Why Trump win may make renting a better option

New Zealanders can expect higher home loan interest rates, and more pressure on house prices, thanks to Donald Trump’s victory in the US presidential election.

Real estate listings website Realestate.co.nz was already reporting large numbers of United States visitors searching for New Zealand property before the result was announced.

As it became clear that Trump will be the next president, and take over from Barack Obama within months, that increased further.

Realestate.co.nz reported US-based traffic up 432 per cent after the result was revealed, compared to the same time last year.

Of those visits, 78 per cent of people had never visited the site before.

“Obviously New Zealanders are the largest group of visitors to Realestate.co.nz, typically followed by Australians,” said Realestate.co.nz chief executive Brendon Skipper.

“Last night, the US jumped into second place ahead of Australia in terms of visitor numbers.”

California generated the most Realestate.co.nz traffic.

Auckland Property Investors Association president Andrew Bruce said New Zealand needed to be ready for those fleeing the US for calmer shores.

“An influx will put further pressure on our already short supply of housing in Auckland,” he said. “We are already struggling to keep up with demands.”

Carmen Vicelich, of property data website MyValocity, said the Trump win combined with existing uncertainty as a result of Brexit would have an effect on New Zealand.

She said more people wanting to move to New Zealand, combined with ex-pat New Zealanders coming home, would add to the pool of buyers looking for properties.

“We saw that in 2008 and after 9/11, a lot of New Zealanders decided this is where their future is.”

But she said the Christmas and New Year period – traditionally a quiet time in the market anyway – could act as a cooling off period for people who were considering making any big decisions.

The surprise Trump victory may also hit New Zealanders in the pocket when it comes to their home loans.

Many of the policies he trumpeted on the campaign trail would push up inflation, which would push interest rates higher.

New Zealand banks are increasingly reliant on money from overseas to fund loans, because of a “funding gap” between the amount of cash being deposited with banks and the amount that people want to borrow.

Vicelich said New Zealand banks were already under pressure because the cost of that offshore funding is increasing. “We are seeing the impact of the uncertainty there, with no traditional spring home loan campaign this year.”

ASB chief economist Nick Tuffley said how big the effect was would depend on how many of Trump’s policies he was able to enact.

“There is no guarantee he will be able to do the dramatic tax cuts and spending he proposes.”

But he said long-term interest rates could rise more quickly than they might otherwise, due to the potential for added inflation.

He said the impact of US citizens fleeing the country for New Zealand was likely to be marginal.

 

 – Stuff

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