Interesting Predictions for Australian Real Estate After the COVID Crisis
The COVID crisis has failed to set a standard for how countries are coping with its effects. Some have curbed losses successfully, whereas others have experienced the full extent of the pandemic.
You can find countries facing strong recessions and others remaining healthy in the same vein, both financially and healthcare-wise. Australia is one interesting combination of the two. Some regions haven’t held up as effectively, but others show promising futures for the real estate sector.
Western Australia's Economy is Holding Up
Most people will agree that the worst part of COVID is subsiding. Restrictions are easing up, and vaccines are starting to reach the population. That said, the long-term repercussions are somewhat obscure yet.
The West Australian shares some intriguing insight into the future of the economy as the COVID pandemic settles. In real estate, WA is offering surprising signs of its financial health. While April did come with a decline in sales activity, transactions have recovered surprisingly fast.
In fact, May saw more sales than the previous month.
What do the Experts Report?
The first point made by the article comes with reports about buyer interest. It paints a fascinating picture of the difference between buyer demand and real property supply. Sellers have been hesitant about returning to the market.
Listed properties for the Perth region oscillate under the 12,000 mark, marking a noticeable low. It’s worth noting that this city comes first for affordability, with a $477,000 median for housing prices. It also contrasts nicely with the above-average salaries when compared to other cities.
The Rental Market
When it comes to renting, the market hasn’t been as promising as its buying counterpart. Perth experienced a decline in April for lease listings, but it seemed to pick up in May. We must point out that easing restrictions appeared to be an essential stimulus for this recovery.
Curiously, the rental market saw more activity in leases than the previous month. That said, the rental market is still facing the highest risk in the real estate industry.
Not All of Them Will Remain Healthy
Finally, the article signals that the pandemic might hit rentals the hardest. Inner-city sectors might be the most problematic ones, mainly Sydney and Melbourne. These markets are quite different from Perth, which is looking to be one of the best markets for recovery.
That said, Melbourne and Sydney have managed to hold up during the pandemic. During the first quarter, rental offers actually increased by over 30% for both regions. However, it still pales in comparison to Perth.
Holding Up How Has Australia Handled the Crisis?
Australia’s COVID measures naturally play a significant role in determining how the market can recover. Economic support has been quite generous for Australians, providing a good cushion to curb the pandemic’s economic hit.
According to KPMG, Australia’s strategy divides into several branches. These include tax measures, employment safety, financial stimulus, and of course, quarantines. We can point out the last three as the most critical factors for the real estate sector.
Employment
Australia’s Taxation Office took an interesting approach to aid employment. Instead of banning turnover, it has allowed companies more time to pay salaries. This measure seems like the most important for offsetting unemployment.
JobKeeper declarations also saw some modifications, mainly for payment eligibility. Employers had to confirm aspects like employee eligibility and GST turnover.
Economic Stimuli
Besides restructuring measures, the economic stimulus strategy focused on four main aspects. The primary focus of the measures is on tax relief and providing instant stimulus.
The methodology targeted temporary investment allowances for businesses. The same is true for carry-back on losses for businesses to write off losses against 2018 and 2019 profits until June in 2022.
Most importantly, the legislation also allowed for immediate reductions on personal taxes for salaries. The estimated tax relief circled almost at $19 billion. Hiring credits have also gone to employers hiring eligible employers.
Lockdowns
Finally, lockdowns have started to ease with specific approaches for every state according to their epidemiology. Some states have reopened restaurants, bars, and cafes. However, they still have to comply with COVID measures.
The same rules go for office work, yet remote work is still encouraged. Gyms, schools, and other facilities are also able to open up while following safety regulations.
What do we Think?
The real estate sector in Western Australia looks promising if you know how to spot the signs—and which signs to look for. In our verdict, Perth might be the most alluring market, even after the pandemic ends.
The main reason is its affordability. Before the pandemic, moving to more affordable sectors often meant sacrificing employment opportunities. However, remote working has shifted the tide in favor of these markets; for now, it’s not necessary to live near the office.
If you’re interested in more investment opportunities as the COVID crisis keeps developing and—hopefully—stabilizing, make sure to subscribe to our newsletter. We offer relevant information for your sector, so you get all the data you need to make the best business decisions.