In the wake of Donald Trump US presidency victory, Moxin Reza, CEO of Investor Partner Group, warns Australian property investors to brace for potential economic turbulence.
Trump’s controversial policies, particularly his proposed tariffs on Chinese imports and Australian exports, may have a substantial impact on Australia’s economy, especially in resource-dependent regions.
“Trump has a unique style that divides opinions, but regardless of personal sentiment, his policies hold considerable weight and have real potential to disrupt global markets,” said Reza. “While some of his pro-business approaches make economic sense, others, like the proposed 60 per cent tariff on Chinese imports, could spell trouble for Australia’s property market.”
Australia’s direct trade with the US is relatively limited. However, Reza points out that the Australian economy’s deep ties to China make it highly susceptible to any escalation in US-China trade tensions. “Should these tariffs lead to a trade war, Australia’s property investors, particularly in mining-reliant areas, need to consider the economic fallout,” he added.
With Trump’s business-friendly policies likely to boost US equities, there’s a real possibility that money could flow out of the property market and into the stock market, at least in the short term, Reza explains. “We may see a short-term shift from real estate to equities in the US, driven by attractive tax cuts and incentives for businesses,” he stated. “This could result in a temporary slowdown in the property sector.”
Reza said that while lower taxes and increased disposable income could eventually stimulate US housing demand, the threat of tariffs on Chinese imports remains a major concern. “Any trade friction between the US and China could lead to a reduced demand for Australian exports, especially raw materials like iron ore and coal,” he said. “For cities like Perth that depend on mining, this could have severe economic implications.”
With iron ore and coal prices at historic lows, Reza highlights the potential for a downturn in mining-related employment and its ripple effects on local economies across Australia. “A weakened Chinese demand for Australian resources would impact not just Perth, but other regions reliant on mining and FIFO employment,” he said.
A potential weakened US dollar could see the Australian dollar also drop, giving rise to speculation around an early interest rate cut from the Reserve Bank of Australia (RBA). “If economic uncertainties continue, the RBA may need to consider lowering rates by March or April next year,” said Reza. However, he noted that federal elections may add complexity to the RBA’s decision-making process.
“Ultimately, Trump’s policies might create a challenging environment for Australian property investors,” Reza said. “We’re closely watching how these developments unfold, as they could reshape the market landscape for the years ahead.”
