This article is from the Australian Property Journal archive
RESIDENTIAL property prices nationwide will fall by 8% this year, in line with a heavy drop in lending, according to Morgan Stanley.
“With national prices down 1.5% from the peak late last year, it is clear the housing market has turned,” the investment firm said in a report.
“But in contrast with others in the market who view the worst as behind us, we expect prices to fall further throughout 2018, as credit availability is tightened further and a stretched consumer reassesses the outlook.”
Morgan Stanley’s forecast is based on several factors, including the availability of credit, and it expects loan growth to fall from 6% to around 4%.
“The risk is skewed to the downside given an increasing focus on responsible lending,” it said.
That will also have an effect on developers.
“While the backlog of approvals not yet completed remains high, we expect some projects to be shelved given tighter credit conditions.”
Earlier this month, NAB downgraded its price growth forecast for 2018 into negative territory, from 0.7% growth to 0.8% growth, which it said was largely due to continuing weakness in the Sydney market (expected to drop by 3.4%) and a softer Melbourne market (slackening to 0.1%).
The came shortly after the ANZ said most of Australia’s residential market slowdown had already occurred. It expects the slowdown to bottom out in the first few months of this year, falling to around 1% across the country in the second quarter before ending at 1.9% growth for 2018, and accelerating again through 2019 to 4.1%.
Meanwhile, AMP Capital chief economist and head of investment strategy, Shane Oliver, has said Sydney and Melbourne house prices would fall a further 5% this year.
Australian Property Journal
