Reasons for confidence, (despite the trade wars)
There’s been a lot of chat recently about the financial chaos being created by the decisions of the President of the United States to introduce heavy tariffs on trade from just about every country on Earth.
Not surprisingly, a lot of the discussion here in Australia has been focused on the impact on the Australian economy of a widespread trade war. This, in turn, has got a lot of people here in Melbourne wondering what this turmoil might do to the property market, from property prices and interest rates to overall consumer confidence.
Now, it’s no secret that I’m not an economist…or even remotely qualified in that area. However, there are a few indisputable facts that I think give me a fair bit of confidence that our property market will not only weather the storms that Donald Trump is creating, but will provide a level of positivity that many other countries can only dream of.
Firstly, as I have commented on many times in the past, our property market is a very resilient one. Even if you look back to the 1990’s when the GFC was causing issues around the globe, the Australian economy did not fall into recession. So in the current climate, talk about ‘the R-word’ is, I think, ill-founded.
Secondly, keep in mind that only 5 per cent of Australia’s exports go to the U.S., and of those exports, many of them are products like gold and beef, which will still have ready demand in other parts of the world. So the impact of the current tariffs is unlikely to be too dramatic in the grand scheme of things in Australia.
Third, but by no means last, we need to remember that we are heading into a period of ongoing interest rate reductions, with the next cut likely to be as soon as May. As we’ve already seen this year, a cut to official interest rates is sure to spark additional activity in the property market, with consumer confidence levels likely to rise the moment the Reserve Bank acts.
So, all in all, it seems to me that 2025 is likely to be a positive period for the property market, despite President Trump’s floundering efforts.
So if you’d like an obligation-free chat about your own property plans, don’t hesitate to give us a call this week at Barry Plant Thomastown on 03 9466 3233. We’d be more than happy to assist.
Regards,