In July this year, amongst the height of the Australian state of Victoria’s lockdown, a woman by the name of Rosie Zarro was working at a gallery. She also held duties as the Commissioner of the Multicultural Council of Victoria.
As part of the Victorian Govts policy to eliminate the spread of COVID19, it was mandated that outbreak hotspots were to be locked down with Police presence to ensure anyone who was diagnosed with the virus was isolated.
One of those hotspots in July were public housing towers in the Melbourne inner North-West.
By effectively locking down the entire estate, public health officials could test everyone there to gain an accurate gauge on who was infected.
Those who tested positive either were confined to quarters or sent to hospital. Medical officials could keep constant watch on those who were quarantined.
But those who tested negative? They had to also stay isolated for the mandatory 2 weeks.
And that’s where services like Rosie’s came in. They were able to provide various levels of support to ensure those who were stuck in place had enough food and mental support while isolated.
In a recent interview with ABC News, Rosie recounted how she felt after both losing her Gallery job and dealing with those forced to isolate and the thought of having to endure a third lockdown period in Melbourne.
“I decided to take two weeks in quarantine now, rather than wait for the third lockdown to come in September,” she said. “It was a bit of a risk waiting until the end of October to come up to Darwin.”
“I didn’t feel mentally that I was going to get through another six weeks in lockdown.”
And it now appears she is not the only one making the same decision to move interstate to escape these lockdowns. In Rosie’s case she moved to Australia’s Northern Territory.
In the same ABC News report a Sydney chef by the name of Lauren Murdoch spoke about having almost no work in her kitchen for months and deciding it was better to go through self-imposed quarantine via moving to the Northern Territory then stay in Sydney.
The Bullo River cattle station some 200 odd kilometres south of Darwin needed a chef.
“I was doing nothing in Sydney, so thought why not,” Ms Murdoch said. “They got back to me and said I was probably overqualified.”
“The best place in Australia to be right now is here on the station — it’s a great job in a great place,” she said
It seems the decision to lift Northern Territory border restrictions with quarantine of 2 weeks for those entering from the most COVID19 affected states are having a big effect on the normally transient population of Darwin.
With a state economy basically stagnant for more than 3 years, the sudden influx of new visitors who are now deciding to stay are now fighting with those who initially wanted to leave deciding they would rather not enter another states months long lockdown for places to settle.
The effects have seen the re-opening of business, a surge in interstate tourists and rising rents.
Let us talk about these rising rents.
Because there is reason to suggest, should this trend continue, that we have a unique opportunity to witness Phil Andersons Real Estate clock in action.
And the turning of the cycle.
The Property Sharemarket Economics (PSE) team study the 18.6-year Real Estate Cycle, 14 years up and 4 down with a mid-cycle recession interrupting the 14 years’ expansion.
We have shown our subscribers that we are right in the middle of the mid-cycle recession of the current real estate cycle. If you want to see how the cycle repeats through history get hold of Phil’s book “The Secret life of Real Estate and Banking” here. Inside this book you will find the Real Estate clock.
For a quick look you could always access your resources page on the PSE website here.
The economy runs in identifiable cycles, we show this like a 24-hour clock. While an economy is not as precise as a watch, the 24-hour property clock acts as a useful guide.
Right now, Darwin is slowly emerging from years of below average growth both economically and population wise. Its population is also transient as Defence and Government personnel get posted into and out of the city. It is also very closely tied with the commodity cycle.
As a test case though it’s ideally placed as a Capital city about to start its path along the property clock.
Per SQM research, week ending 20th September 2020 the 12-month rate of change for house rents in Darwin has seen an increase of 3.7%.
The last quarter saw house rents rise by 10.5% and a vacancy rate recorded in August of 1.1%. Property listings have also been falling since March this year too.
This strongly suggests a trend of rents being bid up in order to secure the best properties as less are being listed for rent.
According to the property clock then, Darwin would be between 2 o’clock and 3 o’clock. So, between Gross rents and Net rents rising.
Now that is established, we can then watch for signs that the clock has progressed to 4 o’clock.
Our subscribers can watch along with us. The Real Estate cycle as its occurring.
Capital cities like Darwin and Perth are also bellwethers for the commodity cycle in Australia. In these cities particularly, rising commodity prices are generally bullish for both their respective economies and land prices.
And they provide key clues as to the future direction of key commodities in Australia like Iron Ore, right up to a likely commodity peak in similar timing with the real estate cycle.
The events leading up to this potential top will be crucial to your own personal investment and trading strategy.
If you want to educate yourself further about the Real Estate cycle, then subscribing to the Boom Bust Bulletin is a great place to start. Click here to find out more.
Best wishes
Darren J Wilson
and your Property Sharemarket Economics Team