadily higher since the 23 March trough. But this week’s 13% gains have been particularly strong.
In the absence of any new market news, the investor enthusiasm is likely tied to the Reserve Bank of Australia’s (RBA) decision to cut interest rates to a new historic low of 0.10% while launching a $100 billion new quantitative easing (QE) program.
Lower interest rates and more QE should help support the economy, supporting Stockland’s retail operations and potentially really strengthening its residential business.
As SQM Research’s Louis Christopher points out, this is a big tailwind for the Aussie housing market. Though one that could come back to bite us in the mid to longer-term (quoted by the AFR):
What the RBA’s intention is, is that they would like to see a recovering housing market and I think they are going to get it… Yes, it does risk creating too much fuel for the housing market.
We are at a significant risk of a new housing bubble. The economy is in recession, or coming out of one. There is going to be a cost here. Eventually we are going to see unaffordable housing.
I’ll leave the speculation of a pending housing bubble to SQM Research. But in the here and now, the Stockland share price looks to be riding the refueled housing market rapidly higher.
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More reading
- Rising jobs and house loans place these ASX shares in focus
- ASX 200 has explosive start to trading ahead of RBA decision
- The Stockland (ASX:SGP) share price is down slightly today. Here’s why.
- 1 ASX share to buy for the WA housing boom
- Look through short-term unpredictability for long-term ASX share price gains
Motley Fool contributor Bernd Struben 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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