WA Property Market: COVID-19 and Beyond
Businesses going under, workers being stood down, and a global economic downturn – Coronavirus (COVID-19) has had a significant impact on more than just the worldwide healthcare system. While the federal and state government stimulus packages have brought relief to existing residential and commercial tenancy arrangements, the current economic slowdown is putting different pressures on the WA property market. Residential, commercial and industrial property will feel the longer-term effects of this pandemic in different ways, so just how will COVID-19 impact these sectors?
The closure of intrastate, interstate and international borders has, predictably, dropped net migration figures. In turn, the sales of houses and other dwellings will continue to fall until people are able to move freely within and into WA. Government initiatives such as JobKeeper Payments, Rent Assistance, and a six-month moratorium on all residential evictions will certainly help people get through this in the short-term, however it remains to be seen what exactly will happen once the pandemic blows over. The potential light at the end of the tunnel is that Australia’s, and in particular WA’s, response to Coronavirus may turn the state into an attractive option for migration upon the lifting of international travel restrictions. Considering our great response as well as a free healthcare system and geographical isolation, the foundations are in place for a swift recovery for any future events similar to COVID-19.
Support via the stimulus packages (e.g. JobKeeper) has managed to keep more people in business and in employment than would have been the case without them. Despite that, many business owners have still had to close their doors, some permanently, raising vacancy rates and putting downward pressure on rents. There is also likely to be a decrease in the demand for shared office spaces as people grow more cautious about the potential for another outbreak, whether it be COVID-19 or a different disease. The retail sector will take a while to recover, as unemployment rates continue to be high through 2020 and 2021, prompting people to reduce their discretionary spending. Recovery in the business sector may also be slower than in others due to business owners being wary of ramping up business operations too quickly after the pandemic is over.
Despite global supply chains being slowed down or put on hold during COVID-19, the industrial market will likely see an improvement in the not-too-distant future. New investment by the Government in local manufacturing of pharmaceutical and medical supplies aims to reduce Australia’s reliance on China for these goods. This means that warehouse and manufacturing space will be required, and the demand for this may lead to upward pressure on rent. The growth of online shopping will also drive demand for warehouse space.
Considering the drastic nature of this worldwide situation, signs are that Western Australia is in a strong position to bounce back better (and sooner) than other parts of the world, and indeed other states in Australia. Our isolation, healthcare system and guidance from the government has helped to reduce the impact of COVID-19, and as a result our future looks bright.
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