Whether we like it or not, Donald Trump has been elected the new president of the United States. With the celebrity billionaire taking the reins of the superpower, many are wondering how this will impact our economy and property market. Will the Trump Presidency positively or negatively affect Australia? We weigh in on the debate and discuss everything you need to know about this issue.
It’s not surprising that global markets have been shaken by the Trump Presidency, and Australia is not immune. In the wake of the news, our stocks and commodities slumped and currency dropped in fear of uncertainty of what this would mean to our economy. Whilst we have seen recovery in our stock market over the past week due to new hope that the new Trump presidency will be able to increase America’s economy, Trump’s protectionist policies will continue to breed uncertainty for some while to come.
So why has this economic uncertainty arisen? Essentially, Trump plans to strengthen America’s economy through major infrastructure investments, lowering US tax rates, raising tariffs and putting a stop to being the world’s policeman. What’s more, having declared his opposition to free trade agreements and the announcement of America’s withdrawal, the future of the Australia-US Free Trade Agreement and Trans-Pacific Partnership remain unknown. This has investors worried since it’s possible these changes will trigger a global trade war. As a result, global stock markets will suffer, including Australia.
Of course, it remains to be seen how Trump’s policies impact our economy – hence continued economic uncertainty. Some economists predict doom and gloom, some believe they may encourage economic growth, whilst much more think his presidency will not greatly impact our country at all.
Fortunately, the stock market volatility, global economic and political uncertainty and low-interest rate conditions brought about by Trump could have one big upside – a property investment surge. In such an economic climate, many turn to real estate as a safe investment. As such, this could be a Trump card for our property market. If this drives a property investment boom, what does this mean for the already property housing crisis? Could the Australian dream of our next generation owning their own home truly become out of reach more so than it is now?
Foreign investors are now seeing Australian real estate as a safe haven for their funds. Whilst foreigners can only buy new and off the plan residential properties, if Trump’s protectionist trade policies come into play we could also see an increase in corporations turning to Australia for their commercial real estate needs.
What’s more, following Trump’s win, many Americans are now fleeing their country. Since Canada’s immigration website is still recovering from its meltdown, many Americans are looking to Australia and New Zealand. In fact, following the election result, realestate.com.au noted a rise in Australian property searches originating from pro-Clinton states.
How could all this affect Australian property prices? While economic uncertainty may produce an initial boost to real estate, if interest rates rise this will negatively impact our property market. Commercial real estate values will also fall, and first home buyers and top tier investors may suffer, which is not good news. We see many home buyers taking advantage of low-interest rates maximising their borrowing capacity. Should interest rates rise what does that mean for these mortgage holders – will they default on their loans with banks repossessing selling at a reduced price? If so this may see the end to our property boom, reducing housing prices and demand.
At the end of the day, it continues to be business as usual for the Australian Real Estate Industry. The Trump Presidency will no doubt impact our economy and property market, but only time will tell whether those effects are positive or negative. As such, the best way to respond is by continuing to do what we do best – help our clients buy, sell and rent property.
How do you think the Trump Presidency will impact the Australian Economy and Property Market?
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