Pete Wargent blogspot

Co-founder & CEO of AllenWargent property buyer's agents, offices in Brisbane (Riverside) & Sydney (Martin Place), & CEO of WargentAdvisory (providing subscription analysis, reports & services to institutional clients).

5 x finance/investment author - 'Get a Financial Grip: a simple plan for financial freedom’ (2012) rated Top 10 finance books by Money Magazine & Dymocks.

"Unfortunately so much commentary is self-serving or sensationalist. Pete Wargent shines through with his clear, sober & dispassionate analysis of the housing market, which is so valuable. Pete drills into the facts & unlocks the details that others gloss over in their rush to get a headline. On housing Pete is a must read, must follow - he's one of the finest property analysts in Australia" - Stephen Koukoulas, MD of Market Economics, former Senior Economics Adviser to Prime Minister Gillard.

"Pete is one of Australia's brightest financial minds - a must-follow for articulate, accurate & in-depth analysis." - David Scutt, Business Insider, leading Australian market analyst.

"I've been investing for over 40 years & read nearly every investment book ever written, yet I still learned new concepts in his books. Pete Wargent is one of Australia's finest young financial commentators." - Michael Yardney, Australia's leading property expert, Amazon #1 best-selling author.

"The most knowledgeable person on Aussie real estate markets - Pete's work is great, loads of good data & charts, the most comprehensive analyst I follow in Australia. If you follow Australia, follow Pete Wargent" - Jonathan Tepper, Variant Perception, Global Macroeconomic Research, author of the New York Times bestsellers 'End Game' & 'Code Red'.

"The level of detail in Pete's work is superlative across all of Australia's housing markets" - Grant Williams, co-founder RealVision - where world class experts share their thoughts on economics & finance - author of Things That Make You Go Hmmm, one of the world's most popular & widely-read financial publications.

"Wargent is a bald-faced realty foghorn" - David Llewellyn-Smith, 'MacroBusiness'.

Monday, 12 June 2017

Buying property overseas

Capital flight

A short piece I did for 7 News (click image to view the video).

Numbers recently released by OFX (formerly OzForex) showed a strong increase over the past five years in the number of people transferring money overseas from Australia to buy foreign real estate, albeit from a low base (and it should also be noted that OFX is a growing company in its own right). 

In particular, the figures suggested that young people in the 18 to 30 age bracket are leading the charge.

This may suggest that affordability in expensive markets such as Sydney is causing some young people to look overseas.

That said, global real estate portals show that the most searched markets included London, New York, and Paris - hardly cheap property markets in their own right!

In my opinion it's at least as much a lifestyle phenomenon, with young people working, travelling, and living overseas more than has ever been the case before. 

There is also a foreign exchange driver of foreign property purchases.

At the peak of the mining boom there was a flurry of activity for Aussies looking to buy US property post-crisis, for example, but the Aussie dollar has since depreciated very significantly (and in many cities US home values have recovered).

Today, Aussies are showing more interest in London, especially post-Brexit.

Risks abound

Despite having a buyer's agency in London, I always caution investors to think very carefully before taking the plunge and buying property overseas.  

There are several risks involved in buying overseas real estate.

Firstly, financing can be considerably trickier, and lenders are often reluctant to finance overseas deals, in part due to flight risk.

I also often caution prospective buyers that if they are planning to repatriate funds in the future then they aren't just buying a property investment, they are also playing the currency markets, even if inadvertently. 

There is also a risk of changes in legislation going against you. 

For example, in recent times there has been a movement towards taxing foreign property owners at higher rates in some countries (and, of course, you may not even have a vote in the country you are investing in, so you won't get a say in such matters).

Last but not least there are sovereign and country-specific risks, or in plain English, the chance that things go pear-shaped in the region you decide to buy in!

Caveat emptor.