Morgan Stanley said Australian house prices nationally could fall as much as 10 per cent, a call it described as the largest correction in the past 40 years. The forecast came after last week’s federal budget announced changes to negative gearing and the capital gains tax.
Chris Read and his colleagues wrote in a briefing that the changes would "fundamentally change the asset allocation decision for Australian households," linking the tax move directly to a possible slide in home values. The bank framed the forecast as a reaction to Labor’s tax changes, not a broader view of the housing market.
The warning lands now because it follows immediately on the budget and puts a hard number on the possible market impact of measures that affect how households weigh property against other investments. Morgan Stanley did not give a date for when the decline might occur, leaving the size of the fall clear but the timing open.
That gap matters. A 10 per cent drop would be the biggest correction in four decades, but the forecast is still a projection rather than a settled outcome. For now, the market has a fresh estimate, a policy change to absorb and no timetable for how quickly either will show up in prices.
