The election of Donald Trump as U.S. president and the extended Republican grip on all levers of American political power will affect the real estate markets on both sides of the U.S.-Canada border, analysts say.
Here is what is expected:
Lower Canadian lending rates:
A surge in the U.S. dollar – which rose within hours of the election – could stall a planned increase in U.S. Fed lending rates and lead to lower mortgage rates in Canada. Some see the potential of negative interest rates in Canada if trade agreements with the U.S. are threatened and the Canadian dollar weakens further against the U.S. currency.
A perception of tougher U.S. immigration regulations under a Trump regime could lead to a surge in Canadian immigration, already on track to welcome an average of 300,000 people annually. The Canadian Citizenship and Immigration web page crashed from excess traffic as the election results unfolded. Higher immigration will increase demand for housing and retail real estate.
Cooling of China’s economy:
Trump has promised trade restrictions against China, which could accelerate a current economic downturn in the world’s second-largest economy. Trump vowed to slap a 45 per cent tariff on Chinese imports on his first day in office if China doesn’t change its “unfair” trade practices. Many Chinese investors may be seeking a safer haven, and Canada, particularly Vancouver, will likely top the list.
Frank O'Brien is the editor of Western Canada's biggest commercial real estate newspaper, Western Investor, as well as a contributing editor at West Coast Condominium, real estate contributor to Business in Vancouver and a regular media commentator on real estate investment.
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