Living and working abroad

There are obstacles to living abroad. But you know, its not as hard as you might think to live and work abroad if you are able to develop relationships in these countries or find forms of work that suit you. In my 'wonderings' I have come across people who find work abroad by doing different things. Consider the following:

1. Selling: I write books about buying property. Such book publishing allow me to live anywhere in the world because my store front is online.

2. Consulting is another activity that allows you to work anywhere in the world if you deal with your clients online.

3. Strategic career opportunities: There are certain jobs like doctors, nurses and teachers who are in strong demand around the world if you have decent qualifications.

4. Service jobs like teaching English, builders, trades jobs and tattoo artistry are also jobs that you can find if you travel. Generally though in these cases you need to tap into the informal economy, but consider this: In a large city like Tokyo, you can be sure there is a need for computer support services for all the English expatriates living there, because there are thousands there looking for a good deal who are getting ripped off because they don't speak Japanese, or have support. In such cases, forums offer support for most, but forums only offer limited support.

Different countries have different rules for staying in the country. i.e. Consider that the Philippines probably has the most liberal immigration laws. You can stay there 18 months before having to leave the country, but you pay around $30/month to extend your visa. Other than that, they care less what you do. In Japan, its a 90-day tourist visa, and hard otherwise to get a business or working visa unless you are sponsored. Having said that, you can fly to China or Korea every 90 days (3mths) if that suits you, or you can commute from another place and just stay the 90 days in gaijin houses (i.e. Short stay accommodation).

The intention of this strategy is to buy accommodation in different countries at the low-end of the market so that I can live a flexible and interesting life as a tourist. This is why a $28,000 dormitory in Japan appeals, with a $300/year rates bill, a $US55,000 house in a depopulating NZ regional city, rates a little pricey at $1700/year, or you can go a house in much of the USA for $80-120K. We also have a place and land in the Philippines.

This is truly a period of great flexibility thanks to technology. I would not equate this however with freedom. No country recognises your personal sovereignty, and no government functions on the basis of rationality as the standard of value. Under democratic tyranny of the 'populist' majority, we spread our assets widely. This is why grasslands are so prevalent. Their spores are basically blowing around the world. We like to travel light in a world of arbitrary government. Yes, that might sound a little tragic, but living a life of slavery to some over-priced, statutorily or artificially priced house is crazy. I don't own a house in Australia, my home country because with the average house costing 11.6x the average income in Sydney, I think I should be living in Japan, NZ or USA, where I can live in a decent place for 2-3 times earnings. Personally, I wish people would think so we can end this tyranny, but since we have a system of wealth extortion based on 'universal ignorance and passivity', I prefer to travel. If you are wondering where this ends up, it is either:

1. A life of repression - Japan is the model we are drifting towards - where you are all zombies entertained by mindless concrete, frivolities like alcohol, sex, etc.

2. A intellectual life - A form of meritocracy which does not yet exist, where economies grow at 16% per annum because they are not constrained by centralised government; which are not overtly materialistic because the people's intellectual sovereignty has been oppressed. In a world where ideas matter because there is a free market for them, as opposed to the statutorily regulated 'parliament' which has political parties act as gatekeepers. But you go on pretending you live in free countries because you are given some pretense of it. More on this matter at our politics blog.

NZ Property Guide Philippine Real Estate Guide Japan Foreclosed Guide

Author Andrew Sheldon| Applied Critical Thinking | www.SheldonThinks.com

Outlook for Australia property

In a number of blogs, we have argued that the Australian property market is not going to collapse. The IMF has come out with the same prognosis. We must remember that the Australian economy has a number of advantages:

1. Currency flexibility - weaker commodity prices or volumes drive exchange rates, and with commodities priced in USD, currency movements provide the perfect hedge.

2. Immigration - The Australian government has the capacity to change the number of immigrants to stimulate domestic demand

3. Future fund - The Australian government has a $200 billion future fund, which could be used to build a high speed, train service around the SE-East coasts of Australia.

4. Business investment - Irrespective of any weakness in China, there will still be a desire to increase commodity supply capacity from Australia, whether coal, iron ore, coal seam gas, etc.

5. Gold mining - Australia can expect a gold mining boom. Australian companies are one of the biggest investors in mining around the world.

6. Government debt - The Australian govt has a significant capacity to sustain spending over 5-10 years. It is probable that this will involve capacity-building, e.g. ports and railways to facilitate future mining, mostly in Qld, NSW, Victoria, NT. I think public sector debt is around 50% of GDP if memory serves me. It could go to 120% without much complaint given the positive outlook.

7. Zoning laws - The government will persist in controlling the release of land, which will assist with sustaining high land prices.

8. Global political revolution - One might also expect a global revolution in terms of the way government is administered.

These parameters will ensure that property holders sustain their property investment value, and that Australia even needs more home construction in coming years. There is no over-supply.

NZ Property Guide Philippine Real Estate Guide Japan Foreclosed Guide

Author Andrew Sheldon| Applied Critical Thinking | www.SheldonThinks.com

Australian dollar forex trade with property twist

I just noticed an increase in orders for my Japan Foreclosed Property Report. Interestingly I was just looking at the currency markets when an order came in...maybe some of you were struck by the same thought. I have made several posts about the impending realignment in currencies. The big news is that we about to see a collapsing Yen and a corresponding high Australian dollar. i.e. The Yen carry trade is about to have a 2nd breath of life. If you jump on this trade, you will be set to buy a foreclosed property in Japan at the end of it. Check out the chart on my forex blog.

My thoughts are that you could buy AUD:JPY as a CFD contract with a group like CMC Markets in Australia, then at the end of the trade, you liquidate and buy a property in Japan. See www.cmcmarkets.com.au.

NZ Property Guide Philippine Real Estate Guide Japan Foreclosed Guide

Author Andrew Sheldon| Applied Critical Thinking | www.SheldonThinks.com

Australian property - is it overpriced?

There is no question that Australian property is over-valued. But we need to acknowledge that it is for structural reasons, and just as the Chinese govt is keeping its currency artificially low, the Australian govt is keeping its property prices artificially high. The Chinese govt using currency regulation; and the Australian govt uses land use regulation. So much for the communist-democratic dichotomy. Near-perfect synergy if you ask me....so we will meet somewhere in the middle, but since we will end up selling our individualistic souls in the process...engaging in moral relativism or moral scepticism if you prefer...we will end up with global collectivism...with govts working in synergy to control your lives. This is probably reason enough to have property or other assets dispersed all around the world. You know about having a diversified asset portfolio...well this is reason enough to spread your exposure. Governments are playing lottery with your money...and lives. The reason they hardly persecute anyone anymore is because you are drowned out by PC-compliant media and organisations, and because they have your money. Is there a conspiracy...its not centralised....and certainly not so conceptually well-planned. Its an alignment of economically and politically compatible interests. They don’t even realise what they are doing to their national values.

So back to the Australian property market. The IMF says the Australian property market is overvalued....Duh! It has been for a decade. The issue is whether its going to fall. The answer is no...at least not nationwide. They might do a few ‘strategically’ placed land releases to the poor, but expect the Australian govt to control prices. You might think they cannot do this. They can so long as they control interest rates (and they do) and the China has a requirement for our commodities. This will be the case for 20 years so no problem. We cannot therefore expect huge increases in Australian property, but you can reasonably expect good growth. Probably bubble? Not likely...at least not for the next 10 years. Strong commodity prices are going to demand interest rate increases. Expect a strong currency too as property prices rise. The AUD is going to break parity with the USD, and do even better. Yep we are probably looking at 1.15. Why? Paradoxically because of high property debt which will give Australians some sensitivity towards excessive consumption. The problem of course is greater import penetration. In a weak global market foreign enterprises will be targeting Australia. So in the long term, we might expect import penetration to balance out those currency gains. Govt spending will also have an impact. The high prices can be expected to remain in the cities because of strong population growth and employment.

NZ Property Guide Philippine Real Estate Guide Japan Foreclosed Guide

Author Andrew Sheldon| Applied Critical Thinking | www.SheldonThinks.com

The AUD will continue to diverge from the NZD

We can see from the following chart that the NZD is in a long term decline against the AUD. We might ask why, and what prospects are there that this trend could turn around. The NZD:AUD decline since 2005 marks the start of huge capital investments in Australia, which has resulted in Australia's national income and savings surging whilst NZ's has gone backwards. This of course mostly arises due to mining and energy investment in Australia. See chart in Google Finance.

The significant rallies in the NZD that you see in that period relate to rises in NZ interest rates, and the NZ Treasuries efforts to quash NZ domestic spending....which was mostly on the rural batch, as well as the ancillary jet ski, motor bike, fishing boat and jacuzzi which went with it. Today the batch is perceived as a waste of money, courtesy of a change in government policy, which has ceased to reward such lifestyle decisions. Now, a great many NZ'ers are selling their 'sections' they use for trout fishing, or their holiday house by the sea. The market will probably resume however, and the strong Australian dollar might just be the impetus.

Australians have to be asking themselves whether anything is going to change. The answer is Yes, but not for probably another 5-10 years. Why do I say that? Well, NZ has to absorb a great deal of housing debt, so there is not going to be any significant spike in interest rates yet. Australia has even more debt, but far better prospects for paying it off. There will also be a stronger Aust economy, with the prospect of stronger interest rates making it even easier for the AUD to outpace the NZD.

It might not be so evident yet, but I see NZ having its own resource boom in a few years. Why? Well, NZ is a relatively small, unmineralised country. Its rocks simply have not been around long enough, and the mineralised core from the current mountain building will not be exposed for another 10 million years. The country does however have large tracts of maritime territory. In fact its the size of the EC. This maritime territory is known to possess vast resources of methane hydrates. In addition, these offshore sedimentary basins may contain vast oil & gas resources. They have not been significantly tested. Even NZ's sole producing basin - the on & offshore Taranaki Basin has hardly been explored, particularly at depth.

It was only last year that the country commissioned a relatively small oil & gas field called the Tui field. The impact of the field on NZ's terms of trade were significant, despite its small size. The Chinese, Indians and others are going to be looking for cheap energy inventories in future years. With access to such resources tied up by major oil & gas producers, extorting high prices for their products and resources, its probable that places like NZ are going to attract a greater share of the exploration dollars, and some of this will lead to success. A significant find is probable, and for a 4.3mil population, its probable that it will make a big difference, not only in pushing up the currency, but by stimulating interest in NZ's offshore basins, which will attract even more interest.

This will take 10-20 years to unfold of course. The implication however might be significant if you perceive NZ as a nice place to retire, or to buy a holiday house. In the short term, the NZD is certain to continue its fall, but it might be a good idea to consider these factors when considering retirement in NZ. In the short term however:

1. NZ immigration is mostly outwards to Australia - that is - Australia's is growing faster

2. Australian export volumes and prices are fairing better - even though NZ milk and timber is doing well

3. Australian business investment is phenomenable, NZ lacklustre

4. Australian savings are far higher

5. AUD will out-perform the NZD for the next 5-10 years, so expect the NZD and AUD gap to continue its divergence

6. Thereafter (say 15-20years off) you might expect the NZD to recover, and do rather well based on my expectations for the recovery of methane hydrates and conventional oil & gas offshore, as well as the mining of coastal titanomagnetite (titanium-rich iron ore), which will by that time be far more strategically important. Currently Ti-Fe is hard to separate and use, and the appeal of high strength steel alloys is only just starting to take off. NZ deposits are relatively remote, so early mining will be of Chinese, PNG and Russian deposits.

The other important factor when you make these Aust-NZ comparisons is to consider the extent to which NZ will benefit from integration with Australia. The issue of course is that NZ is a lovely place, but nothing happens here. If we want to look at what difference greater integration is going to make, then we only need look at South Australia. Does it benefit from being part of Australia? Not significantly, because like NZ, its a small population remote from the rest of Australia. And NZ is split into two islands, so its like two Sth Australia's. Australia is very much concentrated on NSW, Victoria, Queensland and WA. The other states are really mere appendages to the demand created by these states, whether its in existing population or population growth-related demand.

The appeal of NZ integrating further with Australia is mixed. It will make a marginal difference to NZ's competitiveness, but at the same time it will make it easier for NZ'ers to go overseas to capture some of that income disparity. Of course they can always come back to NZ in around 12 years time (to retire) when the currency bottoms against the AUD. The big difference for NZ will come from access to Australia's capital markets. Already the countries are talking about integrating their respective legal systems. This will make it easier for the countries to jointly regulate and administer business. This will make it easier for Australians to buy property in NZ, and it will make it easier for NZ'ers to invest in Australia, giving them access to a broader variety of investment opportunities. The appealing aspect of this is access to mining investment opportunities, and probably technology investments, as well as helping NZ technologists to finance their developments given the lack of savings in this country. This will of course aid NZ financial literacy....which has already been favourably impacted in Australia by compulsory superannuation, and most particularly a plethora of privatisations there. In NZ, the bulk of the funding for privatised assets was offshore.

NZ Property Guide Philippine Real Estate Guide Japan Foreclosed Guide

Author Andrew Sheldon| Applied Critical Thinking | www.SheldonThinks.com

Australian property - Morgan Stanley misguided

I am going to weigh into the Australian property debate. The issue was sparked by an academic Steven Keen, who was unsurprisingly proven wrong with assertions of a dire collapse in Australian property prices. Its just not going to happen. Now there is a guy from Morgan Stanley saying there will be a slow decline in Australian property prices. I care to differ. The reasons are the following:

1. Interest rates in Australia will not rise, the Australia dollar will go up. Is that a concern? No, because I think commodity prices will be buoyant, and the govt would prefer commodity producers to suffer rather than homeowners.

Sydney, CBD, 2009

2. There is a raft of huge energy, iron ore, coal, coal seam gas projects to be developed in Australia, each spelling a huge amount of investment in the country

3. There will be a raft of Chinese and Indian investment in these projects over the next 2-3 decades, and that will free up Australian equity to fund all manner of investments and consumption, not to mention tax receipts.

4. There is still strong (i.e. bent up) demand for first homes and home upgrades, and that will continue

5. Neither government is going to allow land releases to severely undermine urban land prices. I see utterly no discussion on land zoning.

6. Mineral exports will increase over this period because of strong demand from China and India. China is not going to stop spending. It is finding even more reasons to invest. It now has to produce a lot of its own iron ore because Australia, Brazil and India are playing hard ball. So they will need new steel mills, new power stations, new railways, etc.

Mosman - Lower North Shore, Sydney, NSW

We are in the midst of an economic era which will never be seen again. There is really no historical precedent for the period we are currently passing through, and it will not be repeated again on this scale. You have half the world's population undergoing liberalisation, at a time when population growth rates can only fall, so the stimulus is never going to be greater from population growth. Even if governments ceased to be centrally controlled, and reason was the standard of value, it is doubtful that the current wealth production would be achieved because of the reliance on consumption by politicians (i.e. Because they undermine productivity through their very existence).

For this reason, I don't see a collapse in Australian property prices, or even a slow leak. I see a government which will be looking to achieve a sideways movement in property prices in order to allow household debt levels to come down. If they spark a property bubble by preventing interest rate increases, they will leave voters with no one to blame in an uncertain international climate. They will be able to do this because employment, immigration and capital inflows will sustain economic activity and per capita incomes.

There are however some caveats to this:

1. If the Liberals win government, they plan to cut immigration so this can be expected to reduce demand for property. I don't think this will have too much difference.

NZ Property Guide Philippine Real Estate GuideForeclosed Japan Guide

AuthorAndrew SheldonApplied Critical Thinking | www.SheldonThinks.com

Australian property market - election implications

The appeal of the Australian property market might take a hit next year for two reasons:

1. If Labor is elected mining investment will be hit. The response might take a few years to be felt because most advanced project investments are committed.

2. If the Liberals win they plan to reduce immigration to 170,000 from 300,000 currently. The implication is that housing demand will be weaker, and thus property prices more subdued than they otherwise would be in the cities.

NZ Property Guide Philippine Real Estate GuideForeclosed Japan Guide

AuthorAndrew SheldonApplied Critical Thinking | www.SheldonThinks.com

Comparing NZ and Australian property markets

St Arnaud Lake, South Island, New Zealand

Here are 10 good reasons why not to buy property in NZ by Bernard Hickey at the NZ Herald. I might add a few more if it pleases you, as well as some good aspects:

More bad news

1. Food prices will perform well in future, though I think Australia will do better with food, minerals and heaps more minerals. Australia kind of has a global monopoly on coal & iron ore development. I can probably identify 60 projects in Australia which have the capacity to last 30 years. There is just so much ore. Even the crappy 30%Fe can be processes simply for 55%Fe. Its not to far from the coast, and there is good infrastructure, and foreign buyers of the stuff prepared to spend money to develop it. There is going to be a lot of money going into Australia. Meanwhile, the Chinese are trying to buy into NZ farming, and voters are strongly against it. So don't expect much foreign investment in NZ.

2. NZ just doesn't have much of a selling point to attract investment. Unless you are a niche medical technology developer, a graphic design or web-based business, you are likely to struggle getting business on the international stage. Its expensive and time-consuming to get to NZ. So is NZ destined to be just a 'retirement hub' where people come to die? I think so.

3. The government finally looks to be doing something about welfare dependence. There are 386,000 NZ'ers on welfare benefits receiving a total of $6.5 billion a year. The biggest rout seems to be single parenting. There 100,000 single mothers who have 180,000 kids among them. No doubt most of them care less about working, and most are going to be terrible role models, embedding an 'inter-generational' culture of welfare expectancies or dependence. The problem is that NZ really has to create jobs for these people.

4. The government is actually making NZ less attractive for retirement by increasing the GST to 15% to fund tax cuts. Having said that most retirees are living on foreign income, and that translates well into low-priced NZ dollars.

by Andrew Sheldon

Some good news

1. There is actually the prospect of some low-income Australians retiring in NZ in coming years in order to benefit from cheap housing and falling airfares. This will also have a benefit for Australians travelling here for tourism, and buying holiday houses. In NZ you can buy a holiday house for $NZ80,000 ($A65,000) near the beach, in Australia they start at $A350,000.

2. Some of those NZ'ers working in Australia's mining industry are going to come home to NZ. Particularly if they are working in the mines in WA, where they are less likely to meet girls and settle in the country. They might thus be more inclined to save and return to NZ with a nest egg.

3. The Australian population is growing so much faster than NZ, 2% compared to 0.5%. There is a flipside however. Australian property is highly regulated. You have 21 million people sharing a continent slightly smaller than China, and it restricts urban land releases, which keeps prices artificially high. Subdivision is very difficult in Australia, even in rural towns. This is because local & state governments don't want to fund infrastructure, whilst also allowing 'tax creep' based on property prices. In NZ you can buy property or 'sections' in rural areas, in town for as little as $30-60K, and you can stick an old relocatable home on it for $50K (including expenses), or build a new one for $120,000 plus. In Australia, to benefit from those dynamics, you will need to live over the Great Dividing Range on the Western Plains, some 1000km away from Sydney, and maybe 60km from a large town, in something resembling a 'ghost town' which has lost all its services. You will be pleased when it rains, because that will be the most exciting thing that happens.

Northing else I can think to add. I think it was a good article. Basically I conclude:

1. If you have money or want to make it, you live in Australia

2. If you have money and want to leave it in your home country, you live in NZ

3. If you have no money and no desire to make it, no one wants you.

------------------------------------

NZ Property Guide Philippine Real Estate GuideForeclosed Japan Guide

AuthorAndrew SheldonApplied Critical Thinking | www.SheldonThinks.com

Interesting property markets

New Zealand (North Island, countryside)

There are several appealing markets in which to buy property. Among the markets we cover, we consider the best buying to be the Philippines for capital growth, as well as satisfactory yield. Japan offers compelling yields, however there is less prospect of much capital growth in the medium term. Mind you, since the government will likely resort to printing money in order to pay off the public sector deficit, expect some nominal price increase in property and equity assets, but of course that will be inflation-based. They might however be offset by higher property taxes and a GST increase. I see no new taxes in the Philippines, just higher compliance measures. Despite high nominal taxes, people in the Philippines pay amongst the lowest taxes in the world, i.e. 16% of GDP. Its a good deal if you can scam it. Don't be a proud taxpayer....most of your taxes goes to corrupt people, or serves inefficient purposes. You are the best custodian of your money. No one respects it as much as the person who earned it. That which was well-spent you would have been happy to finance if you had a choice. Don't believe you had a choice when you voted in the last election. You have no real or effective choice.

The NZ property market is less appealing at the moment. The currency is consolidating around 0.70 USD and there is the prospect of rising interest rates constraining price growth. Equally problematic is the exodus of NZ'ers to Australia. NZ population growth is just 0.5%, with the exodus of NZ'ers balanced by Asian and other immigrants.

Some commentators are expecting a collapse in Australian property prices. Frankly, I don't see it when the economy is supported by a lot of commodity projects and immigration. Expect business investment in the mining & energy sectors to remain strong. The Resource Rent Tax interestingly will hurt, particularly if they talk about it, then decide to defer it, or not do it. It will leave investors in limbo.

Another positive is the tight housing supply. There is no doubt this is due to the hefty increase in immigration. Immigration to Australia has risen from 100,000 in 2004 to almost 300,000 today. It was doubled from 2007. Clearly the government saw immigration as a means of avoiding recession. It looks like the govt wants to use immigration and mining taxes to finance the retirement of babyboomers.....as opposed to doing what it ought to do....removing the cap on private sector activity. By cap I mean the excessive involvement of government in the economy...stupid arbitrary statutory law, subsidies, welfare transfer payments, etc. Sound idealistic? Well, you would be surprised how counterproductive these measures are at remedying problems. Government solutions are the problem.

1. Housing affordability a dream? Blame the arbitrary restrictions of government zoning which prevent land lot availability.

2. Can't get a job? Blame government cumbersome planning approvals, and most particularly public infrastructure funding and minimum wage limits.

3. Can't make money in a volatile investment climate? Blame government for distorting 'free' markets to ensure they get elected. They don't care if they channel billions into wasteful, unproductive investment, just as long as they get elected.

4. Can't find good workers? Blame the public education system which offers a low-standard for the private sector schools, which fake it, and sell their reputation.

5. Can't even make good friends? Blame a political culture which sets the standard in self-delusion, political correctness and subjective value judgements. Same for forging lifetime relationships. Divorce rates manifestly come from the same problem.

NZ Property Guide Philippine Real Estate Guide Foreclosed Japan Guide

AuthorAndrew Sheldon Applied Critical Thinking | www.SheldonThinks.com

Australian property buyers set for retirement

On many occasions I have spoken of the huge amount of investment which is set to provide a huge amount of stimulus for the Australian economy over the next few decades. In the 1960s and 1970s we saw a rush of Japanese investment into Australian resources. Well in the next 20 years I would not be surprised to see $300-350 billion of mining investment in the industry, encompassing mostly offshore gas, iron ore, coal, coal seam gas, gold, base metals and alumina. Am I missing anything? Probably. The Chinese population is 10x Japan's and I have not even considered the other billion in India, which will also need a large amount of resources. India and China are not exactly mineral-poor economies, but mining in them is relatively disruptive compared to mining in Australia. There resource quality is not as good either. eg. India's coal is dirty, particularly its coking coal. China lacks coking coal, so these are good areas for investment.

The implication however is that Australia is going to have a strong market, so I would not be expecting property prices to fall. They will go sideways at worst, if the government opens up land releases. The reason to keep property prices hard is that it makes you work harder, you pay more taxes, and it ultimately makes you compliant with our fascist punitive government.
Sovereign risk is a problem in any country, and its easier than ever to shift funds and buy assets abroad. There are other reasons as well....foreign exchange benefits.

There is no question you will benefit from having assets in Australia. The AUD will be strong, though when our terms of trade is so strong usually Australians spend a lot on consumption. This is just one for reason to have assets overseas. The AUD is one of the most volatile currencies in the world. If you have the flexibility to be transferring funds at opportune times, you can save a great deal. For instance, we bought a house in NZ at USD0.50-0.53, its now 70c to the USD. The implication is the same for Australia.

Of course we want to be buying in markets with good fundamentals, or perhaps simply lifestyle benefits. My partner and I have property in NZ, Japan and the Philippines. We like these markets. I believe 84yen was a low for the Yen. That has not been my position for the last 2 years. That target was essentially reached. There will be a stronger currency looking ahead because of higher interest rates. Eventually the property market will recover, so you might want to look at foreclosed property. Of course if you can't borrow money in these markets its a bit more difficult, as you have to time your investment well. So you need to watch the charts. Of course we have provided guidance before through this site.

Japan is very cheap if you want a rural lifestyle place for just $USD20-50,000; its more in the city, but you don't need to live right in the city and pay $500,000 plus. Japan is a great place to be a tourist. The Philippines is not a lifestyle place for everyone, however it does have appeal as an investment destination as well.

From a currency perspective there is no need to rush your dollars out of Australia because the AUD is strong, and any interest rate increase to slow the economy will only aid the currency. The greater issue is timing. Key dates to consider are the elections coming up in the Philippines and Japan, plus I would not wait too long in the USA, as the surplus property will be soaked up. High apartment vacancy rates in places like Miami will be absorbed.

NZ Property Guide
Philippine Real Estate Guide
Foreclosed Japan Guide
Author
Andrew Sheldon
Applied Critical Thinking | www.SheldonThinks.com

Properties in NZ for Australian retirees

The cheapest places to buy property in NZ are probably the places you would least likely want to live. For example, driving through Murupara, NZ, I have sympathy for the people trying to sell a house there. Not so much that I wouldn't discourage you. The south too is isolated and colder, which might scare off buyers. The far east coast of Gisborne is a little remote.
The cheapest places you might consider are Wanganui and Taumaranui on the North Island and Oamaru on the South Island. I would be inclined to research the level of crime for Taumaranui, however Oamaru and Wanganui have a lot of appeal and decent priced houses. These places offer good buying because they have experienced depopulation. This might scare off investors, but for retirees, they offer attractive entries into the market.
In fact the opportunities to buy will only get better. We watch the number of properties for sale in Wanganui and the numbers just keep growing. There are several reasons:
1. Property prices are falling in real terms in some areas, or otherwise consolidating in growth areas as rents rise
2. Investment properties are being talked down by the government intent on taxing them
3. Depopulation is rife - not aided by a weak NZD relative to a strong AUD
4. Strong mining investment in Australia, which keeps taking New Zealanders offshore

This of course makes NZ good buying for Australians, though there are few places like Wanganui where I would rush in. I would suggest taking advantage of the strong AUD in coming years. Here are some pointers to the local value. It will only get better.
1. www.trademe.co.nz/link.aspx?i=12121&id=276780398
2. www.trademe.co.nz/link.aspx?i=12121&id=268402395
3. www.trademe.co.nz/link.aspx?i=12121&id=276591749
4. www.trademe.co.nz/link.aspx?i=12121&id=278200693

NZ Property Guide
Philippine Real Estate Guide
Foreclosed Japan Guide
Author
Andrew Sheldon
Applied Critical Thinking | www.SheldonThinks.com

Australian property is hot, NZ is not (yet)

Property prices are likely to come under pressure in rural areas of NZ as a result of depopulation. The weakness of the NZD relative to the Australian dollar is likely to give encouragement to more New Zealanders to move to Australia. There is some $300 billion of mining projects to be developed in Australia over the next 20 years, and this will underpin a very strong economy thanks to the commodity demand of 2.5 billion people living in China and India. Property for this reason looks very good in Australia. Those areas likely to benefit most are Perth and Darwin (because of their role as a service centres to mining & oil industries), plus anywhere from along the Queensland coast.
The argument will be made that Australian property is overpriced. That is true, but the strength in the economy and restrictions on urban development mean that those characteristics are going to be retained. Regional coastal areas however look more attractive. The influx of people from NZ will help, but I would suggest to you that the movement might just go both ways. i.e. The weak NZD relative to the AUD will attract NZ'ers to Australia to earn income, but it will also draw poorer Australians to NZ for retirement or holiday (houses). Deregulation of the airline industry between Australia and NZ is likely to aid that process.

In the short term, I would keep an eye on the number of homes for sale in rural places. i.e. Watch online listings in each rural city. The main cities tend to have more growth, so they are still expensive, and will not offer the attractive discounts, however rural areas like Wanganui, which suffer depopulation are likely to turn around at some point. This has already happened in the Southland area, an area that has good access from Queenstown. Wanganui is similarly well located between Auckland-Rotorua-Wellington, and is perhaps the nicest town in NZ, offering full services to retirees. Its weather is reasonable, though it is a little windier compared to other places. It has reasonable sunshine hours. There is less wind on the Bay of Plenty and East Coasts.

NZ Property Guide
Philippine Real Estate Guide
Foreclosed Japan Guide
Author
Andrew Sheldon
Applied Critical Thinking | www.SheldonThinks.com

Australian opportunity in NZ property

The latest news is that the NZ dollar (NZD) has fallen to a 9-year low against the Australian dollar (AUD). This is good news for Australians and New Zealanders who can take advantage of the disparity in currency values. Consider the following:

1. It makes sense for Australians to buy property if they think their is an opportunity to transfer funds at an opportune low interest rate.
2. It makes sense for Australians to buy property if they think the NZD will recoup its current losses against the AUD.
3. It makes sense for Australians with a house in Australia to buy a place in NZ, and use the rent from their Australian property to pay the interest on their NZ property. They will earn more rent off their (generally) more expensive Australian home, and they will benefit from the cross-rate when they transfer those AUD to NZD. They will have a nice income whilst the cross rate favours AUD. They do need however to anticipate a peaking of the resources boom in Australia to best transfer their wealth. I suggest that will occur price to the peak in metal prices. It will have more to do with consumption levels. The Australian government will be raising interest rates to prevent that, which will also help the AUD:NZD.

Irrespective of your outlook, there is the opportunity to stagger your currency transfers across the period of your loan. Clearly if Australians want to retire in NZ then they need to think about buying property now rather than when it reaches those lows, as they will need to set up a bank account. It need only be a NZD account in Australia if your bank offers that. My guess is that ANZ would. The opportunity is similarly attractive for those NZ'ers working in Australia, to send their money home. I would suggest however that it is premature to send money back to NZ.

There are two factors working for the AUD - strong business investment in mining & energy, strong commodity prices, and the need to raise interest rates to reduce inflationary pressures. Looking at the chart above it is apparent that there are two lines of support for the NZD - the 0.70 and 0.75 levels. I would suggest the NZD is eventually going to get to 70c, so I would suggest people target 0.71 for a reasonable entry into the NZD, as its difficult to pick the bottom. I call this chart pattern an 'accretionary wedge'. We are already seeing this pattern unfolding, as the NZD is already at a 9-year low. The trick is to be prepared to profit from it.

If you want to know more about the NZ property market, i.e. Where to buy, etc, you might want to look at our property guide - see link below.
NZ Property Guide
Philippine Real Estate Guide
Foreclosed Japan Guide

Philippines property ranks highly on yields and forex rates

I'm in the process of updating my Philippines Property Report. This will be the 2nd edition. A part of this report is helping prospective retirees, investors and expats to find investment opportunities in the Philippines. We do this for our own benefit as well as yours. The focus of this blog is exchange rates. The Philippines peso has tended to suffer along with the USD, though it has generally fared better. Click on the charts to the left and it will be apparent that foreign or Filipino investors holding Australian dollars, Canadian dollars or US dollars are in a pretty good position to invest in the Philippines. The same is true for expatriates or Japanese people holding Yen. The Yen is also trading a favourable exchange rate to the Philippines. The attraction of investing in the Philippines is particularly attractive given the better than average yields - 2nd only to Indonesia in East Asia at 9% per annum according to Global Property Guide. Investing in the Philippines makes less sense for Europeans given the weaker Euro, but having said that, its far easier for foreigners to raise finance in the Philippines than other countries. Some people take out loans in their partners names. Its even easier if you are buying foreclosed assets because some of the banks will not require proof of income. The implication is that even Germans, French, Dutch and other investors can buy property in the Philippines with the expectation of paying off the loan when the currency is optimal.


NZ Property Guide
Philippine Real Estate Guide
Foreclosed Japan Guide

Big boost for NZ property market!

There are some important developments occurring in the OCEANIA region. It looks like Australia and NZ are moving inextricably closer together thanks to a desire by the PM's of these countries to boost economic activity. I guess they need to look busy during a recession, and no doubt they will welcome the opportunity to make some landmark decision during their 'reign'. Certainly the decision makes economic sense, particularly for NZ, but in absolute terms for both countries. I have written up a blog on the finer points, but importantly one can expect these developments to be a boost for NZ property prices. See my NZ blog.
-------------------------------------------
Andrew Sheldon www.sheldonthinks.com

Australian Currency update for foreclosed property

A reader recentlyasked me some questions on the foreclosed property market in Japan.
I want to ask questions – but first I want people to buy the book. There are several reasons:
1. I invested 3-4 months into each book, so it would be nice to get some reward/return for my efforts
2. People have a habit of asking questions which are answered in the book – if only they bought it and read it before asking me.

This particular reader did however ask a question which I would like to offer an update. He is an Australian, so it relates to the strength of the $A against the Yen.

I would suggest that my forecast in the book remains basically the same, though there is one factor which will have an impact since I revised the book (2nd edition) in November 2008. That issue is the recent decision by the Chinese government to buy and stockpile commodities. Relatively stronger commodity prices, plus capital developments like LNG terminals (Gladstone & Far North) will likely result in stronger than otherwise capital inflows into Australia. I discussed this in my forex blog, however the decision by the Chinese government to buy and stockpile commodities is new, and unprecedented for the Chinese.
Understand that the Japanese government actually stockpiles strategic commodities for emergency provisions, but in the case of the Chinese, they are doing it because they fear an erosion of the USD which they were inclined to hold by way of US treasuries before. I did expect them to buy gold, but in hindsight, commodities makes more sense. The implication is that commodity price cycle will be shallower and longer. By implication we can expect the AUD currency against the USD to be stronger than otherwise, but the trough to be wider; though of course that depends on how China manages the commodities inventory. The implications for the AUD-JPY are basically the same, as the AUD is closely linked to global economic growth.
You might ask – will other governments follow the Chinese action and buy commodities? I could envisage some countries following suit, e.g. Vietnam, but not so many because of the costs associated with doing it. It’s cheaper to hold treasuries for most countries. China is different because it probably has a lot of spare warehousing, not to mention cheap land in rural areas. I would expect some govt officials to pilfer some of these reserves. Great recipe for corruption.

Japan remains a great place to buy foreclosed property. Some readers are buying inner city properties. I personally would wait a little longer before buying in central city areas. It makes more sense to buy in rural or suburban areas since these areas never had the price rises experienced in the city. Some of you wouldn't lower yourself to live outside Tokyo-23, in which case it makes more sense to buy an investment property in outer areas, and rent it or live in it another 6-12 months. The Japanese economy is contracting faster than most, so incomes are going to fall. In the city asset prices will as well. Some of you are excited...I know the feeling. But good judgement demands buying when things are worst. People are not feeling any pain yet, in part because of the lagging effects, and in part because of the central bank stimulus. The lower interest rates will mean nothing for years. That is because in the short term banks won't be lending, and in the long term because there will be inflation keeping interest rates higher.
-----------------------------------------------
Andrew Sheldon www.sheldonthinks.com

When to buy Japanese foreclosed property

In recent times I have been suggesting that for a lot of buyers it does not make sense to buy foreclosed property in Japan. People investing funds from countries like Australia and NZ should not invest in Japan at this time unless they want to see their asset value erode over the next 5 years. Even if you are flipping these properties you will pay higher capital gains tax in Japan for short term trading in property.
The people who should be buying property in Japan are those who are living in Japan, earning money in Japan, who retain their savings in Yen. In addition there are those countries whose currencies remain strong against the Yen, who also have the opportunity to invest in Japan. Japan therefore has appeal to the Japanese-based English teachers, financiers (who still have a job) and programmers. Even if you don't plan living there more than 2 years it probably makes sense to buy your own place and renting it out. There are several factors to consider:
1. Japanese interest rates remain at record lows - this has not translated into economic stimulation for other reasons, but recognise that it likely will at some time. Higher interest rates will strengthen the yen at some point.
2. OECD countries which have lowered their rates of late will eventually have to raise them, partly due to inflation, partly because of the normal credit cycle.
3. An eventual recovery in economic activity will strength the currencies of commodity producing currencies, so it might be prudent for people to remit their funds back to Aust, NZ, etc by that time (say 3-4 years). You can pay off an investment property in 3-4 years based on current yields....if you buy the right property.
2.
------------------------------------------------
Andrew Sheldon www.sheldonthinks.com

Which currencies will drive Philippines property?

Many buyers of property in the Philippines are foreigners, including among them balikbayan. The recent collapse of asset prices will be impacting on families in several respects:
1. Employment - job losses will be undermining people's capacity to pay off home loans and credit card debts

2. Foreign exchange movements will be increasing/decreasing debt payments for everyone. Those in the worst position are Australians or NZ'ers. Those in the best position are likely to be Asians like the Chinese, Koreans and Japanese. The Americans look ok in the short term, but as the Fed makes cuts to rates, this might not be the case in the future. Arab investors will no doubt also be in a strong position to buy foreign assets as this market settles.

3. Inflation squeezes out defaulters. Inflation is actually no problem for real assets, but in the short term the higher interest rates will squeeze people who are not cash rich into foreclosure if they can't sustain their job or meet margin call obligations.









Given these circumstances one would be inclined to buy Philippines property when these circumstances are at their worst, but one might hold off actually paying off the debt until the optimum time - that is when the peso is weakest. We really need to look at the trend to determine this. At the moment the peso is weakening.
The currencies or countries in the best position to buy property in the Philippines right now are: Canada, the Chinese & Arab (OPEC) oil currencies, Vietnam, among others.

The Canadian dollar is generally very stable against the Philippines peso. The Chinese yuan is a very hard currency so we can expect a lot of public and private Chinese investment in Philippines property. There are several reasons for this, but I will explore that is a separate post.

-----------------------------------------------
Andrew Sheldon www.sheldonthinks.com

Financial crisis will offer more Philippine property opportunities

The Philippines already retains one of the largest inventories of foreclosed properties in the Asian region. When you consider the poor state of Filipino personal finances and the prospect of more 'bouncing' loans as the US and Philippines economies get sold off, you can expect the number of foreclosed properties to increase. There will be a number of families pondering the purchase of their SUVs, or their holidays abroad. Having said that, Filipinos have learned from the 1997 Asian Currency Crisis, but we do need to consider that reduced debt leverage (a modest 27% of GDP) does not translate into a savings culture. We also need to consider the impact on their families abroad who will be under pressure of their local spending siblings and other family.

The opportunity for those cashed up foreigners, balikbayan and locals will be apparent. One might also expect a number of 'humbled' (by the asset price collapse) to reconsider a decision to retire abroad. They will no doubt be struggling with the decision to work a few more years to retire in the USA, etc or decide to recover their savings and move back to the Philippines.
-------------------------------------------------
Andrew Sheldon www.sheldonthinks.com

Cheaper than foreclosed in Australia

You might wonder - what could be cheaper than foreclosed property at a time of collapsing property prices in Western markets? Well there is very cheap foreclosed house & land offerings in Japan, and the wonderful aspect about Japan is that those foreclosed properties don't have to be so far from a regional centre. I bought one for $30,000 just 1 hour from Tokyo, but you can buy them for as little as $10,000 for something 3 hours from a major city. That might seem inconvenient, but unless you are up the far north of Japan, or on the west coast of Japan, its pretty hard to get 'remote' in Japan. The secret I think is to look for something near Nagano , Sapporo, Fukuoka or Nagoya since these are international airports.

So you ask - what could be cheaper? Well I came across this opportunity. A number of country towns are copying this idea, so I suggest you can expect more of this in future. Basically property prices have shot up in the cities, but rural areas have not had the same benefit. As a consequence a number of Australian country towns have resorted to offering cheap or even free land through lotteries in order to encourage more people to live in these areas. Some towns are very remote, say 6 hours from Sydney, on the far Western Plains of NSW. But some are a lot more convenient. The latest offering comes from the town of Avoca. Refer to the program on Channel 7's Today Tonight. The cost of building the average house in Australia is around $110,000. The location of Avoca is shown on Google Maps. The biggest problem might be justifying living in these areas if you don't have the appropriate skills. The best candidates for jobs in such areas are online writers, graphic artists, retiring war criminals (Australia has welcomed a few recently, so don't miss out) and unemployed war criminals looking to turn over a new leaf.
-------------------------------------------------
Andrew Sheldon www.sheldonthinks.com