Donald Trump's tariff tsunami unleashed on 'Liberation Day' may be bad for the stock market but it could unleash a wave of new investment in the housing market predicts KR Peters Director Peter Nicolls.

The US has jacked up tariffs on most countries, hitting China hardest with a tariff of 145 per cent. Australia has been whacked with a 10 per cent tariff.

China quickly retaliated with a tariff of 125 per cent on the US and now the world's two biggest economies are in a trade war that threatens to destabilise the world economy.

Mr Nicolls believes the uncertainty created by President Trump will see investors abandon the stock market and "reinvest in bricks and mortar".

It could also mean good news for mortgage holders who have struggled under the burden of high interest rates after the Reserve Bank of Australia (RBA) began hiking rates in 2023.

"All the leading economists are saying that The Reserve Bank of Australia will need to drop interest rates by at least one percentage point," said Mr Nicolls.

"This is great news for mortgage holders and new homebuyers.  Many homebuyers are currently sitting on the fence waiting for the outcome of the Federal Election on May 3 and will re enter the property market once they know which party has been elected."

Mr Nicolls said if the Liberal Party wins government APRA lending buffer rules will be relaxed enabling home buyers to borrow more and new incentives offered by governments will be taken up by home buyers.

"New home sales will improve as cost to build prices have stabilized. Migration will continue to fuel demand even if the number of migrants are reduced," Mr Nicolls predicts.

"All in all now is the best time to buy. Buyers' confidence will return and those that don't jump off the fence will again miss out."