From the Boss' Desk... Monthly Market Updates

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End of Financial Year 2020

And so we come to the end of a tumultuous financial year …

It is generally acknowledged that the wider economy was gently slowing down through 2019. And, that was consistent with our experience.

Then … with the economic effects of the summer bushfires and COVID 19, the wider economy fell into a deep funk in the first half of 2020. However, in this case, we certainly saw the short term hit, but I am pleased to report that now we are doing a lot better than many others:

  • Our residential management property portfolio has held firm, and, in the circumstances, finished the year with an almost normal result.
  • Our commercial management portfolio took a very big hit in April, but has bounced back surprisingly quickly. In June we fell only just short of expectations, and by August we expect things to be looking pretty normal again.
  • Our residential sales completely collapsed for April and May, but in June activity and sales transactions were normal.

Why so?

First, the Government support of household incomes through the JobKeeper and JobSeeker programs certainly had a significant impact on tenants’ ability to pay rent. After a few weeks of panic and uncertainty, practically all tenants found they had the ability to meet their lease obligations and pay rent. Our landlords (except for a very few cases) were the beneficiaries. Most of our commercial tenants businesses have recovered quickly.

Second, as soon as people were able to think things through, and move about in the State, we, in the Southern Highlands, have quickly and decisively become beneficiaries. The re-think about crowding into big cities, about crowded public transport and congestion, about the ease of working from home, and so on, has driven people to our town to get a break, to shop and relax, to stay the night, to move here to rent, to look hard at buying a house here, to moving a business here.

It’s a real thing! We are seeing it play out right now!

It’s going to be interesting to see how it does plays out over time. Sure, there will be bumps along the way. Perhaps particularly in the Spring as Government support is reduced. But our sense is that we are seeing a long term beneficial shift for our region.

So, this is a time when you may be looking at the financial performance of your property investment, and maybe making some strategic decisions about it. Time to sell? Time to renovate? Time to invest? Whatever the question is, as it relates to your future plans with property in the Highlands, we can help. Don’t hesitate to contact your Senior Portfolio Manager who will be able to guide you in the right direction.

 

Cheers...

Geoff O'Reilly and the Highlands Property and CIPS Team