DONALD Trump’s victory as the President-elect of the United States will drive more foreign investors to the safehaven of the Australian property market.
REA Group chief economist Nerida Conisbee said the uncertainty that came with the Trump victory meant people were likely to look to markets such as Australia.
“Australia will be a beneficiary of this as it is considered to be one of the safest markets in the world,’’ she said.
She warned property values in the United States were likely to fall in the same way they did in Britain following Brexit.
“In uncertain markets, people don’t like to buy,’’ she said.
Ms Conisbee did not know if the uncertainty would push the US into a recession.
“We will know by early next year and it will depend on how unstable Trump is as a president. “From Australia, he looks incredibly unstable. The UK has narrowly escaped recession following Brexit.’’
THE US election circus may be half a world away, but the effects on property markets will come all the way to our shores, with a Trump victory triggering an influx of foreign investors, an industry analyst says.
LJ Hooker head of research Mathew Tiller says that “nearly all parts of the Australian economy are intrinsically linked to the performance of the US; our equity markets take their direction from the US and the Australian dollar is impacted by the strength of the US economy. It’s therefore important that there is confidence in the future policy direction of the US government and that of the president.”
And that confidence will be lacking should Trump come out on top today, prompting foreign property investors to bail out of the country in search of stability down under, Mr Tiller predicts.
“A Trump victor adds sovereign, or crown risk, to inward investment into the US, affecting the amount of capital, the type of investors and the level of return expected,” Mr Tiller said. “It makes investment (in Australia) more attractive for large foreign developers and institutions, as well as high net worth private buyers looking to purchase residential property.”
While Chinese investment in Australia seems to have stalled recently after tax hikes imposed on foreign buyers by state and federal governments, things could change if the Republican candidate gets across the line.
“New York, Los Angeles and San Francisco are top of the list for Chinese real estate buyers, so the result will make Australian property look more stable and less risky to those weighing up options,” Mr Tiller said.
Should Clinton win on the other hand, Mr Tiller believes it will largely be business as usual for Australian property, apart from a slight boost to commercial real estate.
“It will provide more of an uplift to commercial property markets as this is where most of the US property investment is directed,” he said. “Plus, a number of US companies lease shops, office space and industrial properties here, so this should shore up the leasing markets around these tenants.”
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