<a href="https://www.apartments.com.au/developers/s-p-setia">SP Setia</a> has lodged plans for a $750 million, three-tower mixed-use precinct that would complete the long-running redevelopment of Carlton's former Carlton United Breweries site.

The proposal at <a href="https://www.apartments.com.au/new-apartments/185-195-queensberry-street-carlton-vic-3053">46-78 Bouverie Street and 185-195 Queensberry Street</a> spans a 6,468 sqm site, the last remaining undeveloped parcels within the former brewery's 2007 masterplan.

Designed by <a href="https://www.apartments.com.au/architects/cox-architecture">COX Architecture</a>, the development will comprise two purpose-built student accommodation towers and a third build-to-sell apartment tower above a shared commercial podium and basement.

Across the three towers, SP Setia is proposing 606 build-to-sell apartments and 1,499 student accommodation units containing 2,009 beds.

The apartments will sit in the tallest tower, which will rise nearly 200m and 55 storeys. It will become&nbsp;one of the more substantial new build-to-sell apartment projects at the northern edge of Melbourne's CBD.

The apartment mix is weighted toward smaller inner-city product, with 188 studios, 206 one-bedroom apartments, 192 two-bedroom apartments and 20 three-bedroom apartments

<img alt="First look: SP Setia plans three-tower finale for Carlton’s former CUB precinct" data-entity-type="file" data-entity-uuid="8271bc87-1b0a-41b7-ac73-a425ee375261" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/3_2.png?VersionId=G4lw23o90B1boX4k4dj7rdz2ZEajS9wy" />

Part of the precinct will be a large-scale&nbsp;3,684 sqm supermarket and a further 2,198 sqm of speciality retail, creating close to 5,900 sqm of new commercial space within the precinct.

But one of the biggest components of the proposal is what sits between the buildings.

Around 4,650 sqm, or roughly 72 per cent of the site, will be publicly accessible open space, incorporating plazas, pedestrian connections, landscaped laneways and retail spill-out areas.

The ground plane is intended to finally complete pedestrian connections envisaged when the CUB masterplan was first approved nearly two decades ago, stitching together Victoria Street, Queensberry Street, Bouverie Street and Swanston Street through the former brewery precinct.

Urbis said the development would "complete the CUB precinct", with the public realm providing important north-south and east-west connections through what is currently the final undeveloped portion of the masterplanned site.

SP Setia is also exploring a new linear park within the Bouverie Street road reserve, with the concept to be developed further with the City of Melbourne through the planning process.

The proposal is being pursued through the Victorian Government's Development Facilitation Program under Clause 53.23 for significant residential development with affordable housing.

The planning report acknowledges the proposed heights exceed those contemplated under the original Comprehensive Development Plan and masterplan, but argues the built-form context has changed considerably over the past two decades.

Urbis said the three towers would instead create a stepped transition between Carlton and the Hoddle Grid, rising progressively from the 94.1-metre Tower One along the Queensberry Street edge to the 199.44-metre Tower Three closer to the established CBD-scale buildings to the south.

<img alt="SP Setia" data-entity-type="file" data-entity-uuid="e885a07a-592c-40fc-bf82-e6dbaf32da54" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-08-21%20at%208.52.24%E2%80%AFAM.png?VersionId=7s_ErUkSKAdY1mAWp3GRZgMNCGtwhk5m" />

SP Setia plans to deliver the development across three stages.

Stage One would deliver the basement, podium and retail areas for the entire precinct alongside the first student tower. Tower Two would follow in Stage Two, before the 606-apartment Tower Three is delivered as the final stage.

If approved and delivered, the project would close out a redevelopment process that has been underway since the former brewery masterplan was approved in 2007, adding more than 2,600 student beds and apartments to a precinct already home to Swanston Central, the Barak Building, RMIT Design Hub and several large student accommodation developments.

&nbsp;

&nbsp;

Joel Robinson

SP Setia plans three-tower finale for Carlton’s former CUB precinct

Melbourne developer Lowe Living is seeking to add to its growing bayside apartment pipeline, filing plans for a boutique eight-residence development in tightly held Middle Park.

Lowe Living, which has built much of its development portfolio across Melbourne's affluent bayside and south-east suburbs, is behind the plans for the 730 sqm site at <a href="https://www.apartments.com.au/new-apartments/123-125-erskine-street-middle-park-vic-3206">123-125 Erskine Street</a>, just off Armstrong Street and within the Armstrong Street Neighbourhood Activity Centre.

The developer is seeking approval for a five-storey residential building above two basement levels, with just eight large-format apartments and 18 car spaces.

“This is a deliberately very different proposition for us,"&nbsp;Tim Lowe, Co-Founder of Lowe Living, said.

"Eight residences is exceptionally boutique, but that's precisely what this site calls for.

“There is a strong community in Middle Park and the surrounding suburbs who have spent decades building a life here. They no longer want the maintenance of a large period home, but they aren't prepared to compromise on space, quality or location. We think there is a real opportunity to capture that hyper local market. A site like this rarely comes to market.”

<img alt="Lowe " data-entity-type="file" data-entity-uuid="875fe572-0f14-4d90-9e11-55b28dd07731" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-08-21%20at%208.42.49%E2%80%AFAM.png?VersionId=GDNQRv9BfpR9r1zkZ5UDyUM4ZvpIksut" />

The low-density proposal has been designed by Cera Stribley and is being progressed through the Victorian Government's Great Design Fast Track pathway, having already secured eligibility from the Minister for Planning.

The Office of the Victorian Government Architect supported its eligibility after finding the proposal demonstrated consistency with the program's seven design principles, while the project's financial feasibility has also been independently confirmed by Invest Victoria.

The project is targeting the downsizer market, with the planning documents describing the homes as larger-format residences and noting the two penthouses could otherwise have been configured as four separate apartments.

<img alt="Lowe 2" data-entity-type="file" data-entity-uuid="60ab0987-2da6-4175-adac-315dcf6053c6" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-08-21%20at%208.43.15%E2%80%AFAM.png?VersionId=bOCPH0B2MFwlmaRW.TTCF9TzyifgVoQI" />

The site has dual frontage to Erskine Street and Canterbury Place and currently comprises a collection of commercial buildings used as offices, including a former heritage bakehouse, a former stable, a later gabled addition and a central courtyard.

It sits within the Commercial 1 Zone and the Armstrong Street Commercial Precinct heritage overlay, with the existing property classified as a contributory heritage place.

Heritage has subsequently played a significant role in Cera Stribley's design.

The front section of the former bakehouse facing Erskine Street will be retained, including its return walls, street-facing hipped roof and chimneys, while the Erskine Street façade and part of the western return wall of the former stable will also be incorporated into the new development.

Levels four and five will be set back five metres from the retained stable façade, while bricks removed through demolition are proposed to be salvaged and reused within the new building where possible.

<img alt="Lowe 3" data-entity-type="file" data-entity-uuid="e97927a9-a2de-4a0f-83b6-65451238abfa" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-08-21%20at%208.43.06%E2%80%AFAM.png?VersionId=VR44AChLrX9q1XPB9GvVQV.ALXXbe4gC" />

Rather than presenting as a single five-storey building to Erskine Street, Cera Stribley has broken the development into a series of distinct forms.

A three-storey infill element will sit between the retained bakehouse and stable façades, with the upper levels recessed behind the heritage fabric. Canterbury Place will similarly feature two three-storey podium forms, separated by a central pedestrian accessway, before the upper two levels step back from the street.

A pedestrian through-link will run through the centre of the project between Erskine Street and Canterbury Place, creating entrances from both sides of the site and introducing landscaping and communal areas through the ground plane.

Landscape architect Acre has designed planting across the ground level, private terraces and upper levels, including a feature canopy tree at level three and integrated planting and arbours across the level four terraces. Five existing Erskine Street trees are proposed to be retained.

Sustainability is also a significant component of the Great Design Fast Track application. The apartments are targeting an average eight-star NatHERS rating, with no residence below 6.5 stars, while the project has achieved a 75 per cent BESS score. Seven of the eight apartments are designed for cross-ventilation, with the remaining residence using mechanically assisted natural ventilation.

The plans also incorporate an 8kWp rooftop solar system, a 5,000-litre rainwater tank and infrastructure allowing future electric vehicle charging for every residence.

Lowe has a strong portfolio across Melbourne's blue-chip suburbs. They recently launched <a href="https://www.apartments.com.au/new-apartments/jardin-house-by-lowe-living-camberwell-335-camberwell-road-camberwell-vic-3124">Jardin House by Lowe Living</a> in Camberwell, their first development in the Stonnington LGA.

Lowe Living unveils Middle Park apartment development

Article summary

<ul data-end="888" data-start="289">
	<li data-end="442" data-section-id="8tsh6o" data-start="289">DVB Projects is preparing to launch its second Gold Coast apartment development, with demolition now underway at 137 Old Burleigh Road, Broadbeach.</li>
	<li data-end="573" data-section-id="1nyxl3e" data-start="443">The 34-level tower will comprise just 49 ultra-luxury residences, including half-floor, full-floor and penthouse apartments.</li>
	<li data-end="717" data-section-id="oiyimj" data-start="574">The launch follows strong demand at DVB's nearby Sea Glass project, which is more than 50 per cent sold and currently under construction.</li>
	<li data-end="888" data-section-id="epk9o9" data-start="718">The development adds to the transformation of Old Burleigh Road, with premium beachfront apartment projects continuing to reshape the tightly held Broadbeach strip.</li>
</ul>

<a href="https://www.apartments.com.au/developers/dvb-projects">DVB Projects</a> is preparing to launch its second Gold Coast apartment development, with demolition now underway on the Broadbeach site as the Sydney developer moves closer to bringing the ultra-luxury project to market.

The 34-level tower at <a href="https://www.apartments.com.au/new-apartments/137-old-burleigh-road-broadbeach-qld-4218">137 Old Burleigh Road</a> will comprise just 49 residences, ranging from half-floor apartments through to full-floor homes and a penthouse. The launch follows the strong sales performance of DVB's nearby Sea Glass development. More than half of the apartments at Sea Glass, on the other side of Broadbeach, have been snapped up, well ahead of its late 2027 completion

<img alt="DVB Projects to commence demolition on $320m Broadbeach luxury tower" data-entity-type="file" data-entity-uuid="2944b4be-c84e-4b54-8dc1-c712e76704c0" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/E02_Exterior_Street%20Level%20Entrance.jpg?VersionId=YoNig7pRdrE3HCue7sUj78LzJteeQf3H" />

The start of demolition at 137 Old Burleigh Road signals DVB Projects’ underlying confidence in the Gold Coast’s luxury beachside apartment sector.

“We see the Gold Coast as one of the most compelling lifestyle markets in Australia, particularly at the premium end where demand continues to deepen,” said Dean Brown, Managing Director of DVB.&nbsp;

“This project has been carefully designed to respond to that demand - delivering large-format residences with a level of quality, privacy and amenity that is still relatively rare in the apartment market on the beachside."

Brown says the site itself is "exceptional."

"Old Burleigh Road is one of the most tightly held beachfront strips, and opportunities to deliver a project of this scale and calibre in this location are extremely limited.”

<img alt="DVB Projects to commence demolition on $320m Broadbeach luxury tower" data-entity-type="file" data-entity-uuid="398f377a-c037-455e-9250-0c5e0d84c35b" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/I12_FF%20Balcony.jpg?VersionId=NwOiRWGMubR1c8wthuEfggklcja7al9." />

The project will comprise 40 half-floor residences of approximately 260 sqm, alongside eight full-floor residences spanning around 524 sqm.

A single penthouse will crown the building, featuring a private pool, barbecue area, indoor gym and dedicated entertaining spaces.

Residents will have access to a resort-style suite of amenities, including a 20-metre pool with daybeds, a gymnasium, hot and cold plunge pools, a sauna, and private residents’ lounge and dining facilities.

<img alt="DVB Projects to commence demolition on $320m Broadbeach luxury tower" data-entity-type="file" data-entity-uuid="d1642bb0-9a66-4427-a022-dfc0988c6287" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/A02_Pool%20to%20View.jpg?VersionId=c0IXPyn_Gp_Kn3XCwzMrqIVkAdCEwVXP" />

Sales agent Todd Matheson, of <a href="https://www.apartments.com.au/project-marketer/pezet-matheson">Pezet Matheson</a>, which is marketing both 137 Old Burleigh Road and Sea Glass, said 137 Old Burleigh Road would address a clear gap in the market for genuine luxury products.

“There are very few opportunities on the Gold Coast where buyers can secure a residence of this size and quality in a new building,” Matheson said.

“What we’re seeing is a growing cohort of downsizers and interstate buyers who still want space - they’re not willing to compromise on living area, entertaining or finishes.

“This project has been designed with that buyer in mind. It offers the scale of a home, combined with the convenience and security of apartment living, in one of the coast’s most desirable positions.”

<img alt="DVB Projects to commence demolition on $320m Broadbeach luxury tower" data-entity-type="file" data-entity-uuid="59aae0ca-5639-4320-8aca-d0bf60f48e43" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/E01_Exterior%20Hero.jpg?VersionId=DS8Zfy2WtgUEtdfe0TEUuf1W1GfcZq8S" />

Located on a 1,156 sqm site one block from the beachfront, the development will replace an ageing walk-up building and is expected to contribute to the ongoing transformation of the Old Burleigh Road strip into one of the Gold Coast’s most prestigious residential corridors.

With the development moving into the delivery phase, 137 Old Burleigh Road is slated to hit the market later this year.

[smartcode_project_cta:default project_id=145141]

DVB Projects to launch second Broadbeach apartment tower as demolition commences

<a data-end="327" data-is-only-node="" data-start="250" href="https://www.apartments.com.au/developers/norus-projects" rel="noopener" target="_new">Norus Developments</a> has lodged plans for a new apartment development in Clayton that would add further momentum to the suburb's emerging Green Street corridor.

Plans have been lodged for the consolidated site at <a href="https://www.apartments.com.au/new-apartments/1359-1365-centre-road-clayton-vic-3168">1359-1365 Centre Road</a>, where Norus is seeking approval for 218 apartments across a 12-storey apartment building designed by <a href="https://www.apartments.com.au/architects/life-architecture-and-urban-design">Life Architecture</a>.

The proposal sits within the Clayton Major Activity Centre at the threshold of the planned Green Street corridor, a landscaped pedestrian connection intended to improve links through the precinct towards Clayton Railway Station.

The development would replace the site's existing collection of low-scale residential and commercial buildings with a single consolidated building, introducing significantly greater housing density to this part of Centre Road.

A retail tenancy is proposed at ground level to activate the Centre Road frontage, accompanied by transparent street interfaces and landscaping intended to create a more pedestrian-focused edge to the development.

<img alt="First look: Norus Developments plans landscape-led apartment project for Clayton’s emerging Green Street" data-entity-type="file" data-entity-uuid="0a5a763a-d9e9-4253-af2f-88008de27ebf" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Clayton%20a.png?VersionId=S2WJJbat1XVkZwB9SnYtygirXgWHiklX" />

The building has been designed with stepped massing and upper-level setbacks to manage its transition towards surrounding residential properties. The planning report describes the approach as one that integrates the building into the landscape rather than treating landscaping as a secondary element.

"A strong landscape and public realm strategy underpins the proposal," Urbis states in the planning report.

"Public benefits include an affordable housing contribution, a new pocket park, generous landscaped setbacks, deep soil planting and integrated Water Sensitive Urban Design."

The report adds that these elements are intended to create "a permeable, pedestrian-focused ground plane that enhances walkability, supports urban cooling and reinforces the emerging Green Street character."

Biophilic and passive design principles extend through the residential levels, with planting, daylight, natural ventilation and views towards landscaped areas forming part of the amenity strategy.

Parking would be concentrated away from the public realm, with 145 car spaces proposed from the rear laneway rather than dominating the Centre Road frontage.

The proposal follows an extensive pre-application process with the City of Monash. Three formal meetings were held between the project team and Council from December 2025 to March 2026, with the scheme evolving through several concept iterations before the current design was lodged.

The project arrives as Clayton prepares for substantial change around its established activity centre and the wider Suburban Rail Loop precinct. Its position on Centre Road places the development within an existing concentration of shops, services and public transport, while the Green Street connection is intended to strengthen pedestrian access towards Clayton Railway Station.

First look: Norus plans landscape-led apartment project for Clayton’s emerging Green Street

<a href="https://www.apartments.com.au/developers/gardner-vaughan-group">Gardner Vaughan Group</a> has officially commenced construction on Bronze on Chevron, celebrating the sod turning of its first-ever Gold Coast development and marking a significant milestone in the company's continued expansion across South East Queensland.&nbsp;

Following the successful delivery of premium residential developments throughout Brisbane and the Sunshine Coast, <a href="https://www.apartments.com.au/new-apartments/bronze-on-chevron-8-mawarra-street-chevron-island-qld-4217">Bronze on Chevron</a> represents Gardner Vaughan Group's entry into the Gold Coast market. Bronze will deliver 119 one, two, three and four-bedroom apartments above two ground-level retail tenancies.

[smartcode_project:default project_id=107520 project_image_fid=367193]

The recent sod turning ceremony was attended by Deputy Mayor Mark Hammel, President of the Surfers Paradise Surf Life Saving Club, Cassandra Sedgman, project consultants, purchasers, project partners and invited guests to celebrate the commencement of construction.&nbsp;

Gardner Vaughan Group Chief Executive Officer Simon Betteridge said Bronze on Chevron represented an exciting new chapter for the business.&nbsp;

"We've spent almost four decades building homes that respond to the way people want to live, and we're excited to bring that experience to <a href="https://www.apartments.com.au/developments/chevron-island-qld-4217">Chevron Island</a>," Betteridge said.

"Bronze on Chevron is particularly significant because it marks Gardner Vaughan Group's first development on the Gold Coast following many successful projects across Brisbane and the Sunshine Coast."

[smartcode_project:default project_id=107520 project_image_fid=367183]

Betteridge said the ground breaking is a proud moment for the&nbsp;team and their purchasers, who can now see their future homes beginning to take shape.&nbsp;

"As both developer and builder, we're able to oversee every aspect of the project from design through to construction, ensuring the quality and attention to detail Gardner Vaughan Group has become renowned for."&nbsp;

Designed by acclaimed architectural practice <a href="https://www.apartments.com.au/architects/cottee-parker-architects">Cottee Parker</a>, Bronze on Chevron has been thoughtfully designed to complement Chevron Island's evolving streetscape while embracing its relaxed coastal lifestyle.

The development will offer generous residences with refined interiors, premium finishes and resort-style amenities, with completion anticipated in early 2029.&nbsp;

[smartcode_project_cta:default project_id=107520]

The development will offer generous residences with refined interiors, premium finishes and resort-style amenities, with completion anticipated in early 2029

Gardner Vaughan Group breaks ground on first Gold Coast development, Bronze on Chevron

COVID-19

<html><body>
GUEST OBSERVATION
You’ve lost income because of the coronavirus crisis and finding it hard to pay the bills. What if you can’t pay your rent? 
The short answer, if you live in Australia, is that rules changes give you more time – at least six months – before you face eviction.
But that’s all. Nothing else has changed. As <a href="https://www.theguardian.com/australia-news/live/2020/apr/03/coronavirus-update-live-news-australia-queensland-victoria-nsw-qld-tas-act-sa-wa-nt-covid19-latest-updates?page=with:block-5e86b5d58f0866297e9f624a" target="_blank" style="font-family: Tahoma, Helvetica, Arial, sans-serif;">Prime Minister Scott Morrison has said</a>, the moratorium on evictions “doesn’t mean there’s a moratorium on rents”.
Whatever rent you don’t pay you will still owe, with consequences eventually.
There’s unlikely to be any other national assistance for residential tenants along the lines the commercial tenancy market <a href="https://www.pm.gov.au/media/update-coronavirus-measures-030420" target="_blank">might get</a>.
But there may be other assistance on offer according to your state and territory. In Queensland, for example, you may be eligible for a one-off rental payment.
So this is how your options stand.
Eviction moratorium
The National Cabinet – incorporating the federal cabinet and state and territory leaders – announced the eviction moratorium <a href="https://www.propertyobserver.com.au/https://www.abc.net.au/news/2020-04-03/eight-million-tenants-wait-to-learn-coronavirus-rent-bill/12114082" target="_blank">on March 29</a>. Rental law is a state and territory matter, so legal enforcement depends on these governments enacting legislation.
Tasmania was the first <a href="https://www.cbos.tas.gov.au/topics/housing/residential-tenancies-covid-19-emergency-provisions" target="_blank">to do so</a>, pre-empting the National Cabinet decision with a four-month ban on evictions. It’s likely a good indication of what other states and territories will do.
The Tasmanian legislation prohibits commercial and residential landlords from serving notice to vacate for rent arrears for the duration of the “emergency period”, unless:
<ul>
<li>
the lease is non-fixed term and property is being sold (with notice being served before April 3)
</li>
<li>
the Residential Tenancy Commissioner orders termination because of “severe hardship” to either party.
</li>
</ul>
Severe hardship is an established part of tenancy law. It allows parties to apply for a fixed-term lease to be terminated without penalty. It is possible a landlord could argue financial hardship based on needing rent to cover their own debts, but commissioners (or tribunals in other jurisdictions) are likely to scrutinise such applications closely.
(Severe hardship is discussed further below, under “What if I want to break the lease?”).
What if I don’t pay my rent?
If you don’t pay your rent, your debt will keep accruing. Once the moratorium ends, you face eviction.
Your landlord will have the right to keep your bond to cover the rent. If you owe more, they can chase it up through debt collectors or file court proceedings. If this happens, your personal <a href="https://www.canstar.com.au/credit-score/what-is-a-credit-rating/" target="_blank">credit rating</a> could take a hit, and costs may be added to any judgment against you.
So take the Prime Minister’s <a href="https://www.afr.com/property/commercial/office-tenants-inundate-landlords-with-rent-relief-requests-20200330-p54fe6" target="_blank">advice</a>: negotiate with your landlord or agent.
Try to work out an arrangement both sides can live with. Remember, many private landlords rely on rent to pay the mortgage. Even with the <a href="https://www.ausbanking.org.au/covid-19-relief-faqs/" target="_blank">major banks offering mortgage relief</a> during coronavirus crisis, the interest on that debt will keep accruing.
Can I get any rent assistance?
There are generally no special provisions for rent assistance during the coronavirus crisis.
So far only <a href="https://www.qld.gov.au/housing/renting/rent-assistance/bond-loan/covid19-rental-grant" target="_blank">Queensland</a> is offering any form of special rental assistance – a one-off payment of up to $2,000, paid directly to your lessor. To be eligible, you must have lost your job due to the pandemic and have applied to Centrelink for income support.
In other states the usual rules for <a href="https://www.servicesaustralia.gov.au/individuals/services/centrelink/rent-assistance" target="_blank">rent assistance</a> apply. You need to first qualify for Centrelink income support, such as the JobSeeker payment, Youth Allowance or the Parenting Payment. Centrelink provides up to A$139 a fortnight if you’re single, and A$164 for a couple with two children.
What about a rent reduction?
As mentioned, there’s no sign there’ll be direct subsidies for residential tenants, though there may be a national package to reduce commercial rents.
The closest thing so far announced is the <a href="https://www.propertyobserver.com.au/https://www.abc.net.au/news/2020-04-02/act-government-covid19-coronavirus-spending-package-announced/12114504" target="_blank">Australian Capital Territory’s</a> encouragement to residential landlords to lower rents by at least 25% through direct tax relief equal to half the discount (up about $100 a week). The scheme is voluntary, so it remains to be seen how effective it will be.
What if I want to break the lease?
If you’re not on a fixed-term lease, but a monthly or weekly tenancy, you simply have to give the required notice to the landlord (usually 21 days).
If you’re on fixed-term lease, state and territory laws allow both tenants and owners to apply to break the lease without penalty if its continuation causes “severe hardship”.
But this option “should be seen as a last resort,” <a href="https://www.cbos.tas.gov.au/topics/housing/residential-tenancies-covid-19-emergency-provisions" target="_blank">advises</a> the Tasmanian government. “It is best to maintain a positive relationship between owners and tenants. The best way to do this is for owners and tenants to discuss their concerns.”
It is possible your lease may contain a force majeure clause providing for suspension or termination when unforeseeable events (for which neither party is responsible) occur. Unfortunately, such clauses are extremely rare in leases, and unlikely to cover pandemics.
Is there anything else to consider?
If you consistently miss rent payments you risk going on a “black list” – a privately owned tenancy database that real estate agents use to screen tenants. A track record of missing payments can mean a black mark on a future rental application.
So the bottom line: talk with your landlord.<img src="https://counter.theconversation.com/content/135312/count.gif?distributor=republish-lightbox-basic" alt="The Conversation" width="1" height="1" style="border: none !important; box-shadow: none !important; margin: 0 !important; max-height: 1px !important; max-width: 1px !important; min-height: 1px !important; min-width: 1px !important; opacity: 0 !important; outline: none !important; padding: 0 !important; text-shadow: none !important;">
<a href="https://theconversation.com/profiles/mark-giancaspro-182268" target="_blank">Mark Giancaspro</a>, Lecturer in Law, <a href="https://theconversation.com/institutions/university-of-adelaide-1119" target="_blank">University of Adelaide</a> and <a href="https://theconversation.com/profiles/david-brown-103001" target="_blank">David Brown</a>, Co-Director, Bankruptcy and Insolvency Scholarship Unit, <a href="https://theconversation.com/institutions/university-of-adelaide-1119" target="_blank">University of Adelaide</a>
This article is republished from <a href="https://theconversation.com" target="_blank">The Conversation</a> under a Creative Commons license. Read the <a href="https://theconversation.com/what-if-i-cant-pay-my-rent-these-are-the-options-for-rent-relief-in-australia-135312" target="_blank">original article</a>.
Correction: this article has been amended to clarify that consistent non-payment of rent is required to be listed on a residential tenancy database. The article originally suggested any non-payment was a risk. For more advice contact the tenants advice service in your state or territory.
</body></html>

j.ballantyne1990-6AQqhLzZaK

What to do if you can't pay rent (nothing is not a good option)

<html><body>
Working from home is not a foreign concept to the professional industry, with studies revealing that <a href="http://blog.au.indeed.com/2019/01/29/report-68-australian-employers-allow-remote-working-attitudes-divided/">two-thirds of Australian employers</a> allowed their employees to work remotely last year. But what was once considered a luxury or an indicator of the modern professional has since become the key to survival for organisations and industries across the world.

The ability to shift to a remote workplace is a privilege in itself and one that was not always feasible sans the technology age. Nowadays, we have access to modern technology and software that allows employees to remotely access their work system from anywhere in the world and with the addition of work equipment such as laptops and screen monitors, a home office is formed. But like a traditional workplace, it takes more than just equipment and programs to run a productive and cohesive business.

As an increasing number of organisations in Australia encourage their employees to work remotely, to urgently and effectively reduce the spread of COVID-19, employers and managers are posed with a new breed of management challenges to navigate.

<h2>Open communication is paramount </h2>

Working remotely has the potential to inspire productivity in employees but on the flip side, the lack of structure can just as easily hinder motivation.

Expectations of each employee, regardless of position, needs to be established and clearly communicated at the early stages of the relocation and must remain consistent throughout the process.

It doesn’t matter if an organisation has five or 50 employees, an open-door style policy of communication between senior management and employees is the most effective way to maintain team cohesion as it will reduce the likelihood of miscommunication and will allow trust to build between the manager and employees.

Consistent and open dialogue is also key to encouraging employees to display a high level of commitment, something that is highly valued at a time like this, as opposed to just the communal obligation that is associated with a traditional workplace.

<h2>Encourage a set workday structure </h2>

Encouraging employees to structure their day around their traditional routine is an effective way to maintain normalcy in a new work environment.

All employees should schedule in set breaks, just as they would have in their regular office hours and make the effort to get out of the house at least once a day. Whether it is a coffee break or an after-lunch walk, these scheduled breaks create important boundaries between personal and professional lives.

As most individuals bunker down to <a href="https://snacknation.com/blog/social-distancing-at-work/">practice social distancing</a>, lunchtime catch-ups and office banter can seem like a long distant memory. To mitigate feelings associated with isolation it is important that managers encourage socialisation between staff as if they were working in the same space. Employees should be encouraged to take advantage of communication software, whether it be Facetime, Slack or Zoom, to engage with each other as if they were communicating across their desks. These platforms are also great for bouncing ideas around or to check in on how someone is going.

<h2>Increased focus on mental health </h2>

Positive social and mental health needs to be a priority in any workplace but given the peculiar new reality we are all facing, it has never been more important to manage.

Managers and organisations need to foster positive relationships between employees by providing a platform to discuss non-work related topics. This could include company-wide lunches via video conference or phone calls between employees during their lunch break.

Although working remotely creates a physical separation between the HR team and employees, the relationship shouldn’t suffer as a result. This means scheduling regular meetings where the team can check in with every single staff member personally to see how they are dealing with remote working life. A consistent schedule allows employees to discuss any issues related to remote work, such as feeling lonely or isolated or struggling with their workload or new work environment in any way.

With no foreseeable end in sight for COVID-19, remote work arrangements and virtual workplaces are rapidly becoming the new norm across the globe. It is with ongoing communication and mutual understanding that employers and employees can maintain momentum for their organisations. Looking past the negative undertones, virtual workplaces offer the opportunity for us all to develop our businesses and employee relations, to offer vital support to each other to meet the demands at hand and ahead.
</body></html>

How to effectively manage a remote workplace during ‘social distancing’

<html><body>
These days, it’s all about <a href="https://www.youtube.com/watch?v=bYQjssb7xdk">social distancing</a>. Studies have shown that the novel coronavirus (COVID-19) has an incubation period of five days — a significantly longer period of time compared to the common cold, which is generally one to two days — and patients can infect others before beginning to show symptoms. Before a cure is found, social distancing is the way to go about limiting the spread of the virus. 

In a <a href="https://www.propertyobserver.com.au/https://www.abc.net.au/news/2020-03-20/coronavirus-covid-19-scott-morrison-enhanced-social-distancing/12075532">press conference</a> last week, Prime Minister Scott Morrison advised Australians to maintain at least 1 to 1.5 metres of physical distance between one another in public spaces. However, social distancing is just as critical at home as it is outdoors, especially if anyone at home had been in contact with a possible carrier. The Australian Department of Health has released <a href="https://www.health.gov.au/sites/default/files/documents/2020/03/coronavirus-covid-19-information-on-social-distancing.pdf">guidelines</a> to do so.

Social distancing should be and can be, pre-emptive and low cost, according to the <a href="https://www.mja.com.au/journal/2020/212/10/pre-emptive-low-cost-social-distancing-and-enhanced-hygiene-implemented-local">Medical Journal of Australia</a>. In other words, social distancing should be practised as early as possible as a preventive measure, and it can be achieved without spending money on sophisticated medical equipment.

<h2>The following applies to all households:</h2>

Maintaining hygiene around the household is essential, especially in ‘high touch’ areas such as the bathroom and the kitchen. Health officials discourage against touching one’s face, so perhaps intimate contact between family members should be avoided for the time being. Health officials are also encouraging people to take extra precautions when coughing or sneezing. Fluids can easily pass on from one person to another through hands; considering the high infection rate of COVID-19, this etiquette should not be taken lightly. The correct and socially responsible way is to cough or sneeze is into the <a href="https://www.sbs.com.au/topics/science/humans/article/2016/02/15/why-you-should-sneeze-your-elbow">crook of your elbow</a> and always remember to wash that item of clothing as soon as you can. 

<h2>For households with members under quarantine, or members who are ill: </h2>

In addition to the above steps, extra steps have to be taken to contain the spread of the virus under one’s roof. If a family member at home is ill, they should ideally stay in an isolated room, and reduce all physical contact with other members of the household.

If possible, there should only be one person caring for the sick individual, and the carer should be wearing a surgical mask at all times. When bringing food to the patient, it is encouraged to leave it by the door or a place where the patient can collect it without being in contact with the carer. The door of the patient’s room should also be kept closed at all times to reduce the risk of the virus travelling to other parts of the home.

If anyone at home is exhibiting symptoms of COVID-19, <a href="https://www.health.gov.au/news/health-alerts/novel-coronavirus-2019-ncov-health-alert/what-you-need-to-know-about-coronavirus-covid-19#how-to-seek-medical-attention">follow instructions from the Department of Health</a> and seek medical attention immediately. For serious symptoms, such as difficulty breathing, the urgent medical helpline is 000.

The Australian Government has also set up a National Coronavirus Helpline for those who wish to seek information about the virus. The number, 1800 020 080, is available 24 hours a day, seven days a week. 
</body></html>

COVID-19: Is it possible to practise social distancing at home? Absolutely

<html><body>
COVID-19 has gone from a distant news story to <a href="/expert-insights/buying/changes-the-real-estate-industry-will-experience-as-a-result-of-the-coronavirus">now impacting every one</a> of us at a speed that has taken the nation – and the world – by surprise.

<a href="/guides/covid-19-how-to-adapt-to-working-from-home">Adaptation is now paramount</a> for every operator, in every industry, and real estate is no different. Service providers need to find ways to adjust, and fast, because people still need to buy and sell property – perhaps even more so once the real economic impact starts to play out.

Let’s look at some of the potential effects of Coronavirus on the Australian property market.

<h2>March/April 2020 – immediate effects &amp; emerging trends</h2>

The Australian property market <a href="https://reia.asn.au/backing-the-governments-advice-on-auctions-and-open-houses/">changed overnight on March 25</a>, with both in-room and onsite auctions, and open homes, being <a href="https://www.pm.gov.au/media/update-coronavirus-measures-24-March-2020">banned by the Prime Minister</a> and industry bodies bracing themselves for (and lobbying against) further restrictions.

Buying a home or an investment property is a significant decision often fraught with potential stresses at the best of times. So not surprisingly, we already see a softening in the market and both investors and homeowners putting searches on hold.

Having said that, there are existing ‘cashed-up’ buyers out there who need to buy now, having already sold their existing house. Investors will also certainly look to make the most of the current situation and buy discounted stock. Prices are, as you’d expect under such circumstances, coming off. With lower levels of buyers in the market, competition is not as strong, which means that results have not been as high as they were even a couple of weeks ago.

In the medium term, as employment fluctuates and, devastatingly, people lose their jobs, many Australians are going to be highly motivated to sell their property. This will cause further softening of prices in the property market and, because of social distancing rules and the measures people are taking to prevent possible infection, it is becoming increasingly difficult – and unappealing – to do even private inspections.  

This will likely be the case for the next couple of months as the Coronavirus pandemic peaks – and is hopefully resolved – in Australia.

<h2>The longer-term projection?</h2>

Once we’ve managed to get through this immediate crisis and the worst of the pandemic’s impact has dissipated, we’d expect is for <a href="/news/covid-19-understanding-what-you-can-and-cant-control-the-importance-of-cross-referencing-facts">people’s collective fears</a> to diminish fairly quickly, resulting in a jump in pricing.  Buyers currently holding off their searches will return, increasing competition. But ultimately, it’s a grey area for both the Australian and the global economy, so the long-term economic impact of Coronavirus simply isn’t known.

<h2>Buyers, don’t be afraid to seek help</h2>

Buyers’ agents – agents acting solely on behalf of buyers during a property transaction – are inherently well equipped to help buyers navigate some of the immense challenges the COVID-19 pandemic presents.

<a href="/guides">Video walkthrough</a> provides a full virtual property tour that can be viewed from anywhere in the world. These tours were originally created to service the needs of people who didn’t have physical access to view properties, such as overseas investors, however now this content can be made use of by everyone.

Bidding services are another option, enabling buyers to avoid auction rooms. 

<h2>Advice from the experts</h2>

If you’re looking for your new home or a long-term purchase, negotiate now. You’ll find you’ll be in a marketplace that’s going to be <a href="https://www.theguardian.com/australia-news/2020/mar/20/australian-housing-market-will-hit-the-wall-in-coronavirus-recession-experts-say">down between 10-20%</a> from its standard peak pricing, and you’re already getting a discount. If you’ve found what you feel is the right home for your wants and needs, don’t be too cautious about purchasing – if you have secure financials and have done thorough due diligence research.

A bargain-hunter will want to buy the cheapest possible property at the best price, so watch and wait over the coming weeks.

Make sure your finance has been approved. If you’re ready to act swiftly and <a href="/developments">secure the property that’s right for you</a>, at the right price. 

Nobody knows what the market is going to be doing in <a href="/news/covid-19-how-the-world-previously-recovered-from-sars-and-whether-or-not-we-can-do-the-same-this-time-round">6, or even 3 months</a>. If you are in the market to buy property, do as much research as you can, and find out what your trusted experts – who live and breathe the market daily – are forecasting and would recommend for you as they may just point you to a great opportunity.  
</body></html>

How to navigate buying property during the COVID-19 crisis 

<html><body>
In their emergency meeting in March where they cut the official interest rate to a record low 0.25 per cent, the RBA members noted that there was evidence lower interest rates were benefitting the community as a whole.
RBA governor Philip Lowe said the members noted the decline of 1.25 per cent over the preceding year as a substantial easing of monetary policy.
However he added that to date the lower rates had been "boosting the cash flow of businesses and the household sector as a whole, and also helping trade-exposed industries through the exchange rate channel."
Lowe said that members acknowledged that very low interest rates have uneven effects and negative consequences for some people – especially those relying on interest income – but the evidence was that lower interest rates were benefiting the community as a whole.
"Members supported the proposal and agreed that the cash rate would not be increased from its lower level until progress is made towards full emplyment and there is confidence that inflation will be substantially within the two to three per cent target range", Lowe noted.
The RBA have had a steadfast unemployment rate target of 4.5 per cent. The latest data has it pegged at 5.1 per cent, however that was calculated before the recent COVID-19 job losses.
Some economists are tipping the unemployment rate to reach over 11 per cent, so don't expect a rate hike anytime soon.
Lowe said it was "considered likely that the cash rate would remain at a very low level for an extended period", while he further ruled out any change of rates going in to negative.
To read the full RBA minutes, click here.
</body></html>

wdavis-8cCN98p7xp

Evidence lower interest rates are benefiting the community: RBA's March emergency meeting minutes

<html><body>
MARCH EMERGENCY RBA MINUTES
<h2 id="recent-developments">Recent Developments</h2>
In a special meeting convened to consider options for monetary policy responses to the economic effects of the novel coronavirus disease (COVID-19), members commenced their discussion with a review of recent developments. The outbreak was noted as first and foremost a public health issue. Many countries were shutting their borders and placing restrictions on businesses and individuals to slow the spread of COVID-19. This was causing very significant disruption to economies around the world.
Financial markets had been very volatile and there had been sharp falls in the prices of risky assets as market participants struggled to price the risks, given their unprecedented nature. Equity prices in the advanced economies, including in Australia, had fallen by around 30 per cent. The falls had been broadly based across sectors, although equity prices in the energy and tourism sectors had fallen particularly sharply. The equity prices of banks had also fallen significantly, although it was recognised that the capital and liquidity positions of banks had been strengthened over the prior decade.
Liquidity in credit and money markets was very poor and the market for corporate bond issuance was essentially closed to all but the very highest quality borrowers. Credit spreads in corporate bond markets had widened substantially, particularly for high-yield bonds, increasing funding costs for corporations. Members noted that any further widening in spreads would translate directly into higher borrowing costs, since government bond yields had very little further room to fall. Yields in money markets had also risen, although banks and highly rated non-financial corporations were still able to access these markets. The Australian banks had strong funding positions and did not need to source additional funding from bond markets in the near term.
Government bond markets had displayed signs of dysfunction, with many participants seeking to liquidate their portfolios. This had also affected traditionally safe and liquid markets, such as the US Treasury market. The increase in yields and volatility partly reflected the unwinding of highly leveraged positions, and the constrained ability of dealers to absorb additional bonds after having reached leverage and capital constraints. The dysfunction in the US Treasury market had spread widely, given its important role as a pricing benchmark for the global financial system.
In foreign exchange markets, large repatriation flows had supported the yen, and the US dollar had appreciated against most other currencies. Members observed that the Australian dollar had depreciated against the US dollar by around 10 per cent over the preceding month, to be at its lowest level since 2002. Among other advanced economies, the exchange rates of commodity exporters such as Norway, Canada and New Zealand had also depreciated notably. Capital flight had been evident across emerging markets, with exchange rates depreciating against the US dollar and sovereign bond yields moving sharply higher.
In response to these developments, a number of major central banks had made sizable interest rate reductions at unscheduled meetings. The Federal Reserve had cut its policy rate by 100 basis points after an earlier cut of 50 basis points. The Federal Reserve, the Bank of England and the Reserve Bank of New Zealand had each lowered policy rates to ¼ per cent, and interest rates were lower than this in Japan and Europe.
Central banks had expanded their standard open market operations to provide short-term liquidity to financial institutions, including by lengthening the terms on which liquidity is extended. To support Australian financial markets, the Bank had injected liquidity through its open market operations, increasing Exchange Settlement (ES) balances from around $2.5 billion to $14 billion. The Bank had also announced that it would be conducting daily operations at one- and three-month terms and regular repurchase operations on terms of six months or longer. In a number of jurisdictions, including in Australia, central banks had stated that they would purchase government bonds in secondary markets to support their smooth functioning.
Members noted that many central banks were introducing additional measures to support market functioning and promote the resumption of activity in corporate credit markets. The Federal Reserve had introduced a commercial paper funding facility to provide a backstop for the market. The Bank of England, acting as agent for the UK Treasury, had announced that it would purchase unlimited amounts of commercial paper issued by non-financial firms with an investment grade credit rating. The Bank of England and the European Central Bank had expanded funding schemes to encourage banks to lend to businesses. There had also been an easing of bank regulatory requirements in many countries.
The Federal Reserve, in conjunction with a number of other central banks, had also lowered the cost and extended the terms of foreign currency borrowing through foreign exchange swap lines. This was designed to alleviate the very high demand for US dollars from non-US entities that had issued debt in US dollars that needed to be refinanced.
Members discussed how these developments and the rapidly changing situation were affecting the outlook for economic activity. The immediate outlook for the Australian and global economies was highly uncertain, but members viewed it as very likely that most countries would experience a very sharp contraction in economic activity. Members considered the information available for the Chinese economy, which indicated that there had been a large contraction in economic activity in the March quarter. Some indicators, such as coal usage, suggested that economic activity in China was beginning to pick up, although it was too early to assess the extent to which activity would recover in the June quarter.
While it was not possible to provide an updated set of forecasts for the economy given the fluidity of the situation, it was likely that Australia would experience a very material contraction in economic activity, which would spread across the March and June quarters and potentially longer. The size of the fall in economic activity would depend on the extent of the social distancing requirements, and potential lockdowns, put in place to contain the virus. The composition of consumption was changing considerably, with spending at supermarkets and pharmacies increasing substantially, while spending on hospitality and other services was falling sharply. Many service industries were being severely disrupted, with significant spillovers across the economy. There were likely to be significant job losses over the months ahead, although the extent of this would depend on the capacity of businesses to retain employees during this period. At the same time, some industries were employing more workers, particularly those involved in the retail supply chain and delivering goods. In time, following containment of COVID-19, the economy is expected to recover, but the timing of this was uncertain.
<h2 id="considerations-for-monetary-policy">Considerations for Monetary Policy</h2>
Following their review of recent developments in financial markets and the implications for economic activity, members turned to how monetary policy could most effectively support the Australian economy through the challenging period that lay ahead.
Members acknowledged that the primary response to the COVID-19 outbreak was to manage people's health, but that other arms of policy, including monetary and fiscal policy, would play an important role in reducing the economic and financial disruption. Members noted the measures that the Bank had taken to support the Australian economy and operation of financial markets over the days preceding the meeting.
The Governor proposed a package of policy measures, which together would assist in supporting the Australian economy through the period ahead. The focus of the package was on ensuring that funding costs were low across the entire economy and that credit remained available to businesses and households. This would help build the necessary bridge to the economic recovery and support that recovery once the COVID-19 outbreak is contained.
The elements of the package were discussed in turn.
1. A further reduction in the cash rate target to 0.25 per cent.
The proposed cut in the cash rate to 0.25 per cent would bring the cumulative decline over the preceding year to 1¼ percentage points. Members noted that this would be a substantial easing of monetary policy, which, to date, had been boosting the cash flow of businesses and the household sector as a whole and also helping trade-exposed industries through the exchange rate channel. Members acknowledged that very low interest rates have uneven effects and negative consequences for some people – especially those relying on interest income – but the evidence was that lower interest rates were benefiting the community as a whole.
Members supported the proposal and agreed that the cash rate would not be increased from its lower level until progress is made towards full employment and there is confidence that inflation will be sustainably within the 2–3 per target cent range. Given this, it was considered likely that the cash rate would remain at a very low level for an extended period. Members also agreed that the cash rate was now at its effective lower bound. Members had no appetite for negative interest rates in Australia.
2. A target for the yield on 3-year Australian Government bonds of around 0.25 per cent.
Members considered a proposal to extend and complement the longstanding approach to target the cash rate, which forms the anchor point for the risk-free term structure, by also targeting a risk-free interest rate further out along the yield curve. The specific proposal was to target the rate at the three-year mark, given its importance as a benchmark rate in financial markets and its role in funding across much of the Australian economy. Such a target would also be consistent with the expectation that the cash rate would remain at a very low level for several years.
Members supported the intent of the proposal and agreed that it would make most sense, including from a communication perspective, to set the target at the same rate as the target for the cash rate, namely 25 basis points. They acknowledged that the target did not need to be achieved precisely every day. Members noted that some time might be needed before yields would fall to the target from their level over the weeks preceding the meeting – of around 45 basis points. Members discussed the importance of the Bank's communication focusing on how this target would both support the economy in the immediate period and assist with a strong recovery once the COVID-19 outbreak has been contained.
Members noted that the yield target would be achieved by regular auctions in the secondary bond market, whereby the Bank would implement a program to purchase bonds of different maturities, given the high level of substitutability between bonds. The Bank would also be prepared to buy semi-government securities to achieve the target and help facilitate the smooth functioning of the bond market, and would work closely with the Australian Office of Financial Management (AOFM) and state government borrowing authorities. Members noted that, although the program of bond purchases would entail an increase in the size of the Bank's balance sheet, the focus of the program would be on bond yields rather than the quantity and timing of bond purchases. The objective of this component of the proposed policy measures would be to add to the downward pressure on funding costs for financial institutions, households and businesses.
Members thought it likely that the target for three-year yields would be maintained until progress was made towards the Bank's goals of full employment and the inflation target. Furthermore, they expressed the view that it would be appropriate to remove the yield target before the cash rate itself was raised.
3. A term funding facility for the banking system, with particular support for credit to small and medium-sized businesses.
The proposed scheme had two broad objectives. The first was to lower funding costs for the entire banking system to ensure a low cost of credit to households and businesses. This objective would complement the target for the three-year bond yield. The second objective was to provide an incentive for lenders to support credit to businesses, especially small and medium-sized businesses. Members agreed that this aspect would be vital as many small businesses would be likely to find retaining staff in the period ahead extremely challenging.
Under the proposed facility, the Bank would provide a three-year funding facility to authorised deposit-taking institutions (ADIs) at a fixed rate of 0.25 per cent, which was substantially below lenders' current funding costs. ADIs would be able to obtain initial funding of up to 3 per cent of their existing outstanding credit until the end of September 2020, and would have access to additional funding if they increased lending to businesses, especially to small and medium-sized businesses, with these funds able to be drawn upon until the end of March 2021. This size of the proposed facility was at least $90 billion. Members endorsed the proposal that no additional allowance be available to finance growth in lending for housing.
Members expressed support for the proposed scheme and discussed some technical aspects. They noted that institutions accessing the scheme would need to provide eligible collateral to the Bank, with haircuts applying to provide appropriate risk mitigation. The interest rate that would apply would be fixed for the term of the funding, which was consistent with the Bank's expectation that the cash rate was likely to stay at a very low level for some time. Members also agreed that including a penalty rate to counteract the risk of a reduction in lending could act as a disincentive for institutions to participate in the scheme. The Governor indicated that the first drawings under the facility would be possible no later than four weeks from the date of the meeting.
The Governor informed members that he understood that the Australian Prudential Regulation Authority (APRA) would support ADIs using the scheme. In addition, the Australian Government was in the process of developing a complementary program of support for the non-bank financial sector, small lenders and the securitisation market, which would be implemented by the AOFM. Members observed that such support would be important to assist non-bank financial institutions and small lenders to continue to provide credit to households and businesses.
4. Exchange settlement (ES) balances at the Reserve Bank to be remunerated at 10 basis points, rather than zero as would have been the case under the previous arrangements.
The Governor outlined the implications of the proposed policy measures for the cash market. The existing ‘corridor system’ means that the balances financial institutions hold with the Reserve Bank overnight earn an interest rate 25 basis points below the cash rate, and in the event that a financial institution needed to borrow from the Reserve Bank overnight, it would be charged 25 basis points above the cash rate. Should the cash rate be reduced to 25 basis points, the interest rate on ES balances would be zero. In view of the significant increase in the balances held in ES accounts resulting from the combined effect of the Bank's enhanced liquidity operations, bond purchases and the term funding program, maintaining a zero interest rate on these balances would increase the costs to the banking system.
Members agreed that such an outcome would be undesirable in the current environment. They endorsed the proposal to alleviate this cost by increasing the rate of interest on settlement balances to 10 basis points. No change to the arrangements for the top of the corridor were proposed. Members noted that the increase in ES balances would be likely to change the way that the cash market operates. In particular, large increases in ES balances could result in the cash rate drifting below the target as transaction volumes in the cash market decline, as had occurred in other countries in similar circumstances.
In considering the overall package of measures that had been discussed, members acknowledged that the term funding scheme and the three-year bond yield target were both significant policy developments that would not have been under consideration in normal times. Nonetheless, members strongly supported the proposed policy response as a comprehensive package to complement the fiscal response announced by governments in Australia in the preceding week or so.
Members endorsed the continuation of close policy coordination that had been taking place among the Bank, the federal and state governments and government agencies. They expressed the view that, in the Bank's communication, it would be important to emphasise that the Bank expected a recovery once the COVID-19 outbreak has been contained, and that the recovery would be supported by the low cost of funding across the economy.
<h2 id="the-decision">The Decision</h2>
The Board agreed on a package of measures, comprising four elements, namely:
<ul>
<li>a reduction in the cash rate to 0.25 per cent</li>
<li>a target of 0.25 per cent for the yield on 3-year Australian government bonds</li>
<li>a term funding facility to support credit to businesses, particularly small and medium-sized businesses</li>
<li>an adjustment to the interest rate, to be 10 basis points, on ES balances held by financial institutions at the Bank.</li>
</ul>
The measures would be announced in a media release at 2.30 pm AEDT the following afternoon, 19 March, following processes to ensure coordination of related policy announcements by APRA and the AOFM. The Governor would provide further elaboration and take questions at a press conference to be held at the Bank at 4.00 pm AEDT on the same day.
To read the meeting minutes on the RBA website, <a href="https://www.rba.gov.au/monetary-policy/rba-board-minutes/2020/2020-03-18" target="_blank">click here</a>.
</body></html>

jrobinson-rf4aSBido9

Monetary and fiscal policy to play important role in reducing economic and financial disruption: RBA March emergency meeting minutes

<html><body>
<h2>OPINION:</h2>

Earlier this month, I wrote about <a href="/expert-insights/buying/how-will-the-coronavirus-impact-australia-s-property-market">how the market will react to the Coronavirus (COVID-19)</a> before it became a pandemic. Now, three weeks on, we have seen the impact it has on numerous <a href="/guides/covid-19-how-to-adapt-to-working-from-home">businesses and our daily lives</a>. Currently, Australians are living through one of the <a href="/news/covid-19-how-the-world-previously-recovered-from-sars-and-whether-or-not-we-can-do-the-same-this-time-round">most significant economic and social upheavals</a> in our history.

For the real estate industry, the most direct impact from changes announced by the government would certainly be the social distancing restrictions prohibiting open inspections and auctions. These restrictions have forced a lot of new changes to the way they operate, including virtual inspections and online auctions. Last weekend we saw a mix of selling via online and phone auctions, as well as going back to more traditional ways of selling such as private sale or selling by tender.

Virtual Reality for real estate has been around for many years, allowing people to “try before you buy” without spending time and money travelling to scope out properties. However, the traditional open house has always proved popular as one can physically see, touch, hear and even smell the house and environment they may potentially be living in. But with these restrictions in place now, <a href="/guides">technology will again come into the forefront</a> and will eventually become the new norm.

While the industry is able to change and adapt, the more telling signs will be the impact on the number of listings and days on the market. From the seller’s point of view, if they are not under pressure to sell, they may hold off until after this pandemic is over. On the other hand, if we continue to see job losses, many house owners under financial stress may be forced to sell.

For investors, at a time when many people sit on the sidelines waiting to see what’s going to happen, many will see this as a great opportunity to buy a property considerably cheaper than they would have a few weeks ago and much cheaper than they will have to pay for it in 12 months.

The government has no choice but to offer relief for those affected by the crisis. The Prime Minister reinforces that they are “building bridges” to help us get to the other side. At this stage, it looks like commercial and residential landlords will be receiving some type of support, such as concessions on negative gearing and land tax. This will mean they will be asked to forgo rent, hence easing some pressure off renters. Already several major retailers, particularly those in shopping centres, have said they will not pay rent while closed. This is likely to extend to office tenants that are under similar stress.

The RBA and the government’s focus is on supporting businesses and households who will suffer significant income hits, forcing an emergency rate cut to a record low of 0.25%. RBA governor Phillip Lowe explained,

<blockquote>
“We are clearly living in extraordinary and challenging times, the Coronavirus is first and foremost a very major public health issue, but it’s also become a major economic problem and it’s having deep ramifications for financial systems right around the world.”
</blockquote>

It is still uncertain as to what the ultimate economic impact of COVID-19 will be, as well as what the fall out will be for property. However, with most economists accepting that we’re heading for, if not already in, a recession, some are wondering if COVID-19 will finally cause our property markets to crash. 

The bright side is that historically, after each global disruption, there has been a rebound and increase in property prices, and there is no reason to suggest this will be any different as the underlying property fundamentals are still strong.

<a href="/news/covid-19-understanding-what-you-can-and-cant-control-the-importance-of-cross-referencing-facts">Look after one another</a> and <a href="/guides/covid-19-how-apartment-dwellers-can-keep-themselves-safe-during-self-isolation">stay safe</a>.
</body></html>

Changes the real estate industry will experience as a result of the Coronavirus

<html><body>
Along with home delivery of groceries, pharmaceuticals and alcohol, demand for food delivery is booming.
Services such as Uber Eats and Deliveroo have become essential to cafes and restaurants that can now only sell takeaway food.
It is good news for the likes of Uber, whose stock price has risen since it announced a ten-fold increase in the number of restaurants signing themselves up to <a href="https://au.finance.yahoo.com/news/uber-eats-growth-coronavirus-delivery-140101683" target="_blank">Uber Eats</a>.
But it’s a situation that has provoked serious questions. Not only about whether delivery services are safe, but <a href="https://www.propertyobserver.com.au/https://www.abc.net.au/radionational/programs/godforbid/the-covid-19-conundrum/12095750" target="_blank">whether it’s ethical to use them</a>.
Digital platforms like Uber Eats and Menulog are not, after all, ideal employers. In fact, they don’t regard themselves as employers at all, merely facilitators of work by “independent contractors”.
Food delivery drivers and riders often work for <a href="https://www.theguardian.com/australia-news/2019/nov/20/food-delivery-bike-couriers-in-australia-being-underpaid-by-up-to-322-a-week" target="_blank">less than the minimum wage</a>, and have no employee rights such as sick leave.
Now we are collectively relying on them to provide an essential service during social distancing, we need to ask what, as a society, we owe these workers in return.
<h2>Vulnerable to exploitation</h2>
We’re interested in how this economic crisis affects food delivery drivers and riders due to our research into the experience of migrant gig workers.
Our research has found migrants are already “socially distanced”, without deep networks of family or friends. They are vulnerable to exploitation and discrimination.
Most food delivery work is done by migrants, through third-party digital platforms like Uber Eats and Menulog. The platforms treat drivers and riders as independent contractors, not employees with the protections and rights of employees.
A 2019 survey <a href="https://www.premier.vic.gov.au/revealing-the-true-size-of-australias-gig-workforce/" target="_blank">commissioned by the Victorian government</a> suggested about 7% of the workforce used digital platforms to get gig work, the most common being Airtasker (35%), Uber (23%), Freelancer (12%), Uber Eats (11%) and Deliveroo (8%).
Previous research suggests <a href="https://theconversation.com/the-way-they-manipulate-people-is-really-saddening-study-shows-the-trade-offs-in-gig-work-79042" target="_blank">many choose gig work</a> simply because it is better than other forms of low-paid work.
Now food delivery workers face pressure from those displaced from such jobs in hospitality or retail. Complicating the situation is the lack of clarity about whether those on temporary work visas are <a href="https://www.theguardian.com/business/2020/mar/22/what-australias-189bn-coronavirus-economic-rescue-package-means-for-you" target="_blank">eligible for income support</a> announced for other workers.
Platforms don’t owe gig workers a minimum wage so can sign up as many “independent contractors” as they like. This improves the service for customers, and increases profit for the platform, but means individual deliverers make less money.
<h2>Increased health risks</h2>
Many delivery services are <a href="https://www.huffingtonpost.com.au/entry/coronavirus-australia-uber-eats-deliveroo-drive-thru_au_5e71a846c5b63c3b6486e11a" target="_blank">implementing contactless delivery</a> procedures. But the lack of defined employer responsibility in the platform economy means patchy attention to the extra physical and mental health risks gig workers now face.
Unions and others have urged delivery platforms <a href="https://www.propertyobserver.com.au/https://www.abc.net.au/news/science/2020-03-06/gig-economy-workers-uber-deliveroo-ola-coronavirus-outbreak/12022072" target="_blank">to provide protective equipment</a> such as gloves, face masks and sanitisers. Responses from platforms have been limited.
This was Uber Eats’ response on March 17, by its regional general manager for the Asia Pacific, <a href="https://www.uber.com/en-AU/newsroom/covid19aus/" target="_blank">Jodie Auster</a>:
Our plan to address challenges born by COVID-19 includes making A$5 million in funding available for independent restaurants across Australia and New Zealand. The multi-million dollar fund will allow restaurants to deploy promotions to attract customers and will help restaurants time promotions to suit their individual business needs.
What Auster didn’t mention was a plan to issue safety gear, though she did note the company had started a campaign “reminding Uber Eats users that they can request deliveries be left on their doorsteps”.
Not surprisingly, delivery workers are scared <a href="https://www.propertyobserver.com.au/https://www.abc.net.au/radionational/programs/drive/union-seeking-protections-for-delivery-drivers/12094366" target="_blank">they will catch the coronavirus</a>.
Uber says it will financially assist drivers and riders “diagnosed with COVID-19 or placed in quarantine by a public health authority” for a period of <a href="https://www.uber.com/en-AU/newsroom/covid19aus/" target="_blank">up to 14 days</a>.
But what if a worker with viral symptoms wants to self-isolate as a precaution? There’s no sick leave or workers compensation, and they risk “deactivation” if work isn’t accepted.
<h2>Legal protection</h2>
Social distancing measures mean the delivery economy and the health of the general population are now intimately linked.
To secure and safeguard this now essential service, it is time the law ensured gig workers have the same legal rights and protections as other employees.
We need the delivery drivers coming to our doors to be healthy. That health depends on their safety as well as <a href="https://www.theguardian.com/world/2020/mar/18/food-ordering-safe-ethical-coronavirus-with-seamless-uber-eats-should-i-get-takeaway" target="_blank">economic and social inclusion</a>.<img src="https://counter.theconversation.com/content/134406/count.gif?distributor=republish-lightbox-basic" alt="The Conversation" width="1" height="1" style="border: none !important; box-shadow: none !important; margin: 0 !important; max-height: 1px !important; max-width: 1px !important; min-height: 1px !important; min-width: 1px !important; opacity: 0 !important; outline: none !important; padding: 0 !important; text-shadow: none !important;">
<a href="https://theconversation.com/profiles/tyler-riordan-1002045" target="_blank">Tyler Riordan</a>, PhD Candidate, <a href="https://theconversation.com/institutions/the-university-of-queensland-805" target="_blank">The University of Queensland</a>; <a href="https://theconversation.com/profiles/gerhard-hoffstaedter-9125" target="_blank">Gerhard Hoffstaedter</a>, Associate professor, <a href="https://theconversation.com/institutions/the-university-of-queensland-805" target="_blank">The University of Queensland</a>, and <a href="https://theconversation.com/profiles/richard-robinson-958290" target="_blank">Richard Robinson</a>, Research Fellow/Hospitality Management, <a href="https://theconversation.com/institutions/the-university-of-queensland-805" target="_blank">The University of Queensland</a>
This article is republished from <a href="https://theconversation.com" target="_blank">The Conversation</a> under a Creative Commons license. Read the <a href="https://theconversation.com/delivery-workers-are-now-essential-they-deserve-the-rights-of-other-employees-134406" target="_blank">original article</a>.
</body></html>

Delivery workers are now essential, they deserve the same rights

<html><body>
The novel coronavirus sees Australia facing major unprecedented health and economic crises. The key to preventing a downward spiral of the economy is to avoid a collapse in incomes of newly laid-off workers who won’t be able to afford what they normally purchase, and temporarily closed businesses which won’t be able to pay rents or other fixed costs, nor buy goods and services to trade.
It is likely that once a vaccine is delivered by science, or even before, the economic recovery will begin. Thus the question: what are the most equitable ways to handle this major short-term trauma?
There is an instrument that should be used to add to the size and efficacy of the necessary fiscal boost. Income contingent loans provide extra financial support without threatening future fiscal solvency.
<h2>What are income contingent loans?</h2>
Most people in Australia would be familiar with our HECS (Higher Education Contribution Scheme) for tertiary education fees. Students take a loan from the government to cover the cost of their university now, and pay it back when they are earning over a certain threshold in the future.
In what was a world-first, Australia implemented this style of loan scheme in 1989 and it has now been copied in <a href="https://www.sciencedirect.com/journal/economics-of-education-review/vol/71/suppl/C">around ten other countries</a>.
For those with a HECS debt, when incomes are low in certain periods, such as from unemployment, looking after an infant or caring for aged parents, no repayments are required at that time.
The government gets the money back later when the debtor’s financial situation has improved. This is known as an “income contingent loan”.
<h2>How could we use these loans for the COVID crisis?</h2>
It’s useful to distinguish three categories of financial stress that have emerged and which an income contingent loan could assist:
1) for individual employees recently, or soon to be, laid off
2) small businesses forced by health rules or insufficient trade to suspend activity
3) large businesses forced by health rules or insufficient trade to suspend activity.
Income contingent loans can be designed for all three cases although each is quite different.
1. Now jobless employees
For employees now jobless, a HECS-type system could take the form of the government providing a fixed payment (for example $5,000) per person. Some part of that payment would be required to be repaid according to existing (or new) HECS parameters.
Those people whose incomes do not recover repay nothing, or much less than those who regain their financial security (who would repay fairly quickly). The experience of 30 years of efficient HECS collection, including lessons learned, has shown us this would all be administratively straightforward.
2. Affected small businesses
In the case of an income-contingent loan for business, a different approach should be used, that doesn’t involve personal incomes. What is needed instead is a revenue-contingent loan – a system designed and promoted by Linda Botterill and Bruce Chapman nearly 20 years ago.
The reporting of business revenue is a quarterly legal requirement of business through the existing Business Activity Statement which is used to collect the GST. Unlike profits, revenue cannot legally be manipulated to suit the timing of repayments. The revenue-contingent loan obligation would be linked to the Australian Business Number.
In the case of a small business, the government could provide a loan, which would be capped at a level reflecting a firm’s capacity to repay when revenues recover. This could be a fixed amount (for example 25%) of the average of the past three years of annual revenue.
To minimise the chance of non-repayment, eligibility could be restricted to firms that have a good chance of future solvency as reflected, for example, in them having been around for a fixed number of years (for example three years).
The government would need to set a repayment rate, and past modelling has revealed small rates of say 5% to 8% of future annual revenues would be sufficient.
To make sure all this would be equitable for business and healthy for future budgets, the government would need to now model different loan amounts, and different collection and interest rates.
Modelling the different assumptions for budgetary planning would be required to be more precise about the policy details.
3. Bigger businesses
In the case of assistance for not-so-small business, the sums of money needed for the current situation necessitate the involvement of the banks in cooperation with the government.
Government is not equipped to take over large-scale commercial borrowing. But a revenue-contingent loan would still have an important role to play in such a partnership with commercial banks for current not-so-small financial borrowing needs.
The arrangement of joint bank and government lending would be the government providing a revenue-contingent loan which is a proportion of the bank loan. The government loan could repay the bank loan in the very short-term until business reopens and recovers.
A partnership of this kind would be ideal for business, which then has the capacity to repay the normal loan even when there is no short-term revenue coming in.
It would also be beneficial for the banks, which would then have far higher prospects of full loan recovery. It also provides a future return to the taxpayer for the government support of banks during these difficult economic times.
The provision of income contingent loans to individuals, and the revenue contingent loans for business, would have major potential to sustain the Australian economy during a sharp temporary downturn, while not putting additional pressure on future fiscal solvency. This is a bridge to a sustainable recovery.
The authors are fellows of the Academy of the Social Sciences Australia. However these views are their own and not representative of the Academy.<img src="https://counter.theconversation.com/content/134998/count.gif?distributor=republish-lightbox-basic" alt="The Conversation" width="1" height="1" style="border: none !important; box-shadow: none !important; margin: 0 !important; max-height: 1px !important; max-width: 1px !important; min-height: 1px !important; min-width: 1px !important; opacity: 0 !important; outline: none !important; padding: 0 !important; text-shadow: none !important;">
<a href="https://theconversation.com/profiles/linda-botterill-92314" target="_blank">Linda Botterill</a>, Professor in Australian Politics, <a href="https://theconversation.com/institutions/university-of-canberra-865" target="_blank">University of Canberra</a>; <a href="https://theconversation.com/profiles/bruce-chapman-2186" target="_blank">Bruce Chapman</a>, Director, Policy Impact, College of Business and Economics, <a href="https://theconversation.com/institutions/australian-national-university-877" target="_blank">Australian National University</a>; <a href="https://theconversation.com/profiles/glenn-withers-12585" target="_blank">Glenn Withers</a>, Professor of Economics, <a href="https://theconversation.com/institutions/australian-national-university-877" target="_blank">Australian National University</a>, and <a href="https://theconversation.com/profiles/warwick-mckibbin-9129" target="_blank">Warwick McKibbin</a>, Chair in Public Policy, ANU Centre for Applied Macroeconomic Analysis (CAMA), <a href="https://theconversation.com/institutions/crawford-school-of-public-policy-australian-national-university-3292" target="_blank">Crawford School of Public Policy, Australian National University</a>
This article is republished from <a href="https://theconversation.com" target="_blank">The Conversation</a> under a Creative Commons license. Read the <a href="https://theconversation.com/give-people-and-businesses-money-now-they-can-pay-back-later-if-and-when-they-can-134998" target="_blank">original article</a>.
</body></html>

Give people and businesses money now they can pay back later (if and when they can)

<html><body>
EXPERT OBSERVER
Economists just love to forecast. And forecast often. Indeed they can’t help themselves – even when there is a paucity of past experiences to provide guidance, economists are out there forecasting.
At this stage, clearly it is near impossible to make accurate predictions. Much depends on how quickly the number of COVID-19 cases can be controlled. Also much depends on how quickly treatments and a vaccine can be found for the virus.
These are extraordinary times with no exact precedent.
The best approach to forecasting is shown by the International Monetary Fund, expressing in general terms the likelihood of a global recession in 2020 but not speculating on the size of the fall.
Australia is also at risk of recession. But it is important to note that the Reserve Bank and Federal, State and Territory governments are providing massive support for the economy and financial markets. The economic impact of COVID-19 is also quite variable across businesses and sectors. Travel, recreation and hospitality businesses have been most affected. But supermarkets, electrical goods stores, some transport businesses and sporting goods retailers have noted firmer demand. And infrastructure construction has been little affected.
Notably, in past recessions caused by an external shock (such as 1975 due to the oil price shock), the Australian economy has bounced back quickly. But again, much depends on how quickly the virus can be contained.
<a href="https://www.propertyobserver.com.au/images/2020/3/27/recessions%201.png" target="_blank">Click here</a> to enlarge: 
 <img src="https://www.urban.com.au/images/2020/3/27/recessions%201.png" alt="">
Source: CommSec 
The Global Financial Crisis (GFC)
The keenness for economic forecasting was certainly a feature of the Global Financial Crisis (GFC) – an economic event with few parallels. Economists were certain that Australia would follow the world into recession. But recession was avoided. (A recession is typically defined as two consecutive quarters where economic activity (gross domestic product or GDP) declines.)
In October 2008 and February 2009, massive stimulus was provided by the Government and central bank, and it worked to stabilise the economy. In fact when we look back at the GFC many actually believe that the economic support measures were too generous. The economy contracted 0.5 per cent in December quarter and GDP bounced back by 1.0 per cent in the March quarter. The economy didn’t experience another quarterly contraction in output until March 2011 (Cyclone Yasi) even including the period of the 2009 swine flu.
Past recessions
But this period is different. It has been caused by an external shock – and indeed a medical, not financial shock. Most downturns or recessions – both here and abroad – have occurred through financial means, basically policy mistakes. That is, central banks have responded to periods of “irrational exuberance” by lifting rates too far, causing people to cut spending, and causing businesses to trim spending, hiring of staff and investment.
So when have recessions occurred in Australia? There have been seven periods of recession since quarterly records were first maintained in 1959: 1961, 1971/72, 1975, 1977, 1981/82, 1982/83 and 1991 (many observers view the period from 1981-1983 as one event). Clearly there were also economic downturns before 1959 such as the Great Depression.
The common finding is that most of these periods of recession also occurred in advanced nations, notably the US. Most recessions occurred after a period of tighter financial conditions.
One downturn of note was 1975. And the US and other advanced economies also experienced recessions at that time. The US was in recession from November 1973 to March 1975. And a key cause was an external “shock” – a financial rather than medical event – the first oil shock in 1973 when oil prices soared by 400 per cent in response to an oil embargo. Central banks responded to soaring inflation by lifting interest rates.
In January 1973 the 90 day bank bill rate was 4.70 per cent. Rates steadily increased over 1973 and 1974, peaking at 21.75 per cent in May 1974. Ahead of the 1975 recession, 90 day bills still stood at 9.8 per cent.
Interestingly the Australian economy contracted by 2.6 percentage points over the September and December quarters of 1975 and then rebounded 4.4 per cent in March quarter 1976, expanding over the next year.
<a href="https://www.propertyobserver.com.au/images/2020/3/27/recessions%203.jpg" target="_blank">Click here</a> to enlarge:
<img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2020/3/27/recessions%203.jpg" alt="">
Source: CommSec 
Medical emergencies
Three medical emergencies that are most cited are SARS (Severe Acute Respiratory Syndrome) in 2003, swine flu in 2009 and the 1919 Spanish influenza. The SARS epidemic first appeared in late 2002 in Guangdong, China and ended in July 2003. Swine flu appeared in April 2009, extending to August 2010. 
The main impact SARS had on the Australian economy was on the travel sector. Australian GDP was weak in 2003, rising just 0.4 per cent in the first half before rebounding 3.4 per cent over the second half of the year.
Assessing the impact of the 1919 Spanish flu is complicated by the end of World War 1. It has been estimated that real aggregate gross domestic product declined by 9.5 percent between 1914 and 1920. The loss of 60,000 service people in the war depressed economic activity, and extended through the early 1920s.
Unemployment
In past economic downturns, unemployment has understandably lifted. But, as stressed, no two periods are the same. While Australia didn’t experience a recession in the GFC, the unemployment rate did lift in the slower economy – lifting from 4 per cent to 5.9 per cent in the space of 11 months. 
In the recessions of 1990-1991 and 1981-83, unemployment rose from 5-6 per cent to 10-11 per cent in around a two-year period.
In the current period, the jobless rate stands at a near 8-year low of 5.1 per cent. As the downturn has been caused by an external ‘shock’ the jobless rate will likely rise more quickly. A raft of retail, hospitality, arts and recreation staff have been stood down. However, job creation is occurring in supermarkets, grocery stores, some health businesses and delivery/courier businesses.
While unemployment will likely lift quickly to record levels, the government has lifted cash payments to prevent broader job losses. It is anticipated that jobless rates will fall quickly when the virus is contained and businesses are allowed to re-open.
<a href="https://www.propertyobserver.com.au/images/2020/3/27/recessions%204.jpg" target="_blank">Click here</a> to enlarge: 
<img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2020/3/27/recessions%204.jpg" alt="">
Source: CommSec 
<h1>Sharemarket impact </h1>
It may sound like a broken record but these are extraordinary times with no exact precedent. The volatility has been breath-taking as has the speed of sharemarket falls from highs.
After hitting record highs on February 20, the All Ordinaries index entered a ‘bear market’ 12 days later, down 21.3 per cent from highs. A bear market is generally defined as a fall of more than 20 per cent from highs.
The US Dow Jones index took 18 days to fall by more than 20 per cent from the February 12 record high. 
The key issue for investors has been the difficulty in valuing companies in response to a largely unique external shock.
Past sharemarket downturns have been induced by economic or financial factors. 
The speed of the current sharemarket contraction has similarities to the October 1987 sharemarket crash. On both occasions, sharemarkets were perceived to have become expensive, raising the prospect of corrections or a period of market consolidation to restore value for investors.
Interestingly, in the current period, sharemarkets initially were supported despite news of COVID-19. The initial perception was that the virus would be confined to China and the economic impact would be limited to ‘supply chains’ across the globe.
In 2007, it took 84 days for the All Ordinaries index to fall more than 20 per cent from the highs. In 1987, the sharemarket hit highs on September 21. It took 20 days for the All Ords to fall 10.9 per cent off its highs, before the massive 25 per cent fall on October 20.
Compared with 2020, again there was nowhere near the speed of falls in sharemarket declines over periods such as 1970-74, 1981-82, or 1990/91 when there were times of economic downturn.
Looking back even further
Data on the Australian sharemarket goes back to 1875 although the first sharemarket was formed in Melbourne in 1861. There have been numerous events and shocks over time to affect the sharemarket including wars, commodity price shocks (oil, wool), financial crises and the technology crash. 
But in terms of the severity of the downturn and volatility of the sharemarket, the COVID-19 virus crisis has few parallels. It is good to know that there is such a rich history of data to research. The important point is that each experience is different, especially in times of recovery from lows. But experience shows that it can take time for the sharemarket to regain highs. While no two periods are exactly the same, the sharpness of the current decline in share prices may lead to a quicker recovery process.
In relatively recent times, in 1960, it took 42 days for the sharemarket to fall 20 per cent from the September 16 high. It actually took 717 days for the sharemarket to regain its 1960 highs.
In the Great Depression, it took 6½ years for the Australian sharemarket to regain the February 1929 high. And it took more than 6 years for the September 1875 high to be exceeded.
Still, in weak economic times and affected by the Spanish flu, the sharemarket actually rose 19 per cent over 1919 and 1920.
Residential property prices
In Australia, consistent data on home prices goes back to 1980. It is also important to note that there can be marked differences in property cycles. For instance in the current environment, Perth and Darwin are at different points in the cycle from, say, Hobart or Canberra.
In the 1982 recession, house prices peaked in April 1982 and fell 6.4 per cent over the next year. It took 21 months to regain its previous highs.
In the 1990/91 recession there was no appreciable downturn in house prices.
In the 2007/08 GFC, house prices peaked in February 2008 and then fell 8.5 per cent over the next 11 months. It took 21 months for house prices to regain previous highs.
In the current period, house prices fell 9.3 per cent in the 21 months from October 2017. In the recovery since August 2019, house prices have lifted 7.8 per cent.
<h1>What are the implications for investors?</h1>
These are extraordinary times. Australia and the globe are experiencing a shock like no other. But it is important to note – unlike periods such as the Great Depression – governments and central banks are ‘doing all that it takes’ to support businesses, workers and the more vulnerable members of society. 
Labs are working on vaccines and treatments such as those for malaria and tuberculosis are showing promise in killing the virus.
Economies were in good shape ahead of the crisis, in fact it was hard to find better economic ‘fundamentals’ in Australia.
While it will be hard to avoid recession in Australia, it is not impossible. Sharemarkets will settle when virus cases peak (the curve flattens). And while unemployment will likely lift to historic highs, people will quickly return to work when businesses are allowed to re-open.
<a href="https://www.propertyobserver.com.au/images/2020/3/27/recessions%202.png" target="_blank">Click here</a> to enlarge: 
 <img src="https://www.urban.com.au/images/2020/3/27/recessions%202.png" alt="">
Source: CommSec 
CRAIG JAMES is the chief economist at <a href="https://www.comsec.com.au/default.aspx" target="_blank">CommSec</a>.
</body></html>

COVID-19

Editor's Picks

Have something to contribute?

Developments

New apartments

New townhouses

News

COVID-19

Editor's Picks

Receive the latest news stories to your inbox

Have something to contribute?

Developments

New apartments

New townhouses

News