A series of back-and-forth tariffs has sparked fears in the US that a trade war with China could be on the horizon – but experts feel this could be a plus for the Australian property market.
After China imposed tariffs on 128 American products imported into the country, Trump retaliated with tariffs on $50 billion USD-worth of imports. These back and forths have put economists on edge, warning of a potential trade war which could severely damage relations between the countries.
However, while a hit to the economy in the US would likely have detrimental effects in Australia, it could result in the Australian property market becoming more appealing to Chinese buyers.
“For many Chinese Australia is an alternative to the US. Australia offers comparable lifestyle, property markets, and educational and employment opportunities,” said Juwai.com CEO Carrie Law.
“The key difference is, of course, that Australia tightly restricts and taxes foreign property investment, while the US does not. Hypothetically, were the trade war at some point to cause Chinese demand for US property to seriously decline, it’s entirely plausible to consider those buyers turning to Australia as a fall-back,” she said.
Juwai.com is the number one Chinese international real estate website, with the US and Australia being the most popular locations on the site.
The majority of investors are not currently concerned by the possibility of a trade war, or even convinced it will amount to anything in the long run; but it does speak to the wider economic climate between the two countries and how Australia fits in.
“At the moment, most Chinese buyers are cautiously optimistic. From all sides, you hear that this trade war is not likely to escalate to the point where it is a serious threat to international trade and relations,” said Ms Law.
“A persistent trade battle that causes doubt or worry in the consumer’s mind could reduce demand for US property. That long-term fear is counterbalanced for now by a short-term incentive to purchase before Sino-US relations possibly get worse,” she added.
Whether caused by the trade tensions or not, Juwai.com has reported increased Chinese demand for US property in March – up by 26.2 per cent on the previous month. Australian property demands are also up from the prior month, but by a more modest 5.7 per cent.