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Despite growing pressures, investors will once again be turning to bricks and mortar thanks to the volatility of global share markets and the ASX dropping to 2013 levels.

However, there are challenges ahead and you should tread carefully to ensure you avoid unnecessary losses.

1 ONGOING FOREIGN INVESTMENT

With the Australian dollar at just over US$0.70, our property market continues to be attractive to foreign investors, which means competition at auction will remain brisk. This comes despite changes to foreign investment laws last year, which sadly added up to little more than ‘extracting a few more coins from the ashtray’ and have barely dampened foreign investment or the purchase of owner-occupied properties.
NAB’s quarterly residential property survey, released
in October, reveals that during the September quarter,
19% of all new apartments, and 14.9% of new homes, were purchased by foreign buyers, up significantly on the 16.1% and 11.5% levels recorded in the three months to June.

In Victoria, foreign activity was significantly higher
than the national average. Over the quarter, foreign buyers accounted for 28.5% of all new apartments sold, and 26% of all new homes. But what raised a few eyebrows was that, despite stricter restrictions on foreign investment in the established residential property market, the NAB survey suggests that foreign buyers also accounted for a significantly high number of established property sales.

What to do

Avoid a bidding war 

Avoid a bidding war – and one which you are unlikely to win. Opt to buy properties well before they go to auction if you can.

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