Scott Somerville of Allan Hall Business Advisors recently gave us an insight into the the impact of Covid-19 on the Northern Beaches economy and the flow on to local property prices. Allan Hall Business Advisors is a firm of Chartered Accountants and specialist business advisors established on Sydney’s Northern Beaches in 1957. They are currently ranked 42nd in Australia in the highly regarded Australian Financial Review Top 100 Accounting firms.
With a wealth of experience in a range of business advisory, taxation and accounting services, together with a highly personable style, Scott is widely recognised for his ability to provide advice and business solutions to individuals, small businesses and multinational corporations alike. To get in touch with Scott and the Allan Hall team, see contact details below.
We can see first hand the impact of Covid-19 on local businesses and households. We are very pleasantly surprised that the impact is less severe for the majority of people than we expected.
There certainly are people who are severely impacted and some of those may look to list their homes for sale this Spring/Summer and downsize, many to areas within a 2 hour commute to work in the city. This is particularly the case for people who can work from home. Some will rent their home and rent something cheaper hoping their position improves in the next two years.
Included in this group would be pilots, people who have been retrenched from well paid positions, people who work in hospitality and tourism.
Thankfully for the economy generally, in our experience people severely impacted would be well less than 10%, closer to 5%.
The next group would be people who have been impacted and will be more careful with their discretionary spending for the next couple of years but will survive in their current home assisted by very low interest rates. I am generalising but would estimate this group to represent no more than 20% of our sample of clients.
That leaves 70% to 75% of the Northern Beaches population for whom it will be business as usual. They will continue to spend money on home renovations and will qualify for home loans to provide a steady stream of buyers for Northern Beaches property. Some will spend money they would normally spend traveling, improving their home – and that in turn keeps the local economy healthy.
From what I have observed there is no shortage of wealthy people who are concerned about where to invest in this climate and many have decided to invest in the
house they want to live in, ensuring the luxury end of the market has strong demand.
There has been a lot of talk about the economy falling off a cliff when Job Keeper finishes. A large number of businesses suffered in March and April and qualified for Job Keeper through to late September. Many of those have recovered and Job Keeper has helped to normalise the 2020 Financial year and likely 2021.
The idea to extend Job Keeper potentially for a further 6 months at a reduced rate for businesses who can prove they still need it will help to ensure a smoother transition and hopefully avoid the financial cliff.
I do think we are protected here on Sydney’s Northern Beaches and there are many areas in Australia where the impact will be more severe.