The introduction of a new 25% tariff on steel and 10% on aluminium imports into the USA has raised concerns about ripple effects on Australia’s property market, particularly for investors. However, while there are challenges to consider, investors may also find opportunities in a shifting economic landscape.
Australia's direct exports to the US are relatively small, meaning the immediate impact may be limited.
Tariffs could trigger inflationary pressures, as increased import costs are passed on to consumers. This could lead to the Reserve Bank of Australia (RBA) increasing interest rates again in an attempt to control inflation. For property investors, this means higher borrowing costs, which could impact affordability and demand.
However, a recent analysis from Ray White suggests that if global trade tensions lead to slower economic growth, central banks may instead look at rate cuts to stimulate activity. This could potentially make borrowing more affordable.
Additionally, tariffs could impact the residential construction sector. If construction costs rise and new developments slow down, Australia’s ongoing housing supply shortage may worsen. This could put upward pressure on existing property prices and rental yields, benefiting those already in the market.
Any economic uncertainty – whether from potential trade tensions, increased inflation or cost escalations – could lead to market hesitancy as buyers adopt a wait-and-see approach. This could create opportunities for investors who may find less competition in the market.
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