PROPERTY POINT

What are Donald Trump’s tariffs of 145 per cent on Chinese exports going to mean for house prices in Mackay? And why would there be a connection?

To answer the second question first, many of China’s exports to the US and the rest of the world are products that contain steel. To make steel you need iron ore, the stuff that is dug up in Western Australia’s Pilbara region, and coking or metallurgical coal, the stuff that is dug up in our Bowen Basin.

If China’s exports to the US were dramatically reduced because of on-going huge tariffs, there would potentially be a drop in demand for steel and that would mean a drop in demand for steel-making coal.

We know that a thriving mining industry, in which there is a strong international demand for our coal, is an important driver for the Mackay economy and, therefore, a factor in our real estate sector.

Now to answer the first question I posed, I am going to need everyone to hold hands and peer deeply into the crystal ball in front of us. It’s a bit blurry, hey? Can’t quite make things out. Mmm, very unclear.

Oh, stop whinging … it’s a free magazine, not a paid subscription to The Fortune Teller’s Guide to Real Estate Certainty. Phhh!

Despite the negativity, I’ll plough on. While the crystal ball doesn’t tell us much, there are a few things to consider when contemplating the question.

It wasn’t that long ago when China placed a very public ban on coal from Australia. Now people in the industry will tell you that some Aussie coal managed to find its way into China through third countries during that period but it is also true that the industry managed to find alternative destinations for our coal exports.

So we showed that we are not entirely dependent on China, which is a good thing.

There were some huge fluctuations in stock markets when Trump announced the tariffs so it was interesting to note how, in Mackay, my open homes that weekend were incredibly busy with locals and southern investors making strong offers on properties.

I felt that those investors thought Mackay real estate, with its reasonable prices and high rents, was a stable sanctuary in a world of fluctuating stock market fortunes. There was also talk of interest rate cuts, which people like to hear.

Of course, if the Chinese tariffs are prolonged, they will have an impact on the international economy and that will not be good for real estate anywhere.

Whether or not that happens is a matter of opinion; it depends on whether you think Trump is an unpredictable, lunatic dictator with no regard for anyone but himself and his cronies or a disruptor who wants to reset the international trade dynamic and create fewer tariffs across the board, a reduced US debt and a re-ignited world economy.

Whatever your thoughts on that, we can only hope that he knows prolonged tariffs will hurt the international economy, including the US, so he will want to reach deals with trading partners as soon as possible and allow the world to get back to business.

The international economy seems to love a kick-start driven by renewed certainty.

The Herron Todd White Property Clock provides a snapshot of Australia’s real estate markets and places a particular city at 12 o’clock if it’s at the peak, 3 if it’s declining, 6 if it’s at the bottom or 9 if it’s rising.

The latest property clock puts Mackay firmly at 9 o’clock, a rising market. Others, notably Sydney and Melbourne, are in the “starting to decline” or “declining” zone of the clock.

The feeling about the Mackay market is one of confidence, with strong activity and buyer numbers that reflect our position on the property clock.

Meanwhile, the real clock is ticking on Trump and his tariffs.

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