Weekly Update 26/10/2020

25 October 2020

Welcome to this weeks Property News.

The next week ahead will be one of the most decisive weeks in the calendar so far this year. Two events could change the global market risks and two events will influence the domestic market risks;

  • The US Presidential Election on the 3rd November could go either way. Democrat nominee Joe Biden is proposing higher taxes and more regulation. President Trump favours lower taxes and big spending. Trump’s re-election chances have fallen with a majority of surveyed Americans disapproving of his handling of the pandemic and recent civil unrest at a time when the US has plunged into its deepest recession since the 1930s. Winning control of the Senate however is the more important factor to monitor as it will determine how quickly the winning party’s policies can be implemented. A hostile senate will slow the agenda.
  • China Communist Party Congress Meeting 25-29th October in which the Government will outline a framework for its next five-year economic and social development plan. The expectation is that China will seek more autonomous development by cutting reliance on the US for technology supply and exports and rely more on its own middle class population, now 500m+ people strong. China may also set out a plan for its influence in the region and particular Taiwan. Speculations of increased sanctions against Taiwan and rising tensions with the US over Taiwan policy are increasing global risks.

Apart from any repercussions from this weekend’s Grand finals and the Melbourne Cup, the two local events to shape the national agenda and economic outlook are;

  • The Queensland election – (31st October) With just under one week until Queenslanders head to the polls, the odds of re-election look to be in Premier Annastacia Palaszczuk’s favour. The Premier seized upon the electoral mood in taking a hard line on the border, despite the local devastation that it would create on business and tourism on the Gold Coast and Sunshine Coast (which are Liberal seats). Opening up the borders after the election seems likely.
  • Unlocking Victoria & the borders – Depending on how case number go this week, Daniel Andrews may be prepared to accelerate the state’s plans for reopening, with retail, hospitality and other sectors hoping to be back in operation from midnight, 1 November. This decision is important for the thousands of Victorian retail businesses that rely heavily on the Christmas trading period to survive. An extended lockdown will make Victoria’s chances of recovery through Christmas much harder.

The RBA’s interest rate decision on the 2nd November didn’t make my critical list as most economists expect that the Board will continue to take a wait and see approach, mindful of a recent rebound in employment and confidence in the economy post the Federal budget.

Of course these events won’t change things overnight, but they will present challenges and opportunities in time to come. Our responsibility is to interpet these events and pursue opportunities with the right view of the risks ahead.

In terms of the current Market Risks, we have now finalised the 4th Quarter Market Risk Assessment which you can read about here. In essence, we see Market Risks has having improved slightly from the last 2 quarters with improvements in access to capital, market sentiment and relative pricing as greater clarity about future conditions now exists as opposed to the fog and uncertainty that existed 3 months ago.

It is really important to have an impartial and systematic process of measuring market risks so that we can price opportunities with those risks in mind. If you want to know more about how we approach this, contact us at info@propertymarkets.news

Hey, also this week, we’ve also successfully transition to our new online platform which we hope you will find easier to use – I know I will. I am keen for your feedback so take a look and send us a rating.

Until next week.

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