Dexus Research today released the Australian Real Estate Quarterly Review for the quarter ended 30 September 2020. This report describes the outlook for Australia’s main property markets.
Dexus describes the outlook for 2021 as improving, but much depends on maintaining the suppression of COVID-19, which in the absence of a vaccine, will be no easy feat. Consequently, the duration of the impact of COVID on the economy and property markets remains uncertain.
Dexus maintain a view of a slow U-shaped growth profile with GDP growth relatively weak through early 2021 rather than the bounce predicted by some economists.
The report indicates that slow population growth is likely to constrain economic growth in the short term, falling to just 0.4% in FY21 due to border closures. While this could impact spending and housing construction, the effects will be partly offset by infrastructure spending and business investment.
Labour markets have weakened and there is significant variation between industries. While all-industry employment fell by 2.6% in the year to August 2020, the fall in the white-collar industries fell by only 0.2%, held up by solid growth in both the Government and Finance sectors. The fall in Professional Services employment of 3.7% has been mild by historical standards, held up by the Job Keeper scheme and technology allowing
staff to work from home. If maintained, the mild cycle of white-collar employment growth should help office markets recover.
Peter Studley, Dexus General Manager, Research said: “Australian economic growth forecasts are relatively steady on a global scale, with latest forecasts from the IMF predicting less downside in 2020 and a return to growth in 2021. However, much depends on our ability to suppress COVID-19, which itself is reliant on the emergence of a vaccine.
“There is significant variation in labour market performance between industries, with a milder impact on white collar employment growth, which should help the recovery of office markets. Professional job advertisements were up 7.7% in August from the record lows in May, followed by a strong bounce in consumer sentiment in October.
“The work-from-home experience has sparked much discussion about the relevance of office buildings post-COVID-19. Office buildings will continue to play a pivotal role in developing culture, and fostering collaboration and innovation.
“We expect an acceleration of the trend towards greater flexibility, however there is no ‘one size fits all’ solution and the adopted model will depend on the type of business and roles within it. Although many workers are still working from home, office attendance has been improving in line with the easing of mobility restrictions.”
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