With a political shakeup across the Pacific, you may be wondering, “What does an American election have to do with my dream of owning a house in Sydney?” As it turns out, a lot more than you might think. 

The potential re-election of Donald Trump in 2024 brings a fresh set of global economic uncertainties that could have ripple effects reaching Australian shores, especially within the housing market.

But don’t worry – I’m here to break down how Trump’s policies, foreign investments, and economic shifts could nudge Australian property prices. 

Let’s look at what home buyers in Australia need to know about this potential economic plot twist, bolstered by credible data. Ready? Let’s start connecting some geopolitical dots.

Impact #1 U.S.-China Tensions: Impact on Foreign Investment in Australia

Donald Trump’s policies on China are well-known, and they could have an unexpected impact on Australian real estate. 

A renewed hard-line approach may increase tensions between the U.S. and China, leading Chinese investors to seek safer destinations for their capital – which historically has included Australia.

According to the ABS, Chinese investors have shown a preference for Australian properties, especially in major cities like Sydney. In fact, overseas investors spent over $5 billion on Aussie real estate in FY23, with China being one of the top sources of this influx. 

An escalated U.S.-China trade war might spur Chinese investors to increase their stake in Australian real estate as a safe haven.

With first home buyers already feeling disillusioned with property prices, increased interest from foreign investors has the potential to push up prices in already high-demand areas, putting additional strain on these rookie buyers. 

However, a surge in foreign investment might also be limited to luxury properties, leaving entry-level homes less affected – although this is not always the case in hot markets like Sydney.

Overall, Trump’s tough talk could translate into more competition for Sydney first-home buyers as Chinese investors look for a safe, non-American hedge against global uncertainty.

You can find data on foreign investment at ABS Foreign Investment Data via this link: https://www.abs.gov.au/statistics. CoreLogic’s latest insights on foreign property purchases are available at CoreLogic Foreign Investment Report via this link here: https://www.corelogic.com.au. 

Impact #2 Interest Rate Chaos: Will the Fed’s Choices Echo Down Under?

Trump’s track record on the U.S. Federal Reserve is clear: he’s known for favouring low interest rates. 

Now officially re-elected, Trump may pressure the Fed to reduce rates to boost economic growth. Lower rates in the U.S. can create a domino effect, influencing other central banks to follow suit or risk currency instability.

According to SQM Research, fluctuating interest rates have historically influenced the Australian dollar. If the Fed slashes rates, the Reserve Bank of Australia (RBA) may need to adjust its policies to manage the currency exchange rate, which could also influence local interest rates.

A drop in Australian interest rates could provide a bit of relief to first-home buyers by reducing borrowing costs. But this relief might be short-lived if it stimulates more demand in the housing market, possibly driving prices higher in the long term.

If Trump manages to convince the Fed to go easy on rates, Aussie buyers might get a brief break – but don’t expect it to be a permanent fix for sky-high property prices.

Check out the RBA interest rate history at Reserve Bank of Australia Statistics here: https://www.rba.gov.au/statistics/. Read about SQM Research’s interest rate impacts at SQM Research Market Updates here: https://sqmresearch.com.au.

Impact #3 Strengthening the U.S. Dollar: What It Means for the Aussie Market

Trump’s “America First” stance could lead to a stronger U.S. dollar, especially if the Fed takes a hawkish approach on interest rates, or if Trump pushes policies that incentivize foreign capital back into the U.S. 

As the USD strengthens, other currencies like the Australian dollar might lose value, which has its own consequences for Australian property.

Historically, a weaker Australian dollar has made property prices here more attractive to foreign buyers, particularly those from the U.S. and Asia, driving up demand. 

CoreLogic’s 2023 report shows a 12% increase in international property purchases during periods when the AUD was weak, as international buyers saw Australia as a value buy.

For locals, a stronger U.S. dollar means higher competition from foreign buyers who can stretch their purchasing power further in Australia. This influx could lead to further price increases, making it even tougher for first-home buyers to enter the market.

If Trump’s policies pump up the U.S. dollar, Aussie first-home buyers could feel the pinch as cashed-up foreign investors join the property price bidding wars.

Track AUD/USD exchange rates at Yahoo Finance here: https://au.finance.yahoo.com/. For real estate data, check CoreLogic’s Market Insights here: https://www.corelogic.com.au/research.

Impact #4 Increased Global Uncertainty: Flight to “Safe” Real Estate Markets

Global uncertainty often drives investors toward tangible, stable assets like real estate. Trump’s re-election could exacerbate global economic tensions, prompting investors to look for safe havens. 

Australia’s stability and relatively strong economic track record make it a prime candidate for such investments, which could mean higher prices across Sydney’s property market.

Domain reports that during periods of global financial uncertainty, Australian property markets have experienced upward pressure from international buyers seeking security. This “flight to safety” phenomenon is a key reason behind foreign demand for Australian real estate, often at the expense of local affordability.

If Australia is seen as a safe harbor amid global volatility, property prices in cities like Sydney could see additional upward pressure. While this means rising values for existing homeowners, it adds to the affordability challenges faced by first-time buyers.

With Trump back at the helm, global investors may see Australia as a safer bet than a rollercoaster stock market, pushing Sydney prices up in the process.

Access Domain’s property data at Domain Research here: https://www.domain.com.au/research/. CoreLogic also offers insights into foreign investment trends at CoreLogic Research here: https://www.corelogic.com.au.

Darn So, What’s a First-Home Buyer to Do?

While Trump’s re-election could add uncertainty to the market, the silver lining is that there are ways to strategize around these shifts. Here’s what you can do:

Consider Timing – With potential fluctuations in interest rates, keeping an eye on the RBA’s actions could provide hints about the best times to jump in. If rates drop temporarily, it could be a good opportunity to lock in a lower mortgage.

Look Beyond the City Centre – As foreign investors are typically drawn to high-profile inner-city properties, exploring emerging suburbs could offer a way to sidestep the price hikes.

Get Expert Help – Navigating these complexities isn’t easy, especially with potential external factors pushing prices around. This is where having a trusted property buyers agent in Sydney becomes invaluable.

Team Up with Kitty & Miles – Your Trusted Property Buyers Agent in Sydney

In a market as unpredictable as Sydney’s, staying informed and having expert guidance can be the difference between being priced out or seizing your moment. 

At Kitty & Miles, our mission as your real estate buyers agent is to provide clear insights, tailored strategies, and a pathway to homeownership, even amidst economic twists and turns. 

Reach out to Kitty & Miles by email at support@kittyandmiles.com.au today, and let us help you navigate the Sydney property market with confidence.

While Trump’s 2024 victory might feel far removed from Australian property prices, international shifts have a way of influencing our own backyard. For first home buyers in particular, understanding these global impacts and preparing accordingly can make all the difference. 

Stay proactive, stay strategic, and remember – you don’t have to go it alone. With a buyers advocate like Kitty & Miles on your side, your property dreams are still well within reach.