Commentary

Australia’s performance in the COVID-19 pandemic

It has now been a little over 12 months since the World Health Organisation (WHO) declared COVID-19 a global pandemic. How has Australia performed during the pandemic?

March 31, 2021

It’s hard to believe that we are only a little over 12 months since the World Health Organisation (WHO) declared COVID-19 a global pandemic. After the declaration, a number of market economists expressed the view that Australia was going to experience the worst economic downturn since the 1930s depression and the unemployment rate would hit double digit territory.

The most recent print for the Australian economy showed that GDP rose by 3.1% over 4Q20 and the 2020 GDP contraction was only 1.1%. The strength of the labour market is even more impressive with the ABS reporting that total employment has now surpassed the level recorded in February 2020. The headline unemployment rate also contracted to 5.8% in February 2021.

Recent flash indicators for the Australian economy – business conditions, job advertisements and Purchasing Managers Indices – have all come in ahead of expectations. Our most sensitive commercial property market indicator – leasing enquiry – has picked up across most geographies in 2021 with increased enquiry in the sub 500 sqm cohort of the market.

As we move through the vaccine rollout program, one of the challenges for real estate investors will be to form a view on what COVID-19 related factors are cyclical and how we should adjust our asset allocation strategies to account for structural changes.