November 16, 2016
The whole world knows that Donald Trump has now been elected to become the next President of the United States. While many are excited about it, many Australians are wondering what it will mean to the housing market in Australia.
Many leaders around the world have found Trump’s comments and future plans to be highly controversial some even bordering on radical. This has led to predictions among economists that his actions will have strong ripple effects around the globe.
Some believe, such as Nerida Conisbee at the REA Group, that with Trump soon to be at the helm of the United States, that it could lead to a greater likelihood that the Reserve Bank of Australia (RBA) will cut its rates even further.
On the other hand, she says, just how Trump’s actions will affect the Australian interest rates is unknown. It could lead to a stronger Australian dollar which would mean increased rates in the US. This could lead to a situation where more pressure is put on the RBA to reduce rates further.
One thing that may happen is that real estate in Australia could become even more attractive to foreign investors. What happened in America could make real estate here appear to be more stable than in other places and it would have a smaller risk level, says Matthew Tiller, who heads up research at LJ Hooker Real Estate.
Others debate that Trump’s presidency will cause a further cut in Australian interest rates. With clear evidence that the RBA has not changed its rates for some time now, it is doubtful that the little evidence there is now will cause such a rate cut.
One thing that does appear to be more certain, says Martin North, who is the founder of Digital Finance Analytics, is that Trump’s presidency could very well mean that there will be a greater interest in investment properties in Australia. It could become seen to be a stronger market for property investment.
This growing interest in investing in real estate in Australia has been continuing locally in the country for a while, but Trump’s presence in the Oval Office may cause it to grow internationally. It could even mean that the demand could continue to grow for several years.
While other markets are apt to continue to be a little unstable, the real estate market in Australia could very well come to be viewed as a safe haven, North said.
Of course, no one yet really knows what Trump will actually do. It is also hard to tell how his leadership will affect the economy of the United States, and this could produce effects in Australia in a positive or negative way.
Even though there is a degree of uncertainty, it is not likely that there are going to be dramatic changes in the cost of real estate mortgages. Even if there is change, North said, property markets are not going to just “Curl up and die” within the next 24 hours.
Written by Refinancing.com.au
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