2020 really is a year for the record books.
The Dow Jones Index just had its biggest surge since 1933. It rose over 11%.
One wonders what the night traders out here were thinking — but they jumped on board regardless.
The Aussie futures contract surged right alongside it.
We’re going to see a sea of green across the market today.
We might be up for our first sustained rally that can last — I hope I don’t jinx it here — more than a day or two.
Yesterday I floated the worry that Australian miners might be forced to shut their operations.
South Africa and the Canadian province of Quebec are putting the squeeze on.
But not Australia apparently…
Watch for a full shutdown here
The Australian Financial Review reports…
‘BHP chief executive Mike Henry says the government has made clear it wants the resources sector to continue working through the escalating coronavirus lockdown, but New Hope Coal chief executive Shane Stephan says it would be naive to think Australian mines would not be affected by the pandemic.’
We need to know our miners here — those that operate overseas and those that work here in Australia.
One problem is that remote mines usually rely on a ‘fly in, fly out’ workforce.
BHP has Tasmanian workers in WA that can’t get home for their break because of the southern state’s new travel restrictions.
Some mining operations have accommodation that can be used. Many don’t.
It’s clear that the government naturally wants to keep miners employed and the taxes and royalties rolling in.
It all depends on where the COVID-19 virus takes us in the short term…
Your guess is as good as mine here.
Now, let’s move on to something where we can be on surer ground. That’s the real estate market…
Real estate dreams turning to a nightmare for some
My family and I went for a walk yesterday.
My four-year-old daughter Ema was having great fun playing ‘I Spy’. Our baby Luna slept peacefully in the pram.
I happened to ‘spy’ an old house for sale. But the sign out the front showed two new townhouses.
It was an ‘artists impression’ of what could be after development.
The property has a planning permit already in place.
Now, the outlook for real estate is dimming once again.
We’re going backwards again…
I felt for the vendors. A month ago they could have been confident of selling into a rising market.
The odds of a small developer getting finance are not good today.
There’ll likely be many lots coming to the market under duress as COVID-19 exposes overgeared borrowers and the newly unemployed.
A market good for the rich
But what of the rich and resourceful?
They’re going to have a field day!
They have the funds to acquire great sites and wait out the virus.
Nigel Satterley is a name that’s appeared in these pages quite a few times.
He’s a shrewd old veteran of the property market.
What’s he up to?
See for yourself…
‘Rich lister Nigel Satterley and his co-investors have swooped on almost $200 million of development sites in Greater Perth and Melbourne, as they prepare for a rise in housing demand after the coronavirus pandemic passes.’
He’s clearly no fool. One of the development sites for his community in WA is due to have a new train station into Perth by 2023.
The taxpayer will fund the cost of the infrastructure. It just so happens to make his community that little more appealing…
Oh, and what’s this?
The property industry is calling for a big federal first homebuyer ‘stimulus’ to offset the economic weakness.
Anyone with a small amount of study in this area knows these do nothing to boost affordability.
The land market absorbs subsidies, grants, offsets and interest rate reduction like a giant sponge.
This being Australia…such a boondoggle will likely go ahead.
2020 becomes like 2018.
A weak real estate market as banks become conservative with lending, see a rise in bad debts and unemployment spikes.
But shrewd and cash up long-term buyers can acquire good property while this virus plays out.
Then the coming tidal wave of government and central bank stimulus will ignite an enormous boom once the economy returns to normal in about a year.
The infrastructure spending, tax cuts and general stimulus will make sure of that.
Don’t forget that Australian developers were already underbuilding due to lack of credit after the royal commission.
COVID-19 only exacerbates the coming catch up.
This is truly a dip to take advantage of for those that can get the cash or financing and hold for the next big upswing.
It’s one way the rich just keep getting richer.
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