Last week, I outlined in my column what might happen to property values based on three different scenarios around how long the lockdown might last. The scenarios ranged from one in which the lockdown ends soon through to one in which we’re still in lockdown leading up to Christmas and where the economy goes into free fall.
In some respects, its an article I regret writing. Not because I don’t stand by my views, but because in outlining that last, negative, scenario I’m simply feeding into a perception which needs no help from me. Sadly, there’s a section of our society which seems to revel in anticipating the worst possible outcome in any situation and writing in a way which perpetuates that view only seems to feed the hungry beast.
We see it at the end of property booms, with the inevitable flurry of predictions that the market is about to crash. We see it leading into recessions, with commentators breathlessly regaling us with stories of how terrible it’s all going to be. And we see it in the ongoing, mindless sport of comparing New Zealand to other nations in order to (supposedly) highlight how much worse off we are.
That’s not to say that there’s no place for constructive criticism. There is, but such criticism should be balanced, should be based on objective analysis, and should offer pragmatic alternative solutions. Complaining without offering an alternative is counter-productive and pathetic and I certainly don’t wish to be part of it.
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A view of Lambton Quay, Wellington's main shopping precinct, during the coronavirus lockdown. Photo / Getty Images
Which brings me to what I personally believe will happen after we come out of lockdown and why I think there’s good cause to be reasonably optimistic. Of the three scenarios I painted, I’m still of the view that we will come out of the lock down sooner, rather than later, and that the country will return to a degree of normality in which international air travel is largely impossible but the country is otherwise open for business, by June. If this happens there are likely to be some positive outcomes:
1. There will be an economic bounce-back in many sectors
While some parts of our economy are in for some tough times over the next 12 months, others can be expected to bounce back quickly once the lockdown is over. Retail, many parts of the manufacturing sector, food production, and real estate are examples of sectors which could be expected to bounce back to pre-Covid 19 levels quite quickly, reversing some of the short-term job losses and stimulating demand.
2. Domestic tourism will boom
Back in the 1980s there was a domestic tourism marketing campaign called "Don’t leave home till you’ve seen the country". With tough restrictions on international travel possibly lasting for more than a year, I’d expect to see a contemporary version of that campaign and a huge increase in the number of Kiwis visiting parts of their own country. This won’t replace the revenue from international tourism, but it will go some way toward offsetting it.
3. Our communities will be better
If you’ve walked around your neighbourhood during lockdown, you’ve probably found yourself talking to people in a way you might not have done in the past. Like many of you, I’ve met neighbours I didn’t know existed (from a safe distance, of course) and it will be interesting to see if this new community spirit continues once life returns to normal. Let’s hope that it does.
4. Positive structural reform
In the same way that the Rogernomics economic reforms of the 1980s brought about short-term pain but long-term structural reform, Covid-19 will lead to stronger, more resilient businesses that are better prepared for future shocks.
5. Lower interest rates for longer
The process of rebuilding parts of the world economy means that Central Banks will keep interest rates lower for longer than might otherwise have been expected. This will stimulate consumer demand, shore up the property economy, help businesses to recover more quickly, and probably lead to a new generation of small Kiwi businesses rising from the ashes of unemployment.
I'm not suggesting that the next 12 months will be easy, but for those with the right attitude, new challenges will present opportunities and we’ll all be stronger and better prepared. To paraphrase Mark Twain after his obituary was mistakenly published – reports of the Apocalypse have been greatly exaggerated.
- Ashley Church is a property commentator for OneRoof.co.nz. Email him at [email protected]
