Donald Trump’s return to the US presidency has sent shockwaves globally, and Australia’s property market is no exception. With his stated policy platform, particularly on imposing import tariffs, experts predict a significant impact on interest rates, inflation, and property prices.
Interest Rates and Inflation
Financial markets have already pushed back their expected timing of interest rate cuts in Australia, with only one interest cut by the RBA predicted for next year, in May ¹. This is largely due to concerns over global inflation, which could rise under Trump’s presidency. AMP’s Chief Economist Shane Oliver notes, “If Trump’s policies boost US inflation, there could be a global flow-on, including to Australia, resulting in higher than otherwise RBA interest rates”.
Property Prices
Home prices in Australia have continued to grow despite high interest rates, but the pace of growth has slowed due to affordability constraints. However, experts predict that apartments in expensive cities like Sydney could see more price growth at the expense of houses, with constrained buyers adjusting their budgets. 3 Reasons to Buy Property During Rising Interest Rates in Australia
Flight to Value
There’s already been a “flight to value” in real estate markets, with buyers turning to more affordable suburbs. CoreLogic’s Research Director Tim Lawless notes, “A combination of less borrowing capacity and broader affordability challenges, as well as a higher-than-average share of investors and first home buyers in the market, is the most likely explanation for stronger conditions across the lower value cohorts of the market”.
Big Cities to Benefit?
Cities with high trade exposure to China, like Melbourne and Sydney, may be vulnerable to global trade wars under Trump. However, Perth property prices could continue to grow strongly due to a severe housing shortage and diverse economy.
Expatriate Americans
Another factor to consider is the surge in US-based searches for Australian property, up 51% over the year to July. REA Group senior analyst Karen Dellow notes, “The standard of living and the robust economy in Australia are drawcards for property seekers from the US” .
This could lead to increased demand for property in progressive states like Victoria.
Overall, Trump’s victory has introduced uncertainty and potential challenges for Australia’s property market. However, experts also see opportunities for growth in affordable suburbs and cities.