Morgan Stanley: Australian home prices could fall by as much as 15%

Morgan Stanley analysts predicted in a research report released on Wednesday that Australian home prices could fall by as much as 15%. Analysts including Chris Read wrote in a note to clients: "Our latest analysis shows that the catalyst for a housing price bottom will most likely not emerge until the second half of next year. Policy is constrained by inflation, housing market activity remains under pressure, and the burden of buying relative to renting remains at a historic high." The research report said this housing downturn differs from previous ones, and investors should adjust their expectations and holdings accordingly. The report also projected that Australia's unemployment rate will peak at 5.1%; analysts cut their GDP growth forecast for next year from 1.4% to 1.1%. They said: "Disinflation will eventually arrive, but there is a lag; the Reserve Bank of Australia may still raise rates in the near term, and a rate cut before the third quarter of 2027 is unlikely."