We can’t resume publishing for the year without first taking into account the devastating and deadly bushfires that ravaged the country.
Although it is still too early to determine the economic effects of bushfires, according to the Insurance Council, early estimates of insurance claims close in at half a billion dollars and are expected to continue to increase.
The negative tax impacts on agricultural production and food prices, market sentiment and the tourism industry would be significant, while the smoke’s duration and health effect appears to be unprecedented.
Moody’s Analytics economist Katrina Ell said that given the size of the fires, the possibility of wider macroeconomic spillovers this season is high, since she believes the chances were already strong that at its next meeting, in February, the Reserve Bank would cut interest rates to reduce the cash rate to 0.5 percent, since fires raise those chances.
Reserve Bank Governor Philip Lowe has been under pressure not to further cut interest rates when the Reserve Bank meets at the beginning of February.
Quick refresh: Property, markets and the built environment
In 2019, we returned to our desks to the Opal Tower’s abrupt pre-Christmas evacuation, an ominous start to a year for an sector facing significant volatility in residential costs, and the forthcoming final report from the royal commission on banking. (Read more about investment in Sydney’s real estate here)
And with news that Opal residents were given the all-clear to return before Christmas, a big year of property was booked by the saga.
Low interest rates and loosening lending policies by banks boosted property markets, with residential markets coming to a high end of the year, rising 4 percent over the last quarter — the fastest rise in more than 10 years.
The growth cycle of commercial real estate market capital seems to have peaked, with research showing that yields are expected to stay steady in the new year as low interest rates and strong, albeit slow, economic growth supports demand for Australian commercial property.
Dexus eventually reached a deal with the Queensland government in construction news for its $2.1 billion renovation plans for the Eagle Street Pier at Brisbane. Geon Property is set to kick-off work on its $750 million Albion Exchange project within Brisbane’s inner north, after winning first stage approval.
Mirvac ended 2019 with the $200 million purchase of Melbourne’s 7-23 Spencer Street site for Chinese developer Nuway Wy.
Elsewhere, Victoria has continued to refine its shortlist of development bidders on the VicTrack site for Melbourne’s Treasury Square urban regeneration project, with up to 130,000sqm of prized commercial space available for grabs. The tender is scheduled to finalize before mid-2020.
In Melbourne, Lendlease moved the $1.2 billion Victoria Cross over-station construction tower in North Sydney to its Australian Prime Property Fund with a 25 percent stake. The 40-storey office building is expected to add 58,000sqm of commercial space to the fast-transforming second CBD from Sydney.
Meanwhile, a new green home loan worth up to $60 million has been launched by the government’s Clean Energy Finance Corporation which will offer borrowers a 0.4 percent discount on their home finance.