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‘Mounting crisis’: Lockdowns may force RBA re-think on stimulus

“This is a mounting crisis with around 100 days of state-imposed lockdowns so far this year and unfortunately current case numbers mean that number is certain to rise,” ARA chief executive Paul Zahra said.

While retail and construction have been hit hard by recent lockdowns, the property market continues to power along thanks in part to the RBA’s ultra-easy monetary policy settings.

CoreLogic on Monday reported dwelling values nationally lifted by 1.6 per cent through July to be up by 16 per cent over the past 12 months, the fastest increase in more than 25 years.

Sydney property prices increased 2 per cent in July, with the median house value up 2.1 per cent to almost $1,260,000 and apartments lifting 1.6 per cent to about $810,000.

In Melbourne, prices rose 1.3 per cent over the month, with the median value of a house up 1.7 per cent to $946,000 and apartments up 0.4 per cent to $613,000. Canberra’s median house value jumped another 3 per cent to a record $905,000.

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It’s not just the capital cities where values continue to soar. In 70 of the 88 national statistical regions as defined by the Australian Bureau of Statistics, values hit record highs in July.

But CoreLogic research director Tim Lawless said there were signs the national market was losing steam as the monthly growth rate had dropped below the peak in March at 2.8 per cent.

“Worsening affordability is likely a key contributing factor in the slowdown here, along with the negative impact on consumer sentiment as the city moves through an extended lockdown period,” he said.

A major concern for the RBA is how the jobs market will perform under the weight of lockdowns.

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The ANZ’s July job advertisements measure declined by a modest 0.5 per cent. The fall was consistent across the month and did not accelerate as restrictions in Sydney were tightened, ANZ senior economist Catherine Birch said.

During last year’s restrictions, job ads dropped 12.9 per cent in March and 53 per cent in April.

Ms Birch said two key factors were expected to mitigate the effect on the jobs market this time – policy support such as JobSaver, which required businesses to maintain their headcount, and businesses “hoarding” labour to avoid the costs and delays of re-hiring once restrictions eased.

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