Morgan Stanley forecast reveals house prices could fall by up to 15 per cent
There’s no relief in sight for Australian property owners as experts warn house prices will continue to tumble well into next year.
According to Morgan Stanley’s latest forecast, property prices could plummet by up to 15 per cent. In fact, the organisation’s forward-looking housing model has dropped to the lowest level ever recorded.
“We struggle to see improvement in any of our components over the next year, with pre-existing headwinds of net supply, an RBA on hold and sustained focus on lending standards, all independent of potential negative gearing/capital gains tax changes,” Morgan Stanley said in the report.
“We now see a 10-15 per cent peak to trough decline in real house prices, from 5-10 per cent previously, which would mark the largest decline since the early 1980s.
“This downgrade largely reflects the downturn’s extended length, as we expect the relatively orderly declines to date will continue.”
Some of the drivers behind the trend are an oversupply of new apartments thanks largely to the “East Coast apartment boom” as well as a drop in net migration, which have combined to cause supply to outstrip demand.