STOCKS | Morgan Stanley Sees Turbulence Ahead for Australia's Housing Market

Morgan Stanley said Australia's housing market may face a volatile period this year as the risk of further Reserve Bank of Australia rate hikes, slower presales, and falling home prices weigh on the sector. According to Sina Finance, analysts including Lauren Berry wrote in a Wednesday note that residential sales may weaken over the next 6 to 12 months, and it remains uncertain whether Stockland and Mirvac can complete home sales and settlements within this fiscal year. The bank said the market had focused too much on the two companies' better-than-expected 2027 fiscal year funds from operations guidance and may have overlooked signs of slowing sales at Stockland and Mirvac. Morgan Stanley added that, because both stocks trade at relatively low price-to-earnings ratios, a sharp selloff appears unlikely. It also said real estate investment trusts with more stable earnings, such as Scentre Group and Vicinity, may offer investors greater certainty if rates stay elevated.