The residential property market could be about to turn. The average Sydney house price declined by 1.9% over the three months to September according to Domain.
There are a lot of different ways you can get exposure to property, without actually owning a property. Here are three good ideas:
DuluxGroup Limited (ASX: DLX)
DuluxGroup is the owner of a few property improvement brands including Dulux, British Paints, Selleys, Cabot's and Yates.
A lot of these brands are quite defensive. Homeowners will paint their house or do some garden work in most economic conditions.
DuluxGroup is one of those slow-and-steady businesses that uses the strength of its brand to keep growing profits.
DuluxGroup is trading at 19x FY18's estimated earnings with a grossed-up dividend yield of 5.12%.
REA Group Limited (ASX: REA)
REA Group is the property website leader with sites such as realestate.com.au, realcommercial.com.au and flatmates.com.au.
The importance of digital advertising cannot be exaggerated at this point and it's only going to become more important in time. REA Group operates in an exciting industry.
It also has strong growth prospects in Asia and the USA with recent investments. I think REA Group could be the best way to get exposure to the property market.
REA Group is currently trading at 34x FY18's estimated earnings with a grossed-up dividend yield of 1.8%.
Reece is the bathroom and plumbing business that has carved out its own section of property improvement.
The business has strong bargaining power with suppliers because it's the largest in Australia and can therefore get the biggest discounts and pass those onto customers, or have higher profit margins.
Reece is currently trading at 21x FY17's earnings with a grossed-up dividend yield of 3.27%.
Foolish takeaway
I'm a fan of both REA Group and DuluxGroup, so I'd prefer to buy these two over Reece at the right price.
However, both are trading quite expensively at the moment because of their ongoing success. So, they're staying on my watchlist for now.
