An extremely unlikely alliance has been formed. Tenants and landlords suffer through an awful week for Australia’s employment. Retailers are also suffering.

COMMENTARY

NEWS SUMMARY

Key themes:

• COVID-19’s impact on the retail industry has been huge. Retailers are facing indefinite store closures

• Auctions can no longer be held in person, instead real estate agencies are moving to online systems

• Governments across the country are supporting tenants to ensure they are not unfairly evicted because of coronavirus-induced circumstances

Residential sector

Coronavirus forced auction clearance rates down last week – the AFR reported that the clearance rate fell to 61.3%. (Auction clearances tumble amid virus fears – Michael Bleby & Simon Evans, 22/03/20)
 

Whilst auction clearance rates were down, the AFR reported that property purchasers are rushing to buy homes to avoid being cut off from the market by a looming social lockdown. Last week, agencies reported an abnormally large number of sales were made prior to auction for this reason. (Property panic buying is happening – Nila Sweeney, 20/03/20)
 

The Age estimated that housing market transactions could fall 50% over the next few months. Job losses, and the government’s ban on auctions and open for inspections (OFIs) announced on Wednesday, are two of a myriad of factors influencing buyers’ decisions. CoreLogic estimates that the shock to the market will be bigger than the 25% fall during the GFC. (Housing market to slump as ‘open for inspections’ cancelled – Jennifer Duke & Shane Wright, 25/03/20)

The AFR reported that agencies across the country are struggling to adjust to the federal government’s guidelines, with many agents rushing to sell properties before the auction ban came into effect. Most agencies are using online platforms to facilitate auctions, although most staff members are rushing to get up to speed with the technicalities. It is uncertain how the technology will handle auctions until they begin. (Online auction doubt as agents struggle to catch up – Nila Sweeney, 26/03/20)

The Urban Developer explores the options available to auctioneers during this ‘step up’ to technology-based auctions in Make Use of Technology: Auctions, Open Homes in Coronavirus Shut Down.

Rental market

The AFR reported that the NSW Parliament passed a Bill on Wednesday which empowers ministers to ban evictions. This comes after tenant advocates reported that failing to halt evictions and keep rents stable will only encourage the spread of COVID-19. It will be prohibited to evict individuals who have lost their jobs and cannot afford to pay rent if the minister invokes the powers under the new Bill – COVID-19 Legislation Amendment (Emergency Measures) Bill 2020. (Tenants groups call for evictions halt – Michael Bleby, 25/03/20)

The Australian reported that the national cabinet has agreed to make similar rules governing the entire country, with Western Australia following NSW this week. Pecuniary relief may also be provided to tenants to protect them from eviction. Scott Morrison said that landlords may need to take a hit to assist the nation progress through the crisis ‘in the best economic shape possible’. (Temporary rules to protect renters from being evicted from their homes and business properties – Greg Brown, 21/03/20)
 

The Age has alternatively reported a rush in the rental market for people securing houses before OFI bans came into place. Rental agents in South Yarra have reported a 400% increase in interest and applications for some properties. Competition for rental properties has reportedly skyrocketed but local agents are sure it will not last. (As Clare discovered, not all parts of the housing market are slowing – Zach Hope & Clay Lucas, 25/03/20)

Commercial Real Estate offers a positive insight into the future of residential property: There will be a property market on the other side.

Commercial sector — retail

The week was a mess for the retail sector. Sharp declines in sales and strict new social distancing rules have restricted trade for almost all retailers. Over 30,000 employees have been affected by the indefinite closure of many stores just this week including:

• Noni B (Mosaic Brands)

• Rivers (Mosaic Brands)

• Michael Hill Jewellers

• Kidstuff

• Kathmandu

• Rip Curl

• Collette by Collette Hayman

• Strandbags

• General Pants

The Australian reported that Solomon Lew announced the loss of more than 9000 retail jobs due to the closure of all stores under his business Premier Investments. Just Jeans, Peter Alexander and Smiggle are all owned by Premier. Interestingly, the company intends not to pay rent to landlords during this shut down, which has triggered a battle with shopping centre owners. (Premier Retail shuts stores, stands down staff, withholds rent – Eli Greenblat, 26/03/20)

The Age reported that Premier investments has a legal obligation to pay its rent, and therefore shopping centre owners are still attempting to engage in commercial discussions with the retailer. Lew remains clear on his stance of refusing to pay rent, sparking a nation-wide debate about the respective challenges faced by retailers and landlords. It is clear that regardless of whether rents are paid, the retail sector will struggle through the federal government’s COVID-19 policies. (‘Hardest decision’: Premier shuts 900 stores, refuses to pay rents – Dominic Powell & Carolyn Cummins, 26/03/20)

The Federal government is considering offering a stimulus package to assist these retailers. The Australian reported that support relating to rents, rates, taxes and utility bills are all being considered for the retail sector during the virus-led shutdown. The combination of direct fiscal and monetary policy measures directed at small businesses, key sectors, workers, families and welfare recipients will equal $190bn according to Scott Morrison. This provides a small amount of hope to the industry. (Rescue package: rent, tax relief from coronavirus – Dennis Shanahan, Simon Benson & Geoff Chambers, 27/03/20)

The Urban Developer is not optimistic about the retail sector: Lack of Clarity as Retail Confidence Plummets.

Financial sector

The Age reported that Australia’s biggest home lenders will allow up to six months of mortgage holidays to those at risk under the changing coronavirus climate. CBA, NAB, ANZ, Westpac and Macquarie are all participating in the government-suggested initiative. The banks have advised customers to contact them to seek eligibility for an extra 3 months on top of previously announced deferrable mortgage payments. Banks have also slashed borrowing costs and are committed to helping landlords and others during this difficult time. (Big banks may allow up to six months in deferred mortgage repayments – Clancy Yeates, 20/03/20)

Since this announcement banks have been overwhelmed with requests for assistance. The Age reported that NAB is currently seeing one online application for assistance being lodged every 10 seconds, with most requests coming from people in the hardest hit sectors such as tourism. ANZ expects to approve the vast majority of these deferral applications, much to the relief of struggling borrowers. (CBA receiving thousands of hardship requests a day – Clancy Yeates, 24/03/20)

PROPERTY ANALYTICS

Our property analytics includes a simple collection of graphs that we update monthly. We find that it provides us with a high level dashboard to assist us in keeping track of a selection of key statistics.

Feel free to check out our selection of key market analytics:

ARCHITECTURE & DESIGN

OMA wraps glass public walkway around Galleria department store in Gwanggyo

The stone facade of the South Korean building has multi-faceted glass passages cut into it. Tessellated triangles also cover the exterior of the building. Read more at dezeen…

To learn more about Debuilt Property please visit www.debuilt.com.au or email either Paul: pabrahams@debuilt.com.au or Daniel: dburger@debuilt.com.au.

Contact us via phone at +61 3 9988 1929.

You have received this email as a client, friend or due to a past association. If you would prefer not to be included in our email communications please unsubscribe below.