Risks to consider when buying property overseas

On October 1, there was a shooting massacre in Las Vegas. Killing at least 58 people, it is the deadliest shooting in modern U.S. history. The frequent mass shootings in the U.S. are related to a number of factors: overseas, America has made many foreign enemies and has become a prime target of ISIS and domestically, a huge wealth gap and racial tensions are igniting conflicts and violence in a lot of states. Knowing its sociopolitical situation, I have never been very interested in real estate investment in the U.S..

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We all know that investing in overseas real estate can be much riskier than buying property in places we are familiar with, but in the past, people have chosen to make investments in developed nations as a way to mitigate the negative effects of possible sociopolitical instabilities in their home country. However, today’s world has changed - apart from the U.S., the post-Brexit future is a huge unknown factor for the UK and Hong Kong investors are likely to face language and legal barriers in the non-English-speaking, non-common-law continent of Europe. Therefore, it leaves them with Canada and Australia as the only two decent options to invest in the developed world.

Each with its own advantages, the hottest investment spots in Canada are obviously Vancouver and Toronto. Vancouver boasts a mild climate and a beautiful environment that is perfect for retirees and Toronto is a metropolis with great employment opportunities. Unfortunately, they have become wildly popular amongst mainland investors in recent years, resulting in skyrocketing home prices. The housing bubble of both cities are said to be bigger than that of Hong Kong. It is advisable for those interested in Canadian properties to sit tight and wait for the property prices to fall back to a reasonable level.

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On the other hand, far away from Europe and the U.S., Australia’s geographical position has been a blessing that has helped the country avoid two World Wars and other international conflicts. Thanks to its strong agriculture and mining industry, Australia has enjoyed a steady economic development, which explains the high housing prices, particularly in Sydney and Melbourne. However, the small population and high income increases local residents’ ability to afford property, and the government has taken measures to incentivise citizens to move to regional areas such as Brisbane, which helps to alleviate the pressure of increasing housing prices. Brisbane and the nearby Gold Coast have seen a relatively small increase in property prices. In those areas, a brand new 2,000-square-foot condo starts around AU$700,000, which is less than HK$5 million, making it a great deal. I think Australia should be the first choice for those looking to buy overseas real estate for a decentralised investment.

Of course, investing in foreign property is never without risks. Investors have to do their homework and put time and effort in order to find properties that suit their needs.

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