Will Trump’s trade war impact the property market?

As Australia approaches a federal election, economic stability and global trade policies have jumped into focus.

The disputes caused by US President Donald Trump’s tariffs may seem half a world away; however, Domain’s latest report, Tariffs, Trade and Turmoil: How Global Uncertainty Could Shake Up Australia’s Housing Market, explores how the ripple effects may be felt closer to home.

“When uncertainty is high, both consumers and businesses become cautious,” said Domain chief of economics and research Dr Nicola Powell.

“Australians might hold off on major purchases, including homes, until things feel more stable. [Our] research found that political uncertainty reduces the volume of property transactions.”

The report shows that part of this can be due to the wealth effect. Market volatility can shake confidence and limit people’s ability to buy property.

“Equity prices have declined by 10 per cent in the US and 9 per cent in Australia,” Powell said. “Since many Australians have investments in the stock market, these losses could reduce both their appetite and capacity to buy homes.”

To counteract the economic drag from tariffs and uncertainty, policymakers might introduce stimulatory measures. Lower interest rates, increased immigration, and foreign investment – attracted by a weaker Australian dollar – could further support housing demand.

“When market volatility spikes due to uncertainty, investors may turn to property since it tends to offer more stable returns,” Powell said.

Despite the uncertainty, Canberra’s property market remains resilient, with clearance rates remaining above 50 per cent throughout most of February and March, supported by falling inflation and the interest rate cut.