They’re piling in now, though to be fair, MS has been better than most, from Fairfax:
Morgan Stanley analysts are calling the peak of the housing cycle, with a tighter regulatory environment set to blunt the powerful growth momentum for the sector from here on.
It would be a worrying development as housing construction has been a rare source of growth for an economy struggling under the weight of a sharp drop-off in mining investment and falling commodity prices.
“Despite the common belief that lower for longer RBA rates will see strong housing conditions persist, we think [APRA’s] macroprudential [rules are] effectively tightening policy settings,” they write.
“Alongside the 10 per cent speed limit on investor property lending, higher mortgage risk weights and a sharp ~100bp repricing on the front book of investor mortgages [higher mortgage rates for new borrowers], we have noted a material tightening of lending standards since mid-2015.
“Fundamentals are also deteriorating, with slower net migration taking our underlying demand estimate down by ~30k to 155kpa. Weare now calling the peak in the housing cycle,and expect further falls in auction clearance rates and house price momentum, with a negative impact on construction occurring over 2016.”
That underpins the analysts’ negative view on the economy, which they reckon will grow more slowly than the central bank expects and push the official interest rate to 1.5 per cent by mid next year.
Yep, and then lower moving into the end-of-cycle shock.
