The expat dilemma

The strength of the Australian dollar against the US and other currencies has seen many expats, who are paid in US dollars or other foreign currency, put the brakes on buying Australian property. Understandably they don't like the fact that their money isn't currently giving them the advantage it did when those currencies were far stronger.

However, is this ‘wait till the dollar drops’ strategy the right move for those who are planning to return home in the next few years?

In exploring this issue it’s important to recognise the pent-up demand among expats which has been building since late 2008 when the GFC hit. At that time many expats delayed their Australian property purchasing (both for a future home and investment) due to concerns of potential job losses, cut bonuses and the unknown factor of how well the Australian property market would hold up in the global downturn - all valid reasons to hold off at the time. We now know, over the past two and a half years the Australian property market has held up well under the economic pressures which seriously affected many other countries. As a result those who purchased quality property in good locations, as many of my Australia-based clients did in 2009, are glad they did.

Whilst we don't know for sure what Australian property values will do over the coming 12 months, we do know that many respected forecasters are optimistic when it comes to the inner and middle rings of capital cities in the eastern states where supply is low and demand is strong, in particular Sydney. For expat buyers, if market values do continue to rise as they have since early 2009, then any advantage gained by waiting for the Aussie dollar to drop against the US (if in fact it does over the next 12 months) could be cancelled out with the prospect of their buying power being significantly reduced beyond any potential currency exchange benefit.

Of course, everyone wants to buy well, and exchange rates and market influences should be considered. However it’s important for expats not to lose sight of the big picture. After all, a delay is likely to push back plans for building a property portfolio, or even price people out of the market altogether if values increase quickly, which we have all seen happen in the past.

If you’re an expat waiting to stretch your money further with an attractive currency change, then it’s worth keeping in mind that many other expats have also put plans to buy their Australian home on hold. So, if the Australian dollar drops the demand for Australian property, particularly in capital cities where expats typically buy, has the potential to push up prices further than they are predicted to rise without such additional demand pressures.

If you're an expat who's planning to purchase a home or investment property in the next 12 months then click here to send an email to Patrick with your property buying intentions . Patrick will then undertake a personal analysis of your property plans providing you with the pros and cons of your suburb selection and what size and style of home you can expect for your proposed investment.