These past few months, the media has been agog with news of the hotly contested U.S elections between Donald Trump and former Secretary of State, Hilary Clinton.
While many experts tipped Clinton to win the election because of her vast experience in political and diplomatic matters, few people saw Trump as the victorious candidate. Trump is known worldwide for his unpopular- and often ruthless- diplomatic policies. Many political pundits and high profile figures even dubbed him unfit for the role of the U.S President.
Now the elections are over and Donald Trump is America’s President-elect, what effect does this have on major business sectors around the world? Most especially the UK property market? In the first few hours of announcing Trump’s win, market shares dipped steeply before picking up again. Contrary to expectation, and intuitive sense, the Dow Jones and FTSE actually had 2 fairly good days after the election result.
Is there any direct impact to expect from a Trump Presidency? If so, good or bad?
To extrapolate the effects, we must understand the current state of the UK property market today. Ever since Brexit, the UK property market has been strong, contrary to initial fears at the time. The price of housing has continued to rise steadily and rents are relatively stable.
According to Nick Marr, Co-Founder of The House Shop, “The uncertainty experienced pre-Brexit and immediately after, have reduced, paving way for more confident demand amongst buyers in the market. The demand will likely get even stronger in the mid and in the long-term”.
Is this current state of strength in the property market going to be affected by Trump’s new trade policies though? Although, Britain’s property market represents only a small segment of the country’s overall economy, it is still important to know what future developments lie in this area.
Increase in property purchases
There is likely to be an increase in the purchase of property from American investors in the UK, especially in London, both residentially and commercially. American buyers in the capital currently make up between 2% to 3%, but the figures are likely to increase in near future.
We may also see an increased number of non-residential Americans buying up property in the UK as a means of safeguarding their investments following the uncertainty surrounding American trade markets and the dollar. There is also renewed interest from investors in other countries who now see the UK as a safer buying opportunity (alternative) compared to the United States. Chinese investors especially, have already started buying large commercial properties in London.
There are also indications that some Americans may migrate to the UK now Trump is President- a statement which was common during the mid-stages of the election campaign. However, it is important to note the same was said about Canada when George Bush jnr. took over in 2004, but it calmed after a while.
Nonetheless, it is safer to expect anything. An increase in the number of Americans to the UK will mean rising demand for housing, which will automatically increase the cost of property, particularly in the Capital.
While these are speculations, markets are known to be turbulent during times of governmental change. Trump as president-elect, is effecting a significant one in America’s domestic markets at the moment. But in a few months, we can expect it to calm- much like Brexit. Or will it? We will just have to wait and see….