Aussie residential homes face near-term threat from high interest rates - Citi

Stockland

07/07/2023 04:32

** Australian residential market could face a crunch in near
term due to high interest rates and falling borrowing capacity
    ** Surprise cash rate hikes in May and June, and market
expectation for further hikes, could drive weaker buyer
sentiment near-term, says Citi
    ** Cuts FY24 settlement volumes on challenging sales
environment; expects Stockland Corp's  SGP.AX  settlement
volumes to decline 12% in FY24
    ** Brokerage expects rebound in demand in CY24 given tougher
rental market and strong population growth
    ** Retains "buy" rating for SGP, Ingenia Communities
 INA.AX  and Lifestyle Communities  LIC.AX 
    ** Says lower borrowing capacity could push demand towards
affordability housing; sees INA, LIC and SGP emerging winners
from this
    ** Continues to prefer SGP over Mirvac Group  MGR.AX  on
lower earnings multiple and exposure to favourable property
classes

 (Reporting by Sameer Manekar in Bengaluru)
 ((Sameer.Manekar@thomsonreuters.com; Twitter: https://twitter.com/sameer_manekar))