Roll-out, property prices affect quarter

The global COVID-19 jabfest gathered pace with some countries, including Israel and the United Kingdom, achieving high rates of immunisation.

However, the roll-out has had some issues. Some countries suspended the use of Astrazeneca vaccine for a period of time and Australia was also slow off the mark with its immunisation roll-out.

The longer it takes to vaccinate the world, the slower the economic recovery.

Pushing COVID-19 off the front pages was the big jump in residential property prices. Nationally, Corelogic’s home-value index jumped 5.8 percent for the quarter.

Sydney led the jump with a 6.7 percent lift. In March alone the index rose 2.8 percent, the biggest rise in 32 years. Most of the action was on the first-home and owner-occupiers front, though investor purchases were also up.

The main fuel being added to the property price fire is ongoing low interest rates.

With the Reserve Bank of Australia indicating rates will most likely remain low for years, that could continue to inflate property values and see more people priced out of the market.

Helping to fuel the market was good employment numbers. Seasonally adjusted, the Australian Bureau of Statistics reported an unemployment rate of 5.8 percent in February, down from 6.3 percent in January.

However, this counts people on Jobkeeper as employed. Taking this into account, Roy Morgan put unemployment at 13.2 percent in February, with 21 percent of the workforce either unemployed or under-employed.

Blocked artery

In late March the container ship Ever Given provided a graphic example of how small things can have a huge impact.

Strong wind gusts saw the giant ship wedge itself bank to bank across the Suez Canal, one of the world’s main shipping arteries.

Suddenly 30 percent of world container shipping ground to a halt. Fortunately, the ship was freed after a few days, and the backlog of ships was cleared a few days after that. But it was a stark reminder of the vulnerability of large parts of the economy.

The pace of recovery in the local and international share markets slowed during the quarter as prices crept close to or exceeded their pre-pandemic levels. The S&P/ ASX200 rose 3.1 percent, trailing the MSCI All-country World Equity Index, which was up 4.2 percent. Tech shares ran out of puff with the NASDAQ only gaining 1.4 percent, while the S&P500 surged late in the quarter to gain 6.1 percent.

Many countries are experiencing third and fourth waves of COVID-19, and it’s a fair bet the virus will continue to dictate the way we live for some time.

But it’s not the only game in town. US President Joe Biden has taken climate change off the back burner and moved it front and centre.

That means our government and businesses will need to pay it more attention too. Expect carbon tariffs to become a hot topic.

On the local front, with interest rates all but ruled out as a tool for managing the residential property boom, talk is turning to the use of regulatory methods to dampen demand.

These could involve requiring bigger deposits or limiting the rate of credit growth.

And with Jobkeeper now wound up, employment figures will come under close scrutiny. Expect to see a jump in unemployment this quarter.

• The information provided in this article is general in nature only and does not constitute personal financial advice.