Donald Trump’s Impact on Australia’s Property Market

Graeme Salt Broker 2 2 Comments

I am really not a Trump-man. Apart from his vulgarity, when it comes to the nation’s economy, I dislike showmen. I felt the same about Blair and Rudd.

trump

But months before taking office, Donald Trump is already having an impact on property – and this is just a taste of things to come.

According to Digital Finance Analytics US mortgage rates have risen by more than 50 basis points since the election.

us-mortgage-rates
Source Digital Finance Analytics

And it’s likely to be the same over here; on Friday Westpac announced significant hikes to its fixed rates loans. Other Australian banks are expected to follow suit.

Trump’s election is really likely to stoke the economic fires. According to AMP’s Chief Economist, Shane Oliver “The Reaganesque combination of big tax cuts and increased defence and infrastructure spending will provide an initial fiscal stimulus and, with reduced regulation, a bit of a supply side boost to the economy.”

As a result the bond market is already expecting more which is likely to increase rates. This could well cool down the property market. That said, if Trump really boosts the economy, property could keep growing like Topsy.
That said, since Trump’s victory, the ASX has also shot up from 5,150 to 5,500 – investors may become more interested in shares than property.

And just to confuse things, given Trump’s construction background plus his commitment to infrastructure, maybe he will stimulate the resource states whose commodities roar back into demand.

We don’t know really know what we will get from Trump (and he probably doesn’t either). But, even a modest investment property in Kickakanalong will be affected.

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