There seems to be no end to discussions surrounding the state of Australia’s property market, with a major investment bank claiming the nation’s housing cycle has peaked.
Investment bank Morgan Stanley made the claim in an extensive investment note released earlier this week, with the note’s authors Daniel Blake, Antony Conte, Stephen Ye and Chris Nicol citing regulatory changes and slowing migration as major factors behind their opinion.
“Despite common belief that lower for longer RBA rates will see strong housing conditions persist, we think macroprudential is effectively tightening policy settings,” the note read.
“Alongside the 10% speed limit on investor property lending, higher mortgage risk weights and a sharp [1%] repricing on the front book of investor mortgages, 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.
“We are 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.”
Should the housing cycle take a downswing, the nation’s economy is likely to suffer, the report suggested.
“Housing activity has peaked, and we believe the macroprudential induced cooling off period will take growth momentum lower, lift recession risks, and amplify the need for easier fiscal policy.
“This outlook anchors our bottom-of-consensus forecast for 1.9% GDP and 0.7% domestic demand growth in 2016, and we believe recession risks are elevated as regulators attempt a difficult soft landing of the housing market amidst external and income challenges.”
Do you have more than $200k in your super fund? You could use your super to buy property - Find out how
Top Suburbs :
Get help with your investment property
Do you need help finding the right loan for your investment?
When investing in property, it is important to make sure that you not only have the lowest available rate that you can get, but also have the correct loan features for your needs.
Just fill in a few details below and we'll then arrange for a local Aussie Mortgage Broker to contact you and work out what features or types of loans are right for your needs. We'll even help with the paperwork. Plus an appointment is free.
We value your privacy and treat all your information seriously - you can check out