Conventional economic wisdom says, “If the U.S. sneezes, the rest of the world catches a cold,” and a few Aussies might be handing around the tissue boxes now that the U.S. Federal Election has been comprehensively concluded. 

But what does Donald Trump’s second stint in the White House mean for the Australian economy and our favourite asset class, residential real estate? 

Significant policy shifts are expected with the incoming administration led by Mr Trump, the first president since Grover Cleveland in the 1890s to serve non-consecutive terms. The next president has pledged to reduce immigration, cut corporate taxes, and, most importantly, for Australia to impose substantial tariffs on imported goods.

AMP Chief Economist Shane Oliver told ABC[i] that “The real danger lies in the possibility that significant destinations for our exports—like China (about 35%), Japan (around 20%), other parts of Asia, and Europe—could face stiff U.S. tariffs – as much as 60% have been bandied around for China. Shane Oliver reasons this could result in an overall global trade war, ultimately leading to less demand for Australian exports.

“It’s not so much our exports to the U.S., which I’m confident will continue and won’t be affected. It’s more that we see a global trade war and that ultimately results in less demand for our exports,” Shane said. 

Moreover, some analysts believe the changeover of presidents could deliver a short-term boost to the U.S. economy, as well as higher inflation and more significant budget deficits. Yet Reserve Bank of Australia Governor Michele Bullock said it was hard to judge the inflation implications of the U.S. election for Australia at this stage. Still, policymakers at the RBA will watch closely and respond as necessary[ii]. But it’s undoubtedly a case of watching this space, which means that further interest rate increases are not out of the question. 

While some commentators express concern over the potential impact of the next Trump administration on the Australian economy, our resources sector and real estate markets, the previous term was not especially dire. Notably, the last year of that administration coincided with the worst of the COVID-19 pandemic, and the post-pandemic recovery of 2021 and 2022 was yet to commence.

In the December quarter of 2016, just before Mr Trump was sworn into office, the mean dwelling price in Australia was $656,800. By December 2020, as Mr Trump’s term concluded, it had risen to $728,000. Although this 10% increase wasn’t a boom, it was still a solid gain, particularly with the main phase of post-COVID property market recovery still ahead of Australian property owners in 2021.

Angus Raine, Executive Chairman of Raine & Horne, said, “Australian elections typically create some uncertainty in our real estate markets, as buyers often wait for the results before making decisions. Generally, overseas polls don’t have the same effect.

“However, this U.S. election has sparked significant local interest, yet it’s hard to imagine that the presidential race could influence housing markets 15,000 kilometres from the White House – but some of our agents were reporting it did. 

“Hopefully, with Americans making a call on their next president, we will see more Aussies calling into open for inspections and helping extend the traditional spring selling season all the way up to Christmas.”

If you’re considering listing a property before Christmas, contact your local Raine & Horne office. 
 
[i] https://www.abc.net.au/listen/programs/pm/what-does-president-trump-mean-for-economy-/104574868
[ii] https://www.reuters.com/markets/rba-says-inflation-implications-us-election-australia-hard-judge-2024-11-06/