Donald Trump has reclaimed the presidency in what many are calling one of the most remarkable political comebacks in recent history with the majority of the country voting for him. After being ousted from office in 2020 from a questionable 81M recorded ballots for Biden, the former US president has returned with a decisive win over Democratic contender Kamala Harris. While much of the conversation around Trump’s second term has focused on his policies towards the US economy, foreign relations, and his stance on global conflicts, it’s crucial to consider the implications his presidency might have on Australia—particularly the property market.
One of the immediate consequences of a Trump presidency is the potential for heightened inflation. Trump’s economic agenda, which includes imposing import tariffs on foreign goods, is designed to boost American manufacturing but could also create inflationary pressures on a global scale. With the cost of goods rising in key markets like the US and China, Australia will likely feel the effects as well.
As inflation creeps upward globally, the flow of international capital into real assets like property is expected to accelerate. For Australia, this means more overseas investment, particularly in Sydney, Melbourne, and Brisbane, which will remain attractive to global investors seeking to hedge against rising inflation at home. The demand for Australian real estate could see an uptick, especially in the face of fewer international investment options due to the potential for higher costs in other countries.
Perhaps one of the most immediate concerns for Australians, particularly property buyers, is the potential for interest rates to remain higher for longer. In the lead-up to the US election, financial markets had been expecting multiple interest rate cuts by the Reserve Bank of Australia (RBA) in 2025. However, as a Trump’s victory became more likely to the general population, market expectations and dire for a trump president shifted.
As of November 12, 2024, the Reserve Bank of Australia is expected to closely follow the U.S. Federal Reserve’s lead in adjusting interest rates. Under a Trump administration, the U.S. is likely to maintain a policy of rate cuts to stimulate domestic production and economic growth, despite rising inflation risks. Given the strong influence of U.S. monetary policy on global financial systems, the RBA will likely follow suit, implementing similar rate cuts to align with the Federal Reserve’s stance and to keep the Australian dollar competitive.
Australian real estate could experience intensified demand, particularly in Sydney, Melbourne, and Brisbane, as a hedge against inflation. The ongoing rate cuts may provide more affordable financing options, encouraging both local and international buyers to invest in property as a means of safeguarding wealth. Investors seeking stable markets outside the U.S. might also look to Australia, as rising inflation and accessible credit create a favourable environment for real assets like property.
International Trade Relations and Protectionism
If other nations respond with retaliatory tariffs, global trade could see a contraction, forcing countries to rely more on their internal production and leading to higher costs and scarcity in some sectors. This trend would contribute further to the global inflationary cycle, as more countries adjust to a new reality of protectionism, with local economies bearing higher production costs and passing them on to consumers.
Shift in Energy Markets and International Production Costs
An increased emphasis on American energy production could impact global energy markets. If Trump rolls back energy restrictions and boosts fossil fuel production, the U.S. may become less dependent on foreign energy sources. This move could stabilize or even reduce energy prices in the U.S. but might leave international markets more exposed to volatility, especially if large producers like Russia are affected by tariffs. With energy prices rising, manufacturing and shipping costs worldwide would likely increase, adding another layer of inflation to the global economy.
With the spectre of rising inflation and higher interest rates, Australian property buyers are increasingly looking to more affordable markets. In cities like Sydney and Melbourne, affordability has been a key constraint for buyers, and as the economic environment becomes less favourable, we could see an even greater shift towards Brisbane. The Queensland capital has long been considered a more affordable alternative to Sydney and Melbourne, and with rising interest rates, this trend is likely to become more pronounced.
In particular, first-time buyers and those looking for second or third properties will seek out markets where they can still get value for money. Brisbane stands to benefit as more buyers from Sydney and Melbourne look to lock in affordable property in a rising market. With limited supply and an increasing demand for real estate, Brisbane is well-positioned to experience significant price growth.
In times of economic uncertainty, foreign investors tend to look for safe havens to secure their wealth. Australia’s property market has always been a reliable destination for foreign capital, particularly from China. As inflation rises globally, combined with the Trump administration’s trade policies, it’s likely we’ll see a resurgence in foreign investment in Australian real estate.
Investors looking to protect their capital from inflation, whether from China, the US, or other nations, will increasingly turn to markets like Sydney, Melbourne, and Brisbane. With the Australian dollar often seen as a safe bet during times of global uncertainty, these cities are poised to benefit from a flow of foreign capital looking to buy tangible, long-term assets. Even with heightened demand, the limited supply of premium real estate in these markets will likely drive prices even higher.
The global economy is entering a period of significant volatility, and this is expected to fuel the rise in asset prices across the board. Whether it's real estate, gold, silver, or even cryptocurrency, inflation and economic uncertainty are driving investors to seek out real assets that hold long-term value. As capital floods into these markets, asset prices are likely to rise substantially.
For those investing in real estate, this could mean a sustained period of rising property prices in Australia. With a flood of cash looking for a safe haven, limited real estate stock in key markets like Sydney, Melbourne, and Brisbane will only intensify competition, pushing prices up further. This environment presents a potentially lucrative but high-risk opportunity for investors willing to navigate the volatility.
In times of rising inflation and economic uncertainty, the best way to protect your wealth is by diversifying your assets. One property may not be enough to shield you from the impacts of inflation, but two properties—especially in growing markets like Sydney, Melbourne, and Brisbane—can act as a hedge.
Multiple properties in different markets provide a buffer against the volatility of the economy, allowing you to capitalise on growth while spreading risk. As Trump’s policies and global inflation pressures continue to shape the economic landscape, now is the time to secure your future with multiple tangible assets, ensuring that your wealth continues to grow regardless of what happens in the broader economy.
Conclusion: What Lies Ahead for the Australian Property Market
A Trump victory is likely to have far-reaching consequences for the Australian property market. Rising inflation, increasing foreign investment, and the shift towards more affordable property markets will all contribute to rising property prices in Sydney, Melbourne, and Brisbane. While this presents opportunities for investors, it also signals that now is the time to act. Diversification, especially through real estate, is the key to protecting your wealth in an environment where inflation and asset prices are expected to rise.
