Another month another profound shock to the political system and to the established order. Donald Trump is the President Elect, something many thought completely implausible and in a few months will become the 45th President of the United States of America. But what does this mean for the UK, our economy and the property market? Should we be filled with cautious optimism or outright terror?
On the face of it, despite what the press says, there’s every reason to believe that the UK’s special relationship with the USA will endure and according to some pundits improve. No. 10 has said that Donald Trump reportedly wants to reinvigorate the Thatcher – Reagan style of special relationship with Theresa May. Whether the two will be as close this with their different views and differing opinions remains to be seen. However both are pragmatic, ties will develop, and it is felt that it could be an improvement on what many felt to be Obama’s lukewarm stance towards the UK. Infamously, one of his first acts as President was to remove the longtime resident bust of Winston Churchill from the Oval Office. Donald Trump however is apparently keen to return the bust to its former home, perhaps this is an omen?
But what of the Trump effect on the actual economy? The UK, European and Asian markets initially fell on news of America’s seismic election result. For the most part though, many of the markets then largely recovered. However the Trump victory is a seismic shock to the political system and it may result in a prolonged period of uncertainty and downward pressure on the dollar. If this is the case, it is plausible that American Investors will be looking to buy in safe havens, notably Europe, and within Europe London is the obvious choice.
It’s not just the buying habits of American’s that could well be changed by Donald Trump’s victory. Foreign buyers, especially those of Middle Eastern origin and Muslim faith, given the rhetoric and philosophy that Trump has espoused, are unlikely to want to put their money into the US property market. London and New York have always been seen as rival property markets for property investors so the US election result could well be a boon for London if they choose London instead of New York.
If this comes to pass the timing would be fortuitous. London’s prime property market has taken a double battering of late in the form of tax duty changes and Brexit. The Trump effect could well significantly reinvigorate it if Americans and others are looking to buy elsewhere. If they believe that the dollar will weaken significantly when Trump starts implementing policies that he campaigned on, essentially tearing up immigration and trade agreements and conventions, then London ticks all of the boxes in terms of having a strong property market in a thriving multi-cultural city.
A word of caution though, a sudden influx of buyers, from America or elsewhere could push up demand which in turn would push up prices at the top of the housing ladder, and this would then trickle down to first time buyers.
Donald Trump is famously unpredictable so it is hard to foresee what will come to pass, but if the Trump effect, whatever it is, comes to pass, it be may not be welcomed by all.