The election of Donald Trump as President of the United States is one of the biggest political shake-ups the country has ever seen. Whilst many questioned his ability to transition from celebrity to President, others queried his tax cuts for companies and households to promote business within the US. On Friday 22 December 2017, Trump’s government dropped income tax from 35% to 21%, removed tax on profits made by US companies, eliminated the minimum 20% tax on effective profits and started pursuing measures discouraging the removal of US-made profits abroad. Although the government view these changes as promoting a positive outcome for the US economy, some view this financing through debt as a serious gamble that could prove risky in times of crisis.

Although impossible to know the outcome of these changes, they will certainly have an impact on those looking to purchase in the US. Americans will enjoy increased cash flow as household taxes reduce, potentially spurring on a flurry of property purchases, especially for families looking to buy a larger home. The additional abolishment of inheritance tax over ten million dollars should also lead to an increase in investment in properties. However, drastic changes within government can make investors nervous, especially if they see the potential for another property or financial crash akin to the 2008 financial crisis.

With the number of millionaires in the US rising year on year, more precisely by 8% from 2015 to 2016, cities such as Los Angeles, the Hamptons, Aspen and New York are proving to be as popular as ever amongst the UHNWIs. In this year’s Barnes Global Property Handbook, we ranked New York as the number one city for UHNWIs; the first time in ten years that London has not occupied this top spot. What we think has changed is New York’s expanding cultural offerings and access to world class hotels, restaurants and shopping, all points that attract the growing group of emotional influencers and property buyers. New York also appeals to millennial buyers who are predicted to be the leading luxury consumers by 2026, according to the Global Wealth Report of 2017. Millennial luxury buyers are very much a part of the digital revolution and as such are unconstrained when it comes to location, with many able to carry out business anywhere in the world. Thanks to New York’s vibrant culture and increased transport links, it has become increasingly popular amongst these younger investors. In regard to international buyers, New York appeals primarily to Chinese, South American and Australian purchasers.

On the other side of the country, the state of California has been experiencing severe drought for the last few years which most recently culminated in a series of devastating forest fires that destroyed vast areas of natural habitat across the region. And yet, as Los Angeles remains the second largest city in the US with the highest number of museums and cultural institutions in the country, it does not come as a surprise that the Los Angeles luxury property market is booming. This steady growth resulted in the LA property market surpassing the rest of US property last year, one of the very few American cities to do this. A vast city, the renowned upscale neighbourhoods of Beverly Hills and Bel Air are still in high demand as they offer high end, multimillion pound properties catering to families, those in the entertainment industry and business leaders in private gated communities. As the market retains its value and LA remains a cultural hotspot, the city is still one of the four primary markets for foreign buyers, appealing to a global audience. Interestingly, what we have noted is a surge in the number of cash purchased properties by wealthy Texans looking for second homes within the US.

There is no denying that thanks to the current government there is a lot of unpredictability within the US market currently. It remains to be seen how the current tax cuts will affect the economy and day to day income. However, it is clear that like the entertainment industry, Silicon Valley and East and West Coast cultural scenes, the luxury property market is thriving across the nation.

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