Almost a year to the day after the multibillion-dollar JobKeeper program was announced by the federal government, the stimulus tap has been turned off.
The program was introduced in March 2020 to help businesses affected by COVID-19 retain their staff by subsidising their wages during the economic downturn.
Nearly a million businesses received the wage subsidy for 3.5 million workers during the height of the crisis. By the end of January 2021, that had fallen to more than one million employees and 370,000 businesses.
There are fears as many as 150,000 of those jobs could now be lost, according to estimates by Federal Treasury, particularly in sectors still affected by international border closures.
“We believe that in the order of 100,000 to 150,000 JobKeeper recipients may lose employment at the completion of the program, though there is a wide band of uncertainty around this estimate,” Treasury Secretary Steven Kennedy told a Senate estimates hearing, days before the program was scheduled to end.
Despite this, he expects the unemployment rate – which fell to 5.8% in February – to continue trending downwards, even if there is a “bump or two” in the next month or so.
“In our view it is appropriate for the program to end as other support measures take effect and to allow the economy to continue adjusting,” he said.
Could it flow through to the property market?
While the end of JobKeeper will undoubtably result in some job losses, realestate.com.au Chief Economist Nerida Conisbee said, overall, the impact on housing will be minimal.
“House prices are moving quickly upwards now and even in areas where rents are dropping, values are increasing,” said Ms Conisbee.
“Additionally, investors are returning to market and banks are lending more easily.”
However, with other stimulus measures also expiring at the end of March, some particular markets could face challenges, such as rental properties in areas reliant on overseas students and visitors.
“People dependent on JobSeeker and JobKeeper will be worse off, particularly those who are located in areas where there is currently a rental housing shortage,” said Ms Conisbee.
“In areas where there is an oversupply of rental housing, we may see a hit on rental levels, which could impact landlords,” she said.
Other COVID support ends
The JobSeeker coronavirus supplement and HomeBuilder scheme will also expire this week.
HomeBuilder in particular has played a major role in boosting construction activity throughout the pandemic, with building approvals hitting a record high in December.
“HomeBuilder has been very successful in driving new housing development and the end of this will likely lead to a large drop in new housing approvals,” said Ms Conisbee.
This has already been proven in January, when building approvals plunged almost 20% after the value of the grant was reduced from $25,000 to $15,000 at the end of 2020.
Economists are forecasting another surge in uptake of the program during March, before it winds up.
While contracts needed to be signed before the scheme officially ended in March, building work can start within six months. As a result, construction activity will be supported throughout much of 2021.
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