Donald Trump’s re-election as US president brings both bad and good news for global investors in the US property market, analysts said, including for the Chinese citizens who make up the largest group of foreign buyers there.
Trump’s expected tax cuts and the inflation unleashed by his slate of tariffs are likely to keep interest rates at elevated levels for longer, according to Knight Frank’s head of global research, Liam Bailey.
This could mean higher property prices, which is good for current owners but bad for prospective buyers. But some do not expect much change is on the horizon.
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“There is unlikely to be a huge difference with a Trump victory,” Bailey said. “Biden continued most of Trump’s policies regarding inward investment rules, and it does not seem likely that Trump will see the need to tighten further.”
For the 11th straight year, Chinese buyers were the top foreign acquirers of US residential property for the 12 months that ended in March, collectively spending US$7.5 billion on 6,000 homes, according to data from the National Association of Realtors (NAR). The association puts buyers from the mainland, Hong Kong and Taiwan under one umbrella: Chinese.
All told, foreigners accounted for 2 per cent of the US$2.1 trillion residential property market in the US for the 12 months that ended in March this year, according to the NAR.
In September, US home sales fell to their lowest level in 14 years, with 3.84 million units changing hands, according to the group. It was the second straight monthly decline for sales, dragged lower by elevated mortgage rates and home prices.
But new home sales rose to 738,000 new units in September, the most since May 2023, according to official data.
Borrowers in the US started to feel relief after the Federal Reserve reduced its benchmark rate for the first time in four years in September, which was followed by another reduction on Friday. That means buying a home is still expensive for many end-buyers and investors.
“Consensus suggests Trump will let the deficit run higher as he increases spending and cuts taxes,” Bailey said. “Tariffs may also fuel inflation. This would postpone the long-awaited US housing market recovery as mortgage rates remain elevated. The average 30-year rate has risen for five straight weeks due to a mixture of strong economic data and anticipation of a Trump victory.”
Patrick Yip, vice-chair and international tax partner at Deloitte China, said investment in real estate and equities remains attractive to affluent Chinese individuals and families.
“I think some may believe this is a good time to invest in the US, both in terms of real property and also stocks and securities,” Yip said. “Given that the tax rate is likely to continue to be low and that the property values may increase, a lot of foreigners hope that the US will have a more attractive investment environment.”
Although Trump has vowed to increase tariffs for US imports, Yip said there is no indication that buyers of real estate – be they foreign or domestic – will be taxed differently.
“We are getting a lot of inquiries now about making an investment in the US,” he said. “They are also inquiring about converting their non-US dollar assets into US dollar assets because they believe that the US dollar will become stronger going forward.”
Yip also said buyers who have decided to invest in the US are trying to snap up assets now between the Biden and the Trump administrations.
“If they buy it now, the US dollar is still cheap, but if they wait six months or a year, the US dollar will appreciate together with the asset prices if the economy is doing well,” he said.
Property agents also believe investor confidence is bound to return now that most election-related uncertainty is in the rear-view mirror.
“The real estate industry is excited to have a peer and business-friendly president in the White House,” said New York-based Erin Boisson Aries, a global luxury real estate adviser with Douglas Elliman-Knight Frank.
“Buyers have been on the sidelines but the demand has always been there,” she said. “Now that the election is behind us, I anticipate an incredibly busy spring. I’m seeing strong interest from wealthy Chinese buyers looking to purchase in the US and the UK and I don’t see that slowing down.”
But not everyone is optimistic about Trump’s policies regarding foreign property investors.
During the campaign, Trump called for limiting Chinese real-estate ownership, though the focus was on farmlands and property near military installations, said Kashif Ansari, the co-founder and CEO of Juwai IQI, an international property portal.
“It’s too early to tell exactly how much the future Trump administration will do to encourage or discourage foreign property investment,” he said. “Another factor is the pro-market outlook of Trump’s party, which is likely to reduce the ambitions of any new limitations on investment.”
Ansari has also advised investors to hold or buy more property in the US, predicting home prices will rise by 3 per cent next year.
At the very least, Chinese investors in the US should expect “more screening” under a Trump administration, said Jianwei Xu, senior economist for Greater China at Natixis CIB.
More from South China Morning Post:
- UK property market sees green shoots as buyers anticipate rate cut, lower mortgage rates
- Chinese top buyers of US property for 11th year, but Canadians dominate volume
- US bans on Chinese property investment unlikely to withstand legal challenges, law expert says
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