Daniel Blake, equity strategist, said there is no evidence of any economic, policy or banking changes that might stop the fall in property prices.
And regulatory changes are considered a further headwind.
Prestige property values falling twice as fast as low-end housing
Staff reporterDecember 7, 2020
Prestige property values are falling twice as fast as low-end housing, the investment bank Morgan Stanley suggest.
The real estate values in top end postcodes has been sliding at an annual rate of about eight percent, compared to four per cent for properties in the bottom, or fourth quartile, its analysis shows.
Rising interest rates, political uncertainty, stagnant incomes and increasing investor nervousness about the Labor Party's proposed changes to negative gearing are contributing to a sharp downturn in lower priced property too, it shows.
"Given the subdued outlook for credit demand and supply, the still elevated level of prices and indebted households, it looks unlikely that the market will trough in the immediate future," the bank's report concludes, adding the underlying weakness is "entrenched," Blake said.
Last month Morgan Stanley analysts released a bearish outlook on the state of the property market.
“Our housing model suggests that both prices and approvals are likely to fall further, and given the subdued outlook for credit demand and supply, the still-elevated level of prices and indebted households, it looks unlikely that the market will trough in the immediate future,” it wrote.