Why Australian property is the best to invest in

“While it may seem like a good idea at the time, investing overseas is quite a perilous exercise mainly because, unless you know the place or have family living in the country, you don’t know the local market, especially from a demand perspective,” Mr Peleg said.

“It’s only the local people who know if an area is really popular and has high demand or vice versa.”

The regulation and controls Australia have in place, while it may cause some investors to moan, can help protect Australian buyers, unlike when attempting to invest in other countries, he said.

“Also, if you buy a property here you know, or at least you should know, what its fair market value should be but overseas you don't. You don’t know the banks and you don’t know the valuators,” Mr Peleg said.

“Even here, there are blacklisted areas where lenders require more deposit and they will also tell you if it is high-risk. But overseas you won’t know any of [these], not the supply and demand factors, not the demographics of the area and not whether good tenants are available.”

Despite the benefits of keeping investments local, if investors feel like the risk is worth the reward to invest overseas, Mr Peleg recommends that investors familiarise themselves with the property and tenancy laws and regulations of where they want to invest.

It is also important that investors get a good grasp of the agent commission before they choose to invest, and seriously consider this when weighing up the pros and the cons.

“In Australia … with an existing property, the commission the agent receives is about 2 per cent and for off-the-plan maybe between 4–6 per cent. However, overseas in an unknown market you don’t know what the commission is and the person who ultimately pays is you and, in some cases, it could be 10 per cent or even more commission to the seller,” he said.

“The reality is the only exception when it comes to purchasing overseas is when you have the advice and knowledge of close friends or family members who live there to guide you but even they can get it wrong because it still happens in Australia.”

Tags:

• Expert advice

Share