Property investment is still more popular than stock investment because it is more reliable and tangible. However, should Australian investors look beyond their borders considering that rental yields have tightened in Australia and house price growth is falling?
According to an analysis made by Australian Taxation Office (ATO) the 13 million tax returns in 2014 revealed that at least 5% of the Australian taxpayers were earning revenue from their investments in other countries.
Ben Kingsley of Property Investment Professionals of Australia (PIPA) enumerates several reasons why it might be beneficial to invest in overseas properties. The first reason is yield potential because at this moment in time offshore yields are better. In Australia, rental yields have gone down because property values have gone up. Rental yields hit a record low in November in almost all the cities of Australia because dwelling values have continued to rise at a faster rate than week rentals.
The average gross rental yield has gone down to 3.2% from the previous 3.5% a year ago and 4.1% 5 years ago. Tim Lawless of CoreLogic said that rental yields will continue to go down because residential property values are fast rising.
In addition to the high rental yields achieved from overseas investments, buying offshore properties can enhance the lifestyle of Australians. They can take advantage of holiday access and checkout some of the developments that are going on. There are many condo developments in Southeast Asia and most are near the beach. If they invest in one of the property developments, they can rent out a room and gain income from holiday accommodation.
Investors also enjoy the incentive of a couple of week’s holiday every year. The best incentive however is a possible currency upside. There are lots of opportunities for investment in countries with fewer barriers to entry.
Investors can buy property in Karon to take advantage of rental revenues. The property can be used as a second home to enjoy a holiday in Phuket or it can be rented out to the tourists who want to enjoy unlimited sun and waters. Investment in Karon guarantees generous returns on investment.