Lasting economic impacts of COVID-19
It has been two years since the height of the lockdowns and restrictions of the first wave of the COVID-19 pandemic in Australia.
Widespread vaccination has largely restored our freedoms, but some things have probably changed forever as a result of this once in a century event. Here we reflect on some of the long term social and economic impacts.
Permanent changes to work practices
Flexible work is here to stay with many organisations moving to hybrid models that include some home-based work to attract and retain talent. This change has resulted in significant knock-on impacts to CBD economies and the commercial real estate sector.
A 2023 study by consulting firm McKinsey estimated that the shift to work-from-home will likely wipe off $1.17 trillion from the value of office buildings in major global cities in the next seven years. Asset owners are already planning how some of these spaces can be repurposed for alternate purposes like apartments…or farms!
Migration to regional Australia
With cities experiencing the worst of lockdown restrictions, an unprecedented number of people moved to the regions, having a lasting impact on house prices, population growth and infrastructure.
About 86,000 people left Sydney in the first two years of the pandemic, while close to 60,000 Melburnians relocated. Victoria’s Surf Coast gained more than 6,000 people from internal migration, or 7 per cent of its population, while 87,000 Australians moved to Queensland between June 2020 and June 2022.
Growth in online shopping and services
People previously reluctant to buy products and services online had no choice but to adopt these practices during COVID lockdowns.Despite being able to return to bricks and mortar shopping in 2022, 60% of Australian households made 12 or more online purchases.
Demonstrating that consumers, just like workers, want the flexibility of shopping both in-store and at home, retailers with hybrid 'Brick and Click' models have seen the strongest performance post pandemic.
Rise in cybercrime
With the added convenience of online technologies for work and commerce, came the rise in cybercrime as more of us gave our data to online platforms and remote service providers.
The escalation of cyber-attacks is attributed to more agile hackers and ransom-ware gangs who focused on exploiting collaboration tools used during the pandemic. Cybercrime reports jumped 13% in the 2021-22 financial year and this calendar year has seen a number of high profile cyber attacks on household names like Optus and Medibank.
Travel more challenging and expensive
Travel has yet to return to pre-pandemic levels and delays and cancellations remain part of the travel experience today, with 4% of flights cancelled and just 71.8% arriving on time in April 2023. Domestic airfares have fallen somewhat in 2023 as pent up demand for travel eases and the price of jet fuel has eased. However, average airfares remain higher than pre-pandemic levels, even after adjusting for higher than normal inflation.
The death of cash for transacting
The use of cash was already declining rapidly, but many small retailers and even large supermarkets took the opportunity to kill off cash payments for health and hygiene reasons during the pandemic.
Consumers seemingly made the transition to cashless payments effortlessly and the trend continues. More than 3.2 million Australians now use Apple Pay and other mobile payment apps . The younger generations are likely to bypassing tap and go via traditional card payments altogether and begin their transacting life via Smartphone or Smartwatch apps.
The artificial housing market boom
Initial efforts to stimulate the economy prior to 2022, such as building and renovation grants and record low interest rates that were predicted to remain low until 2024, has had two key impacts.
Firstly, it caused some people to over-leverage to buy a home and secondly, it locked others out of the market as prices boomed, forcing more people to rent, in turn increasing rental demand and prices to unprecedented levels. Some of those who stretched themselves now face mortgage cliffs as they come off fixed rate mortgages in the wake of benchmark ash rates rising by 4% since April 2022.
Financial Planning became even more important
Coping with the impact of a once in a generation event like a pandemic made people realise that life can quickly change and it's important to regularly review their finances and life goals. Many FMD clients embarked on career change, relocated or welcomed adult children back to the family home.
A lot of working professionals became more serious about insuring their income against unexpected health events and many people took stock of where they were going and what matters most. Some retired early. Some had more money to spend or invest. We welcomed a number of new clients during this time and we continue to advise all our clients closely to help them achieve optimal health, wealth and happiness in ever-changing times.
_______________________________________________________________________________________________________________________________________________________________________________
Scam Alert!
The National Anti-Scam Centre is warning consumers about a new text message scam currently targeting Qantas Frequent Flyer, Telstra and Coles loyalty programs’ customers, following 209 reports to Scamwatch in the past four months.
How the scam works
• Consumers receive a text message or email stating their loyalty points are expiring.
• The text or email includes a link to a fake website, which prompts customers to login. Customers may also be prompted to provide credit card details to use loyalty points.
• Scammers steal customers’ points. Scammers also steal customers’ login details and personal information to use on other platforms and commit identity fraud.
How to protect yourself
• Don’t ever click on a link included in a text message.
• Access the app or website independently to check on the status of your points.
For more information visit scamwatch.gov.au
General advice disclaimer: This article has been prepared by FMD Financial and is intended to be a general overview of the subject matter. The information in this article is not intended to be comprehensive and should not be relied upon as such. In preparing this article we have not taken into account the individual objectives or circumstances of any person. Legal, financial and other professional advice should be sought prior to applying the information contained on this article to particular circumstances. FMD Financial, its officers and employees will not be liable for any loss or damage sustained by any person acting in reliance on the information contained on this article. FMD Group Pty Ltd ABN 99 103 115 591 trading as FMD Financial is a Corporate Authorised Representative of FMD Advisory Services Pty Ltd AFSL 232977. The FMD advisers are Authorised Representatives of FMD Advisory Services Pty Ltd AFSL 232977. Rev Invest Pty Ltd is a Corporate Authorised Representative of FMD Advisory Services Pty Ltd AFSL 232977.