Why the Domain (ASX:DHG) share price is hot property today

The Domain Holdings Australia Ltd (ASX: DHG) share price continues to climb, but should you jump on board at its current price?
The post Why the Domain (ASX:DHG) share price is hot property today appeared first on Motley Fool Australia. –

online real estate shares

The Domain Holdings Australia Ltd (ASX: DHG) share price has jumped 1.3% higher in early trade. It follows a strong last 6 months for the Aussie online classifieds business, which has seen its shares climb 90.6% higher.

Why the Domain share price is hot property

I think it pays to rewind a little bit to the March bear market. The coronavirus pandemic was taking hold and there were many experts predicting a doomsday scenario.

That saw many ASX shares plummet lower and the Domain share price was no exception. It’s not hard to follow the reasoning: A pandemic shuts down the economy, causes mass unemployment and sees a potentially overvalued share market crash.

That’s not good news for an online classifieds business like Domain. On top of that, many homeowners were fearful of selling with such uncertainty. That would mean fewer listings, driving down advertising revenues for the site.

However, the last 6 months have been pretty good for shareholders. The Domain share price has surged higher and house prices have been largely resilient.

In fact, there’s potentially a regional housing boom on the cards thanks to a shift in working arrangements. That would be good news for Domain and could propel its valuation even higher.

Investors continue to want to buy Domain shares in the current market. I think as long as economic and housing data remains positive, that will continue to be the case.

The group now has a $2.2 billion market capitalisation with a 1.6% dividend yield. Those are some handy numbers given the S&P/ASX 200 Index (ASX: XJO) is down 13.1% for the year.

Is now a good time to buy?

No one knows what the future holds. However, plenty of people have left money on the table by waiting for a crash compared to those that invested and rode the ups and downs. 

The Domain share price is now up 3.8% for the year. I think positive momentum and favourable property laws in Australia may continue that trajectory into early 2021.

Of course, things can change quickly, particularly in a global pandemic. But there are enough positive glimpses from Domain to make it a solid buy if you believe property will hold its value next year and beyond.

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Motley Fool contributor Ken Hall 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.

The post Why the Domain (ASX:DHG) share price is hot property today appeared first on Motley Fool Australia.

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