Though there’s some 8,843 miles between the US and Australia, what happens there can have profound effect on us here. Take, for instance, Halloween. An American holiday that has now bled across the borders, delivering a middle-finger shaped
mixed message to every Australian kid taught from birth not to take candy from strangers.
Of course, it could be worse. At least they won’t be taking a McDonald’s Quarter Pounder from Donald Trump, the fry cook who donned the golden arch apron less than 48 hours before an E. coli outbreak swept through the fast food chain this week. Surely just a ‘uge’ coincidence, like the Poptrack data from July revealing a 51% year-on-year spike in U.S. searches for property to buy in Australia just days after the first presidential debate aired nationally.
In a sense, this foreign investment interest bodes well for the Australian property market, essentially making whichever political party Americans are looking to flee from good for business. In 2018-19, under Trump, the Foreign Investment Review Board (FIRB) ranked the US as the #1 source of foreign Australian real estate investment. In 2022-23, with the US under Biden, Chinese investors regained the top spot as the largest foreign buyers of real estate here.
But with Kamala Harris now in the equation, how could the upcoming election results impact the property market here? The newly elected US administration’s economic and trade policy alongside currency exchange rates and global economic growth could have a significant effect on Australian property prices.
On the one hand, a Democratic presidency could invite a sense of calm to the markets and stability in trade relations, with Harris signalling she’s unlikely to veer from the trade policies of the current Biden administration. Such consistency could increase property demand due to an increase in investor confidence.
On the other, smaller hand, circling back on another Trump presidency could bring the same unpredictability he brings to a microphone to the global economy. Of most concern is undoubtedly his threat of escalating a trade war with China – Australia’s main trade partner – which increases the potential risk of recession. With a recession comes unemployment – which means that although a recession would cause more properties to flood the market, there’d be fewer buyers able to afford the price tag, leading to a drop in house prices. With China’s economy already in trouble, anything that could further weaken the world’s second largest economy could have significant implications on our own.
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In 2019, our dollar fell to 69 US cents – at the time, the lowest in three years – after Trump tweeted that the US would impose a 10% tariff on $US300 billion worth of Chinese imports. This time around, as part of his re-election campaign, ‘protectionist’ Trump has proposed a 60% tariff on goods from China, and 10% – 20% duties on the rest of the world, including Australia. Trump has also pledged to slash the corporate tax rate from 21% to 15%, while offering fresh tax reductions as incentive to boost domestic production.
It’s hard to imagine that these tariffs from the US won’t be met with a reciprocal response, meaning more tariffs and higher prices. This may lead to another bout of inflation, which would likely lead to higher interest rates. This would put downward pressure on property prices.
If Harris were to claim victory in the upcoming election, a less volatile (and stronger) U.S dollar could drive up Australian property prices due to interest from a more affluent American investor. If Trump were to win, foreign investment might stall due to a less stable dollar – perhaps achieved by inflationary tactics like printing more money or quantitative easing.
The uncertainty around a Trump administration’s monetary policy could also create ‘upward pressure’ on interest rates, whereas a Harris presidency could steady interest rates, easing pressure on global markets.
While the effects of Covid-19 makes it difficult to compare how the Australian property market did under Trump vs Biden, the sentiment around the upcoming change of guard seems to suggest the results could be even further reaching than an E. coli outbreak.
