And the answer is NOT a Pandemic

The curve’s been flattened and now with less than one in forty thousand people in Australia infected, the focus is on restarting the economy.

In Australia, there are several industries that will be key to ensuring our recovery is quicker and stronger as we seek to rebuild. One of those industries is property. We all know the flow on effects associated with a strong housing market. It’s not just about builders and tradies. Its associated industries that supply the buildings being constructed along with the finished goods to furnish them.

So, what is the relevance of 1890 to 2020? Many people think of the 1930s as Australia’s most dire economic catastrophe – the Great Depression. But the reality is, if you go back 40 years, it was the early 1890’s that was far worse.

And there is one key factor that was at play then that is also severely impacting the property market today and will continue to do so for at least the remainder of 2020.


In the 1880’s on the back of the gold rush, the Australian property market was booming, particularly that of Melbourne housing land, which grew massively due to financing from land banks which saw money flooding in from British investors. At that time annual population growth was between 3 to 4%.

What triggered the property market crash of the early 1890’s was a collapse in immigration that occurred after the end of the gold rush. As a result, annual population growth in the early 1890’s was next to zero. Demand sank and the land banks that were backing the rush into property, crashed. Indeed, more than 50 of them went under.

Fast forward to 2020 and with COVID-19 resulting in all international travel to be cancelled, including new migrants to Australia, we have the potential of a perfect storm for the property market.

So, what are the implications for Australia now? There are three ingredients when occurring simultaneously, that could cause a housing collapse in Australia – a significant cut in immigration, high unemployment and rising interest rates.

At the present moment we have two out of three. What will most likely save us is the fact interest rates will remain low for at least the next three years, most likely longer. That should be time enough for the economy to recover from the global economic shutdown brought on by the COVID-19 pandemic. Fingers crossed.