This is what the shutdown means for your strategyMay 05, 2020
Tax reforms afoot
A few thoughts for you today on what life might look like on the ‘other side’ of the Coronavirus shutdown.
There are plans afoot for a staged transition from stamp duty to a broad-based land tax in New South Wales as part of wider tax reform package.
Ostensibly this move is to make for more consistent state revenue streams, but just as pertinently it’ll simply lower the entry hurdle and closing costs for more prospective homebuyers and investors to come into the market, egged on by the lowest mortgage rates in history.
This has the potential to create a mini-boom in prices and activity as the deposit hurdle is effectively lowered for new market entrants.
Bargain hunters with an elevated tolerance for risk, problem-solving, and potential vacancy periods may instead be drawn towards the commercial property space, where vacancies have spiked and retail rents have been under a good deal of pressure.
Whether by luck or judgement Australia has flattened the curve of the COVID-19 remarkably quickly, with Australia and New Zealand ranked at the top of the global tree for successful containment of the virus.
So successful has the containment been, in fact, that the Australian economy is set to begin reopening months ahead of schedule.
The combined stimulus packages of the government and central bank had assumed a 6-month hibernation for business and the economy, but it now seems as though we won’t face such a scenario after all.
As such, there will be opportunities arising in business again as pent-up demand returns.
Of course, there have been changes in the way in which many of us work and interact, and in some respects there’s never been a better time to build your own online or virtual business.
The good news is that these days there’s a proven and systematic way to funnel traffic towards your website, convert interested visitors into loyal and paying customers, and deliver a service or product to them in a scalable fashion.
For all of the above, we’re not nearly out of the woods yet, and even a return to 80% capacity in the economy would see many businesses struggling to turn a profit.
Unemployment is expected to rise to 10%, before easing back down to 7% by the end of next year.
We know from history that global recessions will always through up some opportunities for investors with available cash, as we discuss in some detail on our podcast series.
I discussed some of these ideas a little further in the short video here
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