Housing prices outpace the Commonwealth Bank (ASX:CBA) share price

The Commonwealth Bank share price is up 5% this year, less than the increased cost of the average Aussie home. Should we be concerned?
The post Housing prices outpace the Commonwealth Bank (ASX:CBA) share price appeared first on The Motley Fool Australia. –

growth in housing asx shares represented by little wooden houses next to rising red arrow

The Commonwealth Bank of Australia (ASX: CBA) share price closed at $87.80 today, down 0.13%.

The S&P/ASX 200 Index (ASX: XJO), meanwhile, closed 0.07% higher as the index managed to maintain its afternoon rally.

Why CBA isn’t concerned about rising house prices

The Commonwealth Bank share price is up 5% so far this year. While that’s a solid result for the big four bank, a company with a market cap of $156 billion, Aussie home prices have risen even faster, up 6.2%.

Should we be concerned?

Not according to Commonwealth Bank CEO Matt Comyn.

Addressing the House of Representative economics committee in Canberra yesterday on the rapid increase in Australia’s home prices, Comyn said (quoted by the Australian Financial Review), “We are not overly concerned with what we are seeing at the moment in the context of broader financial stability.”

Comyn said rising home prices tie into the strength of Australia’s economic rebound, with the unemployment rate ticking down another 0.2% in March and GDP forecasts improving. He called the recovery in Australia’s labour market “miraculous”.

As the AFR reported:

CBA expected unemployment for the March quarter to come in at 5.7 per cent, just missing the actual result of 5.6 per cent. The bank expects unemployment to fall to 5 per cent by December 31, and to further decline to 4.7 per cent by the end of 2022.

As for dwelling prices, CBA has upped its forecast for 2021 from 8% growth to 10% for the full calendar year. “We expect house prices to continue to grow through this year and next, but not at the rapid levels we have seen in the first two months of the year.”

Comyn also highlighted the falling number of deferred loans on the bank’s books since the onset of the pandemic. He said that the 158,000 home loans CBA had deferred at the height of the crisis had now fallen to 3,000–4,000 deferred loans.

Commonwealth Bank share price snapshot

Though the average Australian house price may have outpaced the Commonwealth Bank share price so far in 2021, over the past 12 months that’s certainly not true.

CBA shares have lifted 43% over the past full year, compared to a gain of 29% on the ASX 200.

Where to invest $1,000 right now

When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for more than eight years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

Scott just revealed what he believes are the five best ASX stocks for investors to buy right now. These stocks are trading at dirt-cheap prices and Scott thinks they are great buys right now.

See The 5 Stocks

*Returns as of February 15th 2021

More reading

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. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

The post Housing prices outpace the Commonwealth Bank (ASX:CBA) share price appeared first on The Motley Fool Australia.

Trade The World Anywhere & Anytime!

Mobile app platform with over 50,000 global listed securities across 12 markets (over 70% global market capitalisation), right from your Android or iOS device.

Integrated with exclusive trading idea and investment analysis tools to help you find actionable insight on virtually every financial instrument across our 12 global markets, to help you optimise your trading strategies.

Refer Your Friends

Tell your friends about Monex and gift them FREE access to our trading tools.

We respect your privacy and will only send this one email notification to your friends. 

Share With Your Friends

Share on facebook
Share on twitter
Share on linkedin

Monex Trading Tools Access and Usage Terms

The Monex Trading Tools (referred to as ‘tools’ hereafter) are available to you inside your client portal;

To activate access to the tools, you must have a verified and approved trading account and have made a deposit of at least AUD $1000.

An active and funded account with a positive trading balance is required to continue to have access to the tools;

Although the tools are available to you indefinitely, Monex Securities may at it’s discretion disable access to the tools in the future;

Monex securities reserves the right to change these terms and conditions from time to time, as it sees fit, without notice.

Important Notice
iOS & Android App - 12 International Markets & Over 70% Global Market Cap. $0 Brokerage On US Trades. Click Here!