The softening in house prices even as global economic growth picks up pace has only reaffirmed the belief that shares are likely to outperform property in the new financial year.
However, not all stocks are well placed to run ahead when the housing market is weak, and the Australian Financial Review has reported that Citigroup has created a shortlist of stocks to avoid in this environment.
The downturn in the housing market, which is confirmed by the latest batch of housing data, is unlikely to turnaround quickly either. Cycles in this market tend to take months if not years to play out and I can’t see how home prices can rebound in the near or medium-term.
Besides the obvious casualties in the home building sector, Citi has put conglomerate Wesfarmers Ltd (ASX: WES) and electrical and furniture retailer Harvey Norman Holdings Limited (ASX: HVN) at the top of its shortlist of stocks to avoid.