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Category: government and politics
Donald Trump’s victory in the 2024 United States presidential election means that his second tenure is set to begin in January 2025. What will this mean for the UK housing market?
Some anticipated that Trump’s provocative rhetoric, as well as his recent criminal conviction for mishandling official documents, would tip the scales in favour of the Democrat candidate, Kamala Harris.
However, the opposite outcome occurred as the Republican candidate made significant headway with many voter demographics, leading to a decisive win. Republican voters view Trump as an emblem of change who will disrupt the status quo, for better or worse.
Due to the massive influence the US has on the global economy, many in the UK and abroad are wondering how their national position will be affected by the changing of the guard.
Some effects in the Private Rented Sector (PRS) can already be felt, but there may be larger waves on the horizon.
Trump’s overall agenda
Trump still promotes his particular brand of right-wing populism and neo-nationalism, nicknamed ‘Trumpism’. A key tenet of this is Trump’s ‘America First’ policy, emphasising the US’s interests over all others.
Naturally, this overarching philosophy makes foreign policy and international relations quite precarious. Trump has often shown sympathy to rival superpowers such as Russia and North Korea while disparaging the US’s traditional allies like Canada and NATO. He has, however, often called to minimise the US’s involvement in foreign conflicts.
Relationships with the US have been especially tense since the UK’s foreign secretary David Lammy called Trump a “tyrant in a toupee”, while various Labour Party figures were accused of lobbying support for Harris.
All that is to say that Trump may no longer show as much favour to the UK despite our historic “special relationship” with the US – his continued affinity for Reform UK leader Nigel Farage notwithstanding.
In addition, the president presumptive has plans to raise tariffs, lower taxes and reduce the US’s reliance on cheap imported goods and labour.
Short term effects
On the week that Trump’s victory was all but confirmed, UK gilt yields were up slightly, influencing mortgage rates to rise.
Many UK landlords are delaying their remortgaging plans believing rates will drop, due to the change in the Base Rate.
This is not happening. Lenders had already priced it in. Instead, a large number are hiking rates up, because global news is driving uncertainty in the money markets. Swap rates are also increasing. As such, landlords looking to remortgage should do so promptly.
The US dollar grew stronger compared to the UK pound sterling, but Trump’s actual aim is for the American currency to become slightly weaker, so that their economy can become more competitive.
Possible long term effects
It is believed that the results of the US election may provide opportunities for the UK housing market.
There is a window of opportunity for overseas buyers to snatch up property and other assets in the UK while the pound is weaker than the dollar. However, if the US dollar weakens as Trump desires and undertakes the pound, this window may be very narrow.
There is also a more remote possibility that the UK may be one of many countries hosting a small migration of left-leaning Americans, seeking to move to countries with leaders that better reflect their political views and values.
According to Google search trends, there was a huge spike in search queries relating to moving abroad. It stands to reason that some may seek to rent homes in the UK, perhaps until another Democrat becomes president.
Of course, the high search volumes for these queries may not reflect the number of Americans willing to take that big step and move abroad for their political convictions.
Overall, it is still early days, so the full impact of Trump’s second administration are hard to quantify. It looks like the macro effects on the UK economy may continue to trickle down to sectors like the PRS and manifest in the form of higher mortgage rates, but there are currently not many direct impacts on the PRS.
