Prices in Sydney and Melbourne are so high, some first-home buyers are purchasing properties abroad instead.
One such person is Paul Linabury, 30, from Western Australia, who recently purchased a three-bedroom house in Niseko, Japan, for $90,000 with his partner and two other couples.
“I was purchasing as a bit of an investment opportunity in Niseko, Japan, along with two other friends,” Linabury told the Daily Mail Australia. “When you look at the comparative price of property in Japan, and then take into account splitting it three ways, it was an affordable option to consider.”
Linabury does not own any property in Australia, and he said he may use the capital invested in his property in Japan as security, which the banks can lend against.
“I didn’t buy with the intention of selling and using the capital gains to get into the property market in Australia, but even in the last six months the property has gone up in value, so you never know,” he said.
Linabury and the other investors plan to use the three-bedroom house in Niseko, which is located in Hokkaido Island, as a holiday home. They also plan to offer it as a short-term rental via Airbnb.
While Linabury was able to purchase his property for only $90,000, he and his fellow investors need to have deeper pockets if they want to snag a similar property in Sydney or Melbourne.
A typical three-bedroom house in the Sydney suburb of Balmain now goes for $2.6m. In Melbourne, a three-bedroom house in Degraves Street, Parkville, goes for $2.3m to $2.5m.
International transfer company OFX recently unveiled data that indicated Australians aged between 18 and 30 were increasingly transacting in property deals abroad.
“OFX transfer data and the current strength of the Australian property market, when viewed in combination, suggest that that our millennial customers could be increasingly looking outside Australia when it comes to initial involvement in property investment,” said Adam Smith, chief operating officer at OFX.
“What's particularly interesting is that foreign property transactions appear to correlate with the strength of foreign currency rates, so when the Australian dollar is strong against the US dollar, for example, we see an increase in property-related transfers to the US.”
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