Cutting through the noise – In the news

With so much misinformation out there, we have decided to do our best to share with you some of the better articles and data we have digested recently. Our goal is to help you ‘cut through the noise’ and provide snippets of the ‘light at the end of the tunnel’.

We constantly read, review and analyse articles, information and data relating to the economy, government policy, financial and property markets. Our aim is to  educate and empower you, our clients and readers, to make great property, mortgage and money decisions.

We will endeavor to increase the frequency of our updates, which is also supported by our weekly Property Planner, Buyer and Professor Podcast Covid-19 specials. We trust this helps to keep you well informed, whilst also saving you time deciding where to get information from.

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Victoria backtracks on open inspection curbs 

Victoria has backtracked on a tough social distancing rule introduced only last week preventing open inspections of occupied homes, a requirement that would have all but shut down the struggling residential market. 

Consumer Affairs Minister Marlene Kairouz on Monday reversed regulations the government had justified as recently as Friday – on the grounds that an open inspection was no reason for a resident to leave their home under current COVID-19 restrictions on movement – following heavy lobbying by the real estate industry. 

‘Recipe for chaos’: Andrews told to end uncertainty and unveil rental rules 

Thousands of Victorian renters facing possible eviction as a result of the COVID-19 crisis are being forced to haggle with their real estate agents and landlords, who are demanding they provide sensitive and personal financial information. 

Five rental and social lobby groups want the Andrews government to better protect renters by swiftly providing promised new rules on residential evictions. 

And a group representing the nation’s largest developers has warned that asking landlords and renters to negotiate without strict rules was “a recipe for chaos”. 

Prime Minister Scott Morrison declared a six-month moratorium on evictions on March 29. Premier Daniel Andrews has consistently cited this moratorium – despite no new laws being put in place. 

SMEs have two years to pay deferred rent 

Small and medium-sized businesses hurt by the coronavirus economic downturn will be exempted from paying part of their rent and given at least two years to catch up on any deferred payments under a mandatory code of conduct for tenants and landlords. 

Tenants would also have the option to break a lease if their landlord refused to abide by the code and negotiate a rent reduction in good faith. Recalcitrant property owners also risk missing out on concessions offered by state governments, local councils and banks. 

But larger retailers not captured by the code because their sales are greater than $50 million demanded that big landlords, such as shopping centres, embrace the same principles to offer rent relief. 

Government assistance

NSW Government to announce $440 million coronavirus rental assistance with moratorium on forced evictions 

The State Government has announced $440 million in relief for renters and landlords affected by Government-enforced COVID-19 restrictions. 

Half of that money has been allocated to residential renters — a group that had not yet received financial support during the pandemic. 

The package is targeted at keeping people in rentals over the next six months. 

NSW gives 25pc land tax relief to landlords 

Landlords of both commercial and residential properties will gain $440 million worth of land tax relief from the NSW government if they assist tenants hit by COVID-19. 

The land tax relief is expected to be divided approximately 50-50 with around $220 million going to the commercial sector and a further $220 million expected to benefit the residential sector. 

The new initiatives form the NSW government’s response to the mandatory code which the Morrison government announced last week. 

In NSW, landlords will now be able to apply for a land tax concession of up to 25 per cent of their 2020 calendar year land tax liability, but the relief landlords pass on to tenants would need to be of the same value or greater. 

Economy, data and healthcare

Infection rate falls below one, raising hopes virus is fading 

One of the government’s top advisers says the key measure of Australia’s COVID-19 infection rate has fallen below 1 – the point at which the virus begins to fade. 

Melbourne University mathematics professor James McCaw, a co-author of the Doherty Institute epidemiological modelling released last week, said his team had been making estimates of the effective reproduction rate – known as the “Reff” – about twice a week, and are looking to release a public version of the number. 

“There is enough local data now to create a Reff. A fortnight ago we did not have that confidence, but my group’s estimate is it is well under one,” Professor McCaw told The Australian Financial Review. 

Oxford University says its coronavirus vaccine could be ready by September 

A coronavirus vaccine could be available for the general public by September, an Oxford professor has claimed. 

Sarah Gilbert, a professor of vaccinology at Oxford University, is leading a team of researchers in the development of a vaccine that would protect the world against coronavirus. 

In an interview with The Times, the professor said that she and her team have already created a potential vaccine that is due to begin human trials within two weeks. 

Most industry experts say that a vaccine could take as long as 18 months to be developed and distributed globally. 

Prime Minister pivots to an early exit 

Australia’s pragmatic Prime Minister Scott Morrison has, unsurprisingly, pivoted to the possibility of an early release from the lockdown, which if prolonged indefinitely would push the country into an extreme depression with far greater human costs than the capricious coronavirus. 

ScoMo also had no compunction shutting down the NSW premier’s suggestion that the lockdown could continue until we have a vaccine. The narrative has shifted to the Prime Minister flagging that states that crush the transmission quickly could experiment with a more rapid transition to the “new normal” of getting ultra-low-risk, working-age employees back to making a living, which could give them a competitive advantage over states that lag. 

Australia has flattened curve, and US infections about to peak 

Consistent with our contrarian March forecast, Australia appears to have passed through its peak in new infection cases, and successfully flattened its curve, which is no mean feat (see the first screenshot from our real-time tracking systems). And the US infection data is likewise tracing to an April zenith in line with our previous projections (see third screenshot).  

We built this forecasting framework (see the full technical paper here) because we hypothesised that markets would respond positively to passing through the peak in new infection numbers, which appears to have played out over recent trading sessions. This is one of two critical regime changes that we outlined as key for markets. The second is when governments start preparing to reactivate the working age population, which will be crucial for avoiding a protracted depression that could inflict greater human costs on the community than the first-order impacts of the virus itself.  

Since we posited that a six month hibernation of businesses was likely to be highly sub-optimal from a social, human and economic perspective, there has been a sharp pivot in the public debate with numerous leaders calling on the government to consider a more nuanced and adaptable containment strategy. 

How to lift the lockdown in six to eight weeks 

Rather than dragging out the COVID-19 lockdown for six months, Australia should make it short and sharp over the next four to six weeks, according one of the country’s leading biosecurity experts. 

Professor Raina MacIntyre, from UNSW Sydney’s Kirby Institute, says this strategy would “bring Australia down to a very, very low baseline of cases compared to what we’d otherwise be dealing with.” 

But this has to be supported by a parallel strategy that expands testing and gives doctors discretion to test. 

Three steps world leaders must take right now 

Over the past few weeks, I’ve spoken to dozens of experts about COVID-19, and there’s clear evidence that the disease does discriminate in a few ways: it kills the old more often than the young, men more often than women, and it disproportionately impacts the poor. 

But here’s something I’ve seen no evidence of: COVID-19 discriminating on the basis of nationality. The virus doesn’t care about borders. With such an infectious and widespread virus, leaders must also recognise that as long as there is COVID-19 somewhere, it concerns people everywhere. 

Working from home because of coronavirus? You’re now eligible for a new 80 cents per hour tax shortcut 

Claiming tax deductions for working from home due to coronavirus is being made easier. 

The Australian Taxation Office (ATO) is introducing a new method which will allow people to claim 80 cents per hour for all their running expenses, rather than needing to calculate costs for specific running expenses. 

The change will apply from March 1 to June 30, after which the ATO will review the arrangement for the next financial year as the COVID-19 situation progresses. 

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