How Could Trump's Trade War Impact the UK Property Market?
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What Might Happen to the UK Property Market Following Trump's Trade War?
Since early February this year, when Donald Trump first announced his plans for tighter tariffs on foreign imports, there has been a lot of uncertainty surrounding the strength of the global economy.
Fast-forward to April, and Trump’s recent escalation of tariffs has sent shockwaves through global markets and had a significant impact on worldwide economies. For those looking to invest in UK property, these recent events raise the question—how might Trump’s trade war affect the property market in the UK?
Mortgage Rates are Expected to Drop
Since Trump’s trade policy announcements, a number of mortgage providers have already made plans to reduce mortgage rates.
TSB Bank has announced it will reduce some two-year fixed rate mortgages by up to 0.25%, while MPowered Mortgages has already reduced rates by up to 0.21%.
Barclays is also planning to slash selected mortgage rates below 4% from Friday the 11th, announcing plans for a two-year fixed-rate mortgage at 3.99%.
More lenders are expected to follow suit, and with lower mortgage rates, a property market boost could be seen over the coming months.
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More Investment into Property as a Stable Asset
Property has historically been seen as more of a stable investment asset when compared to other assets such as stocks and shares.
Following Trump’s announcement of sweeping tariffs under “Liberation Day,” U.S. stocks fell sharply until rising after the announcement of a temporary suspension of certain tariffs. By the 10th April, however, continued uncertainty has caused stock prices to fall once again, with the future of the market remaining uncertain.
The UK stock market has also declined following these announcements, with an 8.4% drop for the FTSE 100 recorded over the past week.
This uncertainty is likely causing a lot of people to put their investments on hold, and instead look to put their money into less volatile assets.
Savills has predicted that the UK property market could see a boost in demand for high-quality assets as a result of a “needs-based dynamic.” They commented that the relative stability of UK real estate could potentially attract opportunistic and “safe-haven” investments.
Currency Fluctuations Could Encourage Foreign Investment in the UK
The trade war has also caused significant currency fluctuations, with global currencies experiencing volatility as a result of the recent economic conditions.
The GBP reportedly fell this past week, hitting a one-year low against the euro. If the Pound depreciates further, UK property could be seen as an attractive investment option for international buyers looking to maximise their returns.
If we do see an increase in property market activity and demand, this could result in enhanced property market growth for the UK.
As always, when deciding to invest your money, it’s important to consider all of your options, not rush into any purchases, and even seek the advice of a financial advisor to be sure you’re making the smartest decisions.
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