Welcome to CoreLogic’s housing market update for December 2023.
Recovery from COVID-19 continues across Australia
The recovery from the pandemic-driven recession is well underway across all states and territories, although COVID-19 outbreaks continue to disrupt state economies as they arise. Assuming a successful vaccination program and continued fiscal and monetary policy support, and despite all the considerable uncertainties, we are expecting a strong recovery over 2021.
The Q3 2020 national accounts showed a strong rebound in economic activity across the country, with the exception of Victoria which had significant virus-related restrictions in place that quarter. However, since then, higher frequency data shows that once restrictions were removed, activity lifted significantly in Victoria – a similar experience to elsewhere. Similarly high frequency data show only short-lived impacts from the brief South Australia (November) and Queensland (January) shutdowns, while the impact on NSW of the milder but longer northern beaches shutdown (and broader Greater Sydney measures) is less noticeable, although NSW is lagging on some of these indicators.
These data show that the major hit to activity across the states came through household consumption – particularly in spending on services. Services consumption has seen a broad-based rebound across the states, though both international and domestic border restrictions as well as ongoing work from home policies are likely to see a slower recovery in travel services.
There was less uniformity in the other components of state final demand. Dwelling construction saw large hits in Victoria, NT and the ACT. Business investment declined in all states but saw larger falls in Vic, Tas and the ACT than the other states over the first three quarters of 2020. Government consumption saw the strongest gains in the ACT and the largest three states.
Business conditions have recovered relatively quickly across the states, after reaching a trough in May. The recovery has been strongest in WA and Tasmania but NSW, QLD and SA are also now firmly back in positive territory. Victoria has improved but remains negative with a delayed improvement following ongoing lockdowns. In a levels sense, capacity utilisation shows that activity has also seen a notable recovery, though it has a little further to go to reach pre-COVID levels in NSW, Victoria and QLD and WA. Forward looking indicators suggest ongoing improvements across the states.
In addition to the fiscal support provided by the federal government and impact of record low interest rates, state governments have also provided significant support. For NSW and Victoria this is largely an infrastructure story while most have sought to provide tax relief and support to small business – particularly those hard-hit by recent lockdowns.
The recovery is also evident in labour markets . In December, the level of employment was around or higher than its pre-COVID (Feb.) level in Queensland, WA, SA and the ACT.
For further details please see State Overview January
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