Part Two: Has COVID-19 crashed the 'Great Australian Dream'?
The previous two episodes of our live From the Bunker webinars looked at COVID-19's effect on both commercial and residential property. You can find other episodes from this series in the Events Section.
Here are the key takeaways for our double episode on property:
Part One:
- Housing is facing its biggest crisis since the GFC; as clearance rates collapse, buyer enquires fall and sellers go on strike.
- Declines will be driven by state and local factors with the cities likely to have bigger falls after rallying significantly more than the regions during the housing-led recovery of 2013-2017.
- Employment will be key to buyer sentiment. If we see unemployment pushing up into the 12%-15% levels housing will see an even stronger buyers strike than currently forecasted.
- Investors are facing the unenviable position of a failing investment as rents are slashed, leading to lower yields and possible negative returns for the foreseeable future as tenants look for rent relief. Could this see force selling?
Part Two:
- Listed property is facing its most significant structural change in a lifetime as tenants unite to demand rent relief and structural changes to rental agreements.
- Unlisted property is facing possible investor strikes as illiquidity, collapsing returns, and loss of paper value see increased redemptions.
- We examined why rising unemployment is bad news for speciality and high-end speciality leases.
- Why consumer behaviour in the post-COVID-19 world will likely mean listed centres will see increased vacancies.
One of the sectors that may feel the brunt of both a residential and commercial investment downturn are the banks which will be the focus of next weeks From the Bunker webinar. You can register here to watch this webinar Friday 1 May at 9:30 am AEST.
We'll be joined by special guest, Nathan Bell, Head of Research and Portfolio Management at Intelligent Investor. Nathan has researched and written extensively about Australian banks, and this is a prime opportunity to see where he thinks banks are heading.
You can watch both Part One and Two below:
Frequently Asked Questions about this Article…
COVID-19 has caused a significant crisis in the Australian housing market, with clearance rates collapsing, buyer inquiries falling, and sellers withdrawing from the market. The impact varies by region, with cities experiencing larger declines due to their previous strong rallies.
Employment levels are a key factor influencing buyer sentiment. If unemployment rises to 12%-15%, it could lead to a stronger buyer strike, further impacting the housing market negatively.
Property investors are dealing with reduced rents, leading to lower yields and potential negative returns. This situation may force some investors to sell their properties as tenants seek rent relief.
The listed property sector is undergoing significant structural changes as tenants demand rent relief and modifications to rental agreements. This is leading to increased vacancies, especially in specialty and high-end leases.
Rising unemployment is concerning because it negatively affects consumer behavior and demand for specialty and high-end leases, leading to increased vacancies and financial strain on property investments.
The unlisted property sector is facing potential investor strikes due to illiquidity, collapsing returns, and loss of paper value, which are prompting increased redemptions.
Banks could face significant challenges as both residential and commercial property investments decline, impacting their financial stability and lending practices.
You can learn more about the impact on Australian banks by attending the upcoming 'From the Bunker' webinar featuring Nathan Bell, Head of Research and Portfolio Management at Intelligent Investor, on Friday, 1 May at 9:30 am AEST.
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