COVID-19 impacts on the Australian economy & housing market

paging @Redom

now we are 7 months in to this new dynamic, any thoughts or revisions on your original opening post for this thread ? im sure theres many others besides myself who would be interested in this. thanks

 

At the time of writing OP, the government hadn't put in JobKeeper, JobSeeker, the cash flow boost was much smaller (25k vs 100k), and the round one stimulus program was around $30bn, vs a ~$200bn+ total package that has actually been put in place. Liquidity in credit markets was a real risk too - the RBA have handled this deftly with facilities and acted as a liquidity bridge themselves.

Privately on the fiscal side, I was shocked at the small size of stimulus as a complete mis-read of the economic factors that were about to hit. The government was trying to save us from recession in early-mid March, and appeared to lack realisation of how bad it could go (that benchmark was near impossible). Realistically I'm a private market participant now (no access to the machinations of what's happening behind the scenes), and I'm sure Treasury were simply doing the pre-work to the biggest stimulus program ever, that was released a week or so later.

It was clear that governments needed to step up in mid march, and they did once they worked through the details of fast-paced massive stimulus programs.

The rapid change in direction in house prices is largely over. Speaking housing market exclusively, price data went from very much boom like month on month price growth in major markets, to rapid price falls in month on month data very quickly. At the time I expected the fastest fall in price growth, I think once there's some solid charting on it, looking at inflexion points on price growth data will likely show this (although there are some comparable periods too around when APRA restrictions were put in place). Activity also halted, which was largely expected too.

Overall the size of stimulus is enormous. It has put a floor on the actual quantum of price changes to be relatively modest (which will also be looked back on as an important intervention given the potential consequences of a wipeout of housing values).

Will unpack my thoughts on future directions in more detail soon.

 

thank you @Redom , always appreciate your commentary.