Morgan Stanley says property prices will fall 8% this year:
The risk is skewed to the downside given an increasing focus on responsible lending.
This suggests the likely decline in prices will likely continue throughout 2018.
With national prices down 1.5 per cent from the peak late last year, it is clear the housing market has turned.
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.
MS concludes that it is the worst outlook for property in 30 years. Who can blame them? As well as the above, we have looming:
- rising bank funding costs;
- interest-only reset cliff;
- regulatory and management chaos, plus
- the end of negative gearing and SMF borrowing if Labor wins the looming election;
- probable reductions in immigration as politics boils over, and
- an end-of-cycle shock.
Indeed it is the worst outlook for property of my lifetime. Probably the worst since the Great Depression:
