Lockdowns Are Ending: What Does This Mean?
Published 5:10 am 15 Oct 2021
The two states comprise almost half of Australia’s economic output. So what will their reopening mean for the country?
On Monday, New South Wales began its reopening process to those that have been fully vaccinated, with cafes, restaurants and bars now allowed to open, and limits on the number of attendees at weddings and funerals being increased.
New South Wales had been in lockdown for 107 consecutive days, but is now learning to “live alongside the virus,” according to the new state Premier, Dominic Perrottet.
Victoria is set to follow suit, with Premier Daniel Andrews stating that he is committed to ending his state’s lockdown when 70 per cent of Victorians aged above 16 are fully vaccinated against the virus, which is estimated to be met around the 26th of October.
By that time, Victorians will have endured a total of 267 days in lockdown – which equates to 45% of the time since the coronavirus pandemic was first declared back on March 12th, 2020.
So, what will it look like as the two most populous states in Australia brace themselves for living with COVID-19? And will things ever return to pre-pandemic conditions?
End of Disaster Relief Payments
As lockdowns come to a close, Treasurer Josh Frydenberg has stated that COVID-19 disaster relief payments will have to come to an end. Once the 80 per cent double-vaccinated threshold is reached, payments will begin to taper off.
So how will the tapering of payments take effect? Having now reached an 80% vaccination rate, from the first-week post lockdown, disaster payments will drop from $750 to a flat rate of $450. In the second week, it will drop to $320, and in the third week, it will drop to zero.
Currently, however, roughly one in five people in NSW and the ACT are receiving the payments.
Additionally, the cessation of disaster relief support comes amid a rising national unemployment rate, which just increased to 4.6% from 4.5%. This increase in unemployment numbers is accompanied by a drop in Australia’s participation rate, which reached a 15-month low according to the ABC.
There are now 111,000 fewer people employed than before the first COVID lockdowns in March 2020.
“Extended lockdowns in New South Wales, Victoria and the Australian Capital Territory have seen employment and hours worked both drop back below their pre-pandemic levels,” said Bjorn Jarvis, the head of labour statistics at the Bureau of Statistics.
As such, the reopening of the country will be a double-edged sword for many Australians – businesses will be able to resume operating at some capacity, and the unemployed will be able to attend job interviews more easily, but a large safety net will be removed in the process.
Office spaces are becoming redundant
A report released in September by the Productivity Commission which looked into the costs and benefits of working from home found that “In all likelihood, productivity will remain the same or improve under more widespread working from home.”
The Commission’s chairman Michael Brennan told The Australian that he expects the proportion of hours worked from home to rise to between 7 to 13 per cent, from its pre-pandemic level of 2 to 5 per cent.
Health Insurer Nib is already diving head-first into the working from home model by encouraging employees to work from home at least four days a week, with staff only required to come into the office for meetings. New employees will also receive a one-off reimbursement of $300 to help them set up their workstation at home.
A survey of Nib’s workforce showed that 79% of employees wished to work from home to some extent, which echoes a broader survey done by the ABC that found ninety percent of Australians wished to continue working from home.
“While nobody celebrates the misery and disruption caused by Covid-19, it has presented a unique opportunity to us to re-think old work practices and design principles and ultimately redefine work at Nib,” said Nib’s chief people officer, Martin Adlington.
The growing redundancy of office spaces may have lasting impacts for cities like Sydney and Victoria, after many residents left to go to Queensland amid ongoing lockdowns. Victoria, for example, now has nearly 43,000 fewer residents than when the pandemic started, while Queensland saw its population increase by 0.9 per cent over that same period.
If an increasing number of workplaces maintain a WFH model after lockdowns end, CBD’s like Victoria and Sydney may not see a return of the residents that left them. And, given that economic support will be reduced as lockdowns end and vaccination rates rise, many may wish to remain in Queensland, given its affordability over Melbourne and Sydney.
Will the property market continue to grow?
Despite the on-and-off lockdowns over the past two years of the pandemic, Australia’s property market has experienced its fastest rate of price growth since 1989. So, when lockdowns end, will things get even hotter for the housing market?
Previously, when states exited lockdowns, CoreLogic identified that housing markets experienced a “catch up” in buying activity after restrictions eased.
Furthermore, given that New South Wales has had restrictions placed upon ‘in-person’ inspections and auctions, and Victoria had prohibited ‘in-person’ auctions or inspections during these latest lockdowns, it’s safe to assume that auction sales volume and clearance rates will increase as restrictions ease.
However, CoreLogic also notes that the “stability of housing market values is likely subject to extensive government stimulus and institutional support for the sector; a factor which is far less certain going forward.”
Given the reduced stimulus that will be provided as states become 80% fully vaccinated, we may see less buoyancy in the property market as regions leave lockdown.
An additional tailwind for Australia’s property market is the resumption of international travel which is slated for November for those that are fully vaccinated. An increase to the number of travellers coming to Australia will invariably push up rental prices, likely near CBD’s as international students return. This may offset some of the decreased demand for CBD properties.
Finding Undervalued Properties
With lockdowns ending and international borders opening in November, the housing market can only continue to get hotter.
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(As compared to comparable sales in each area and from market data supplied by Corelogic RP Data.)
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