Q: I am thinking of buying a 2 bedroom apartment in a France. I would like to retire there one day. Is now a good time to buy or will it be better in 2012 viz a vis the euro ?
A: When you plan to retire to a different country, I recommend you “road test” the lifestyle for at least 6 months by renting. Get to know the local market and ensure that the idyllic holiday translates into an idyllic retirement lifestyle.
If you are looking to buy in a highly sought after area and you can afford to fund the property purchase and ongoing management and maintenance costs now, buy when you find the right property. As the property will become your home, it is not an investment decision but rather a lifestyle decision. If the location you plan to purchase has a plentiful supply of properties available, you may wish to delay the purchase as you have the benefit of choice. With supply outstripping demand prices would be likely to remain flat or fall.
The AUS$ has risen dramatically and quickly against the Euro. In October 2008 a Parisian unit bought for €200,000 would have cost AUS$418,000. To buy the same unit in 2011 for €200,000, would cost AUS$275,000! That’s 35% cheaper if you hold AUS$. Given the AUS$ is at 10 year highs, is the current strength of the Australian Dollar against the Euro sustainable?
As can be seen by the chart, things can change very quickly. You can remove the risk of currency by moving AUS$ into Euro then focus on finding the right property at the right price in time.
Do your homework on the Net and on the ground. Get to know the local market. Make sure you understand the French Property Title system as it is different. Get advice on Estate Planning. Also allow for Tax on property, income and Capital Gains.
This article was published in The Australian on 1 October 2011. A direct link to the article can be found here.
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