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Per Amundsen, Company Secretary, Thinktank
As Australia grapples with its greatest public health crisis since the Spanish flu in 1918-19, and no one knowing just how long or severe COVID-19 (coronavirus) will prove to be, it is worth pondering what Australian commercial property markets will look like post this pandemic.
It’s our belief, and it can be no more than that given this is unchartered territory, the health and economic crises will peak in the June quarter and, that while there will be a recovery in the September quarter, it will be soft. Not until the December quarter will the economy start to pick up the pace and return to positive growth, with shutdowns just a memory and unemployment receding.
This scenario could still prove optimistic. However, it does appear to be the emerging opinion from respected economists and Thinktank is inclined to think they might be right.
Assuming they are, then it’s quite conceivable that the jobs market could bounce back quite quickly as those sectors most affected by the pandemic, such as entertainment and recreation, accommodation, hospitality and retail, stir back into life.
There are two other factors at play here. First, we now have the Federal Government’s $130 billion JobKeeper payment, which, when coupled with two earlier stimulus packages in response to the economic fallout from COVID-19, will provide vital support to businesses and their employees, especially many small to medium-sized enterprises (SMEs). The latter package, in particular, will ensure many businesses survive these twin crises as the Government effectively becomes the country’s paymaster.
Second, Westpac estimates the unemployment rate in the June quarter will hit 9%, still below the double-digit number we experienced during Labor Treasurer Pau Keating’s “recession we had to have” in the early 1990s. The bank is also predicting 7% by year-end. The flipside to the June number is that 91% will still have jobs but, in a period of social distancing, few options for spending their discretionary dollars. It seems fair to assume a splurge in consumer spending post COVID-19 as people reclaim their social mobility.