FEBRUARY 06, 2017
Donald Trump has officially been in power for just over two weeks, but already he’s caused chaos and inspired global protests with his likely unlawful executive orders.
If you are someone who doesn’t agree with his political views, it’s tempting to comfort yourself with the knowledge that Trump isn’t your president. But don’t be fooled into thinking his decisions won’t impact us at all.
Like it or not, Australia and the United States are close allies—and Trump’s decisions are having global consequences that can, and will, filter through to us down under.
Trump talks a big talk and he’s made all sorts of promises to the American people. If he follows through on them all—particularly his pledge to leverage ad hoc tariffs to “win” trade wars with foreign countries—there will be global economic consequences, and here in Australia, we won’t be immune.
In the last week, there have been many headlines generated about the deal brokered between Prime Minister Turnbull and former President Barrack Obama. The agreement would see more than 1,000 asylum seekers from Manus Island—that is, refugees destined for Australia—rehomed in the U.S. Whether Trump will follow through on this deal remains to be seen.
Whatever the outcome, it’s safe to say that it’s the first of many ways that Trump’s presidency is going to impact or influence Australia. Another big one could be real estate.
Australian real estate, particularly in Sydney, has been considered by overseas buyers to be a ‘safe haven’ investment destination for the last few years. Chinese property investors in particular have been aggressively buying up Australian real estate and in many cases, they’re not listing them for rent.
This is having the impact of driving down housing supply, which has prompted our Federal and State Governments to introduce a number of ‘foreign investment’ levies and taxes. At the same time, lenders introduced stricter loan conditions for foreign investors.
These measures seem to be accomplishing their goal of making it trickier for overseas buyers to purchase Australian property.
Then Trump came along, chasing chaos and mayhem, changing the game in the process.
Until recently, America was also considered a sought after investment destination for cashed-up property buyers in Asia. Cosmopolitan cities like San Francisco, New York and Los Angeles were also considered ‘safe’ bets.
But now, Trump’s unpredictability is turning the United States into a risky proposition. In property terms, all of the action and instability being generated out of Washington is scaring international investors off—which could serve to make Australia seem even more appealing as an investment destination.
Buyers from China are going to need more than a foreign buyer’s tax to dissuade them from Australian real estate, if the alternative is investing in an American economy that boasts an uncertain future.
And if this happens? If the overseas buyers keep flooding the Australian property market?
Well, that could serve to strip even more supply from the market—thereby putting more pressure on property prices, which could potentially push cities like Sydney into an official bubble state.
Of course, Trump could also calm down, stop dishing out executive orders like they’re minties, and the United States could return to a period of relative peace. But what fun would that be?
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