2 ASX stocks in the sector poised for a massive comeback
Even before interest rates rose by 125 basis points over the past few months, afraid rising interest rates have infected many sectors. Perhaps one of the sectors most directly affected is real estate. An increase in interest rates increases mortgage payments, which reduces property demand and prices. Now one of the hottest real estate markets in the world, Sydney, will see house prices drop by 20%. Not only that, the COVID-19 pandemic has also hit commercial real estate as many workers continue to use their homes as offices. All of this means that ASX’s stake in real estate investment trusts (REITs) has taken a brutal hit in 2022. In fact, S&P/ASX 200 A-REIT (ASX:XPJ) has fallen nearly 23% since the start of the year. REITs set for a stunning comeback Inflation is still rampant and the US Federal Reserve is set to deliver a super big interest rate hike in the coming months. The Reserve Bank of Australia will surely follow suit, to fix Australia’s own inflation and not devalue the