How do expats prevent overpaying for a home?
Property prices around the nation are rising at their fastest rate in decades, according to official data.
Part of the reason for this collective market strengthening are record low interest rates, but also elements of pent-up demand and low property supply levels.
On top of these factors – which would light a firecracker under any property market at the best of times – there is the added complexity of expats returning home to live in droves.
The pandemic has so far resulted in hundreds of thousands of people returning to Australia to live.
Some of these returned residents are people who were simply overseas on holiday when the global public health crisis emerged early last year.
A fair contingent, though, are expats who have decided to move home earlier than planned because of our nation’s superior handling of the coronavirus compared to many other nations.
Some people have even returned home when they never thought they would anytime soon.
Indeed, it’s interesting how the pandemic has made us all reassess our lives and how we want to live them.
The “expat factor”
A recent report by the Property Investment Professionals of Australia (PIPA) found that the influx of expats was adding to the current pressure on property prices, especially in Sydney.
Many returnees are also landing in Australia with stronger currencies in their back pockets, plus they have sold holdings in far more expensive property markets, such as New York or London before coming home.
This means many are prepared to pay more than many people to secure a home.
The problem with this mindset is, well, just because you could, it doesn’t mean you should.
Overpaying for a property just because it seems affordable to you is still paying too much for it in anyone’s language.
This can turn into an issue in the years to come if someone has dropped hundreds of thousands, or even millions of dollars, more on a property than it was fundamentally worth at the time.
The property may take years or even decades to claw back this over-payment, which is not a situation anyone wants – no matter how deep your pockets seemed at the time.
Accessing expert assistance
We have experienced a strong uptick in expats seeking our buyers’ agent services over recent months.
Some have already arrived back on our shores, while others are planning their return sometime soon.
These expats recognise that they no longer understand the local market nor even which locations are investment-worthy because they haven’t lived here for so long.
Rather than taking a punt on a property in a suburb they used to know and paying far too much for it, we are working with them to help them secure the best property for their needs for the appropriate price.
Part of this service involves recommending locations that have gentrified since the last time they lived here, as well as ensuring they are paying what is necessary to secure it in a hot market.
There is never anything wrong with paying market price if it allows someone to buy a home for their family and in strong market conditions there really is no other option most of the time.
However, paying significantly over what was needed because of a lack of understanding about local market dynamics should always be avoided.
Just as using the comparison of how much a property would cost if it was in Hong Kong should never be a justification for someone to unknowingly do their dough.
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