We are all still a little shell-shocked by the incredible events of 2020. For Victorians, we have lived with a mixture of disbelief (a little fear) and frustration. We have, for the most part, accepted restrictions on our lives and liberties that would have simply been unthinkable 12 months ago. Incredibly, the rest of the world now looks at us a little enviously. Throughout most of the civilized world, lives and economies are still a long way from normal. The trajectory for Covid-19 infections and deaths in the USA is still quite frightening.
But at least in Australia (and in New Zealand), our island status now permits us to look forward to improving times. Barring a catastrophe, the crisis is not only behind us, but our economy and personal lives are in rapid recovery. The scars will be there for ever and many have lost loved ones. But the buds of Spring (metaphorically) are unmistakable. So, what’s ahead for 2021?
The general optimism when meeting friends again, dining out and even heading back to the office is contagious. For business, this means investing in people, product and capacity again. A bit like the share market, which looks beyond the noise and into the future, business’ must plan for tomorrow, even when needing to address the problems of today. This forward looking has neutralized many of the gloomy projections that existed mere months ago. Growing confidence has dramatically reversed the economic expectations.
Real estate, for instance was predicted to suffer price falls of 30 and even 40% by reputable economists and institutions. Now it is looking like our own expectations of a decline of 10% may have been overstated. We did drop by 6-7% in the inner eastern suburbs of Melbourne before the lack of stock and consistent demand put a very firm floor under prices. Now the new year may see a new wave of sellers, but even if this happens, further falls will likely be quite modest.
Some significant mega-trends (office based work, our relationship with China) are now altered forever and others (travel, international student education etc.) are likely to be heavily disrupted for at least another 12 months, but we have moved from fear, to hope and now, into confidence in just weeks. So, now it’s time to plan again.