Source: Australian Property Journal
THE property industry has welcomed the federal government's $17.6 billion targeted stimulus package in response to the coronavirus (covid-19) pandemic, but said significant challenges remain for the Australian economy.
The Urban Development Institute of Australia's national executive director Connie Kirk said the stimulus should help maintain cash flow, jobs and business activity across the economy but also urged the government to reserve the capacity to introduce a second round of stimulatory measures if the economic effects become worse.
"The economy-wide risks from the coronavirus are not yet fully known, but there are clear signs already that growth is being dampened.
"Housing markets remain vulnerable to the effects of broader economic risks and there is evidence that supply chains for developers and builders are being hurt," Kirk said.
"The economic downturn comes at a time when housing markets had started to show some signs of life across lending and pricing, but the recovery was not yet widespread. In particular, approval and construction pipelines are thin, and the risk is we see them soften further should signs of a buyers retreat emerge," he added.
Property Council of Australia chief executive Ken Morrison said the stimulus package is substantial, well targeted and will have a significant impact, but there is no hiding from the fact that there are tough times ahead.
"Despite this strong stimulus package, there would still be significant challenges ahead for the Australian economy as the public health response to the coronavirus outbreak continued to evolve.
"As governments escalate the public health response, these measures will have their own unavoidable impact on the economy.
"From an economic perspective, the current phase has largely been about our exposure to China. The next phase is likely to be about the impact of an economy that will have gone into partial lock-down.
"While many jobs can be performed from home, you can't build a construction project from your lounge room. Many of these economic impacts are simply unavoidable given how this health challenge is likely to evolve and business needs to prepare for this," Morrison warned.
Master Builders Australia CEO Denita Wawn said the package will assist more than 380,000 small building businesses and tradies in the building industry.
"However, if there is a major contraction in building activity then the benefit of these measures will be blunted. The government must take a strong leadership role in ensuring that construction of government projects currently underway continue and that projects scheduled to commence are not delayed or withdrawn.
"The government could also bring forward expenditure on existing projects. Accelerating construction of current projects and bringing forward construction of shovel ready projects, big and small, would provide an immediate strong impetus for building firms to take up tax write off and investment incentive measures,"
Meanwhile Wawn said the industry is nervous about how protracted the inevitable shortage and delayed delivery of imported building products will be as factories in China remain shut.
"This is a hit to our industry that is looming over the next few months and additional measures and extensions of some of stimulus measures may be required to help the industry weather that storm," Wawn said.
