The Estate of the Nation
The Estate of the Nation
Yes the economy is in recession at the moment. Surely there can be no suprise? Let's keep this in perspective. Our infection rate was contained, we are opening up our economy and people are getting back in to the workplace, businesses are trading again. All positive outcomes so far. Spare a thought for our counterparts in all corners of the globe still in the grip of this terrible pandemic.
It will take time, I see people returning to the stores spending a little. This is a welcome sign.
Over 600,000 Australians lost their jobs and the employment rate today is at 6%. Through fiscal and monetary policy such as yesterdays builidng industry stimulus and a nationwide collaboration to stem this pandemic we begin to see a roadmap for our future.
Every tiny movement in the right direction is significant. Just a smattering of positivity works wonders for our mental health and hope of a return to normality.
According to Dr Lowe, Govenor of RBA “The Australian economy is going through a very difficult period and is experiencing the biggest economic contraction since the 1930s.” “It is possible that the depth of the downturn will be less than earlier expected. The rate of new infections has declined significantly and some restrictions have been eased earlier than was previously thought likely,” Dr Lowe remarked.
So let's focus on what we do know for now.
According to the CoreLogic Home Value Index results for May, Australian dwelling values posted their first month-on-month decline since June last year. The national index was down 0.4% over the month, with five of the eight capital city regions recording a fall in values.
The reduction in values through May comes as transaction activity in the market shows more positive signs. The CoreLogic estimate of sales activity bounced back by 18.5% in May after a (revised) drop of 33% in April.
CoreLogic head of research, Tim Lawless, said “Considering the weak economic conditions associated with the pandemic, a fall of less than half a percent in housing values over the month shows the market has remained resilient to a material correction. With restrictive policies being progressively lifted or relaxed, the downwards trajectory of housing values could be milder than first expected.”
Federal Governments Home Builder Package
A brief run down.
“HomeBuilder will be a lifeline for an industry facing a valley of death in the coming months," said Denita Wawn, CEO of Master Builders Australia.
"It will mean more new homes, more small businesses and jobs are protected and provide a stronger bridge to economic recovery for our country,” said.
“Based on the Government’s estimated 27,000 grants, we think the scheme will be used for $10 billion in building activity, supporting the viability of 368,000 small builders and tradies – the businesses which employ 800,000 people in communities around Australia."
The Property Council of Australia said the Federal Government’s new HomeBuilder program will help stimulate confidence as well as save jobs in the residential construction sector.
There is still a lot to play out in 2020 and beyond. Some of it will not be welcome news but it may not be as detrimental as we expect.
Property prices are likely to continue to decline, but as stability builds and a gentle return to normal ensues we may avoid some of those dire predictions that are out there. If you try hard encough you will find positives.
What we do know is that our resilience is steadily building. Look around you. How far have we all come collectively as we journey through this pandemic. It is a moment and it will pass. Keep your eye out for family neighbours and friends make sure we don't leave anyone behind.
Stay well. Stay tuned for our rental market update.