Many Australians will have grown rich via the appreciating equity in their homes recently with the Sydney and Melbourne property markets in particular delivering some spectacular rises in wealth to homeowners and their families.
And while it's surprisingly popular to moan about rising house prices in Australia, I doubt you'll ever find anyone complaining about rising share prices for companies they own.
One listed company in Australia with a rising share price and exposure to the underlying strength of the Australian property price obsession is REA Group Limited (ASX: REA).
The operator of leading property trading website realestate.com.au has delivered share price gains of 350% over the past five years as its revenue growth is tied to the number of properties advertised for rent or sale across its websites.
Despite listing volumes being lower than normal in Australia for the six-month period ending December 31 2016 the group still managed to lift its earnings 13% to $200 million and half-year dividend 11% to 40 cents per share.
In total the group earned 92.5 cents per share for the half year, which means its payout ratio is less than 50% as this is a business that likes to re-invest profits for growth.
REA Group has been investing substantially in acquiring or part-owning overseas property businesses in North America, India, Malaysia and other high-growth Asian markets.
Importantly, REA Group is also majority owned by global media giant News Corp (ASX: NWS), which means it retains its business support and network of global influence.
REA Group's capital light business model in operating websites means it can generate consistent returns on equity of around 35% for investors and that's partly why shares ($60.33) trade at around 32x analysts' estimates for $1.87 in full year earnings per share.
Despite the company's attractive economics and my confidence in the excellence of its management team, I would prefer a price around 10% lower before buying shares.
A similar business that is also now trading on a marginally more attractive valuation is online recruitment marketplace SEEK Limited (ASX: SEK). It makes most of its money by charging recruiters or employers to advertise job vacancies on its website, which is a key part of the business cycle unlikely to be ever too disrupted by jobs and networking rival LinkedIn. In fact SEEK's core Australian business was its star performer for the half-year ending December 31 2016, which suggests its still the go-to site for employers looking to recruit employees.
Unfortunately, SEEK's share price has risen 10% in 2017 which means it's even outpacing Sydney's house price growth. However, I expect patient investors may soon get an opportunity to buy the shares for around $15.80, which I think is a reasonable entry point for a business with multiple growth levers and global operations.
