Investors can easily be bewildered by the array of house-price statistics and wildly differing views on the state of the property market. The Economist magazine, for example, has long said Australian property is the most overvalued in the world – a claim refuted by many local economists.

Who knows? The only certainty is that price is what people pay, and right now people are paying more again, judging by rising auction clearance rates in capital cities – the best early indicator of future price trends. If it continues, some small property stocks could prosper this year.

The sharemarket is clearly siding with the bulls on the property-price debate. Leading property advertising portal REA Group has soared from a 52-week low of $12.82 to $26.50 – an astonishing gain. REA looks overvalued, but keeps rising.

Some micro-property stocks should also benefit from the broad theme of low interest rates and rising consumer confidence boosting activity in the residential property market, and lifting demand for property advertising and research services.

A newer player, Nearmap, remains under the radar despite rallying from a 52-week low of 3 cents to 11 cents. Its main asset,, provides high-resolution photos of Australian property and licenses it to government agencies and private companies through subscription models.

I’ve seen property agents use it to promote houses, and the service has commercial application in industries such as roofing, construction and building. Local governments must love the ability to peek on residents who do dodgy renovations or rebuild without council permission. The service should have applications in a range of industries that need aerial views of properties.

Unlike Google Maps, which seems to use the same dated images forever in some cases, Nearmap adds new photo maps for Australian capital cities every month. Higher-resolution images and tools to measure distance and area for a property – from your desktop – are other features. Users can also track and measure changes over several years to follow the stgelopment of areas or projects.

It is a good idea in principle, although I doubt home owners like the idea of having high-resolution images of their property taken. Nearmap is just starting to ramp up sales off a tiny base: new digital subscriptions boosted revenue by 51.3 per cent to $4.03 million for the December half. The net loss – expected at this stage of the company’s evolution – was $2.64 million, an improvement on the $3.87 million half-year loss a year earlier.

Nearmap had no net debt in the December half and its cash balance swelled to more than $9 million in February 2012 due to patent payments. Strong cash-flow growth, no debt, and recurring subscription revenue are excellent qualities for emerging technology companies.

Nearmap’s $36-million market capitalisation  has already factored in strong revenue growth. My guess is it will eventually be acquired by a large property advertising company that can distribute its photo-map service to a much larger audience. Nearmap has an interesting product; it just needs the distribution. As an emerging technology stock with low liquidity, it should be considered speculative.

A more established property technology stock, Onthehouse Holdings, slumped to 33 cents from a $1 issue price within months of its 2011 listing, before recovering to 71 cents. It provides property data in addition to listing information, and should benefit as online property advertising eventually moves from classified advertising to performance-based revenue models based on pay-per-lead services.

OntheHouse reported 17 per cent growth in revenue to $11.3 million for the December half. Its underlying earnings before interest, tax, depreciation and amortisation (EBITDA) rose 8 per cent to $3.6 million – a sluggish result, although the property market was fairly subdued then.

Beneath the headline results were impressive gains: traffic growth and the number of housing reports generated by consumers were sharply higher in January. Onthehouse should have a better 2013 as a strengthening market lifts demand for property advertising and valuation reports.

The Brisbane-based company is building scale as more consumers use its service: the key is monetising that traffic faster and lifting revenue and profit growth. Capitalised at $51 million, Onthehouse suits experienced investors comfortable with micro-cap stocks.

Risks aside, it won’t take much to get the property market moving faster again: another interest-rate cut, or even just stable rates in 2013, will flush out more buyers and sellers. The rising sharemarket, and the confidence it creates will lift demand for prestige properties. Prices will slowly rise.

The smart investment might be in listed companies that service the property industry, rather than the bricks and mortar.

Click on the links below to read other articles from this week’s newsletter

18 Share Tips – 11 March 2013

Playing the Price of Iron Ore in 2013 and Beyond

Market crash 1929, mystery unraveled?

National economy grows but some non-mining states in recession

How International Financial Crises Occur

Choosing Between Major and Junior Mining Stocks 

Top 10 shorted stocks

Stocks on a roll: ASX rolling 52-week highs

Stock on the slide: ASX rolling 52-week lows

Tony Featherstone is a former managing editor of BRW and Shares magazines. All prices and analysis at Feb 14, 2013. The author implies no stock recommendations from the above commentary. Readers should do further research or talk to their financial adviser before acting on themes in this article.