What do people do with the houses they buy overseas?

There are four main reasons why people buy property overseas – but what is the motivation behind the sales, and how many people are buying?

What do people do with the houses they buy overseas?

There are four main motivations for buyers looking at the international property market.

The first is for a holiday home.

This is a major driver in France which attracts a large number of buyers from the UK. In Bali, many Australians manage to navigate significant Indonesian restrictions to buy property as a holiday destination.

Bali sun deck

Bali remains an attractive investment location for many Australians looking for a holiday home.

Strong interest from overseas property seekers on realestate.com.au for the Gold Coast is likely driven in part by people looking to this as a holiday destination.

The second is for investment, and this is particularly the case for Australians who were born overseas and therefore have a good understanding of the rules and market dynamics of their home country.

Australian property is expensive and may be out of reach for many buyers. Buying in their country of birth may be cheaper and also potentially provides a base if they prefer to return there at any stage.

Property investing

Investing in cheaper markets can be attractive to some buyers.

A large number of New Zealand-born residents of Australia are a key driver of interest in New Zealand housing. Larger scale investors may look to diversify their risk profile by investing in residential across many countries

The third reason is to live in. Australia has around 190,000 overseas migrants entering the country every year. China, India and UK residents dominate. Before arriving in Australia, it is likely that many looking for somewhere to live.

Australian passport

Australia attracts migrants from all over the world.

For property seekers from these countries, the most popular suburbs are generally those that contain a large number of people also born in the same country. The most popular suburb for Chinese buyers is Glen Waverley, for buyers from Indian it is Tarneit and for people from the UK, it is Manly.

The fourth reason is to provide housing for family members who are looking to study in that country. In the US, the main driver of purchases by Chinese buyers is to provide somewhere to live for family members studying that country. In Australia, strong interest in places like Melbourne and Adelaide CBDs are likely to be driven by strong universities in that city.

Australian universities attract students from all over the world. Picture: Getty Images

Australian universities attract students from all over the world.

The biggest challenge when buying overseas is understanding the regulations around foreign investment in that country. Taxes are also a consideration. Countries with relatively relaxed foreign investment rules may have significant taxes on offshore buyers which can make a relatively inexpensive property far more expensive.

If you are dreaming of owning a chateau in the South of France, or an apartment in Berlin you are in luck. Most European countries have very few restrictions on foreign purchases.

Riomaggiore, Italy

Fancy a spot on Italy’s famous Cinque Terre coastline? It might be easier than you think.

If however you aspire to own a house in Reykjavik you may need to look at residency – in Iceland and Liechtenstein, only residents of those countries are allowed to buy real estate.

Photo credits to: Getty Images

~ Article by Nerida Conisbee / REA