Guide to Buying Property in Australia
Overview
The Australian Property Market
A comprehensive guide to buying property in Australia whether it be residential,
commercial or holiday property read more details on the buying process here.
When it comes to nations in the world that are experiencing a thriving real estate
market, Australia is towards the
top of the list. Indeed, over the course of the past decade, the real estate market
in many locations around Australia
has been booming.
Major Australian cities naturally are experiencing the biggest growth in their real
estate markets. Cities like Sydney, Perth, and
Melbourne are leading the way in the real estate arena. In addition, a great
number of more rural areas in the country are experiencing a surprising growth in
their own real estate markets. Many people have come to find the more rural areas
of the Down Under to have particular appeal.
Buying Real Estate Property in Australia
The ability of a foreign national to make the purchase of
real estate in Australia requires governmental permission. Before a foreign
national can commence seriously the pursuit of real estate to purchase in Australia,
he or she must seek and obtain permission to purchase real estate from the Foreign
Investment Review Board.
Whether a person is seeking to purchase residential property or investment real
estate, it is important to initiate the approval process with the Foreign Investment
Review Board early on. Indeed, most people apply for approval from the Board at
least ninety days prior to launching a more concentrated search for
real estate in Australia.
When it comes to a foreign national investing in residential or commercial real
estate in Australia, getting approval from the Foreign Investment Review Board really
is the most cumbersome portion of the entire process. Once this approval has been
tendered by the governing Board, the process of satisfying the legal requirements
to purchase and own real estate in Australia surprisingly is rather simplistic.
Overall, most real property in Australia
is sold either through what is known as a conventional channel or through auctions.
In considering the conventional course of purchasing real estate in Australia, when
a foreign national identifies a property that he or she is interested in purchasing,
he or she need only convey an offer to the seller.
In Australia, this initial offer can be verbal or in writing. Once received by the
seller, the seller will either accept or reject the offer that has been tendered.
In many instances, if the offer is not at the price the seller has set for the property,
the seller may counteroffer. In any event, if an offer (or counteroffer) ultimately
is accepted, a Contract for Sale will then be drafted.
After the acceptance of the initial offer (or counteroffer), the buyer is obliged
to make what is known as a holding deposit. Generally speaking, the holding deposit
is 10% of the total price agreed upon for the sale of the real estate in question.
During the period of time in which the Contract for Sale is being prepared and drafted,
a buyer or seller maintain the ability to back out of the transaction. If this occurs,
more often than not, the buyer is entitled to a refund of the entire holding deposit.
Once the terms and conditions of the Contract for Sale fully are hammered out, the
parties to the sale will sign the agreement. The Contract for Sale sets forth all
of the conditions, restrictions and requirements that must be satisfied in advance
of the ultimate and final sale and conveyance of the property. The primary conditions
generally are the buyer obtaining financing and the seller making certain that there
are no encumbrances on the real estate that would preclude its transfer to a new
owner.
In most locales in Australia, once the Contract for Sale the deposit that is made
by the buyer becomes irrevocable -- in short, the buyer can't get his or her deposit
money back. However, in some Australian states there is a ten day "cooling off period"
following the execution of the contract for sale. Within this time period, if the
seller decides to back out of the contract, he or she can do so without losing the
security deposit. There may be some financial penalty to backing out of the deal,
but the majority of the initial deposit will be refunded.
At this juncture, the parties merely wait for the final wrap up of the obligations
under the contract for sale that each party assumes pursuant to that agreement.
The seller obtains appropriate financing in most instances and the buyer makes certain
that the property is in proper condition for sale both physically and legally.
In summary, for many foreign nationals seeking to buy real estate in Australia,
the most difficult hurdle to surmount is that of gaining authorization from the
Investment Review Board. However, once that is in hand, there are many opportunities
to purchase real estate of all varieties in the country.
Buying Investment Property in Australia
An increasing number of people -- both Australian nationals and people living abroad
-- have become more involved in purchasing and owning investment real estate in
Australia since the turn of the
century. Generally speaking, the up tick in the acquisition of investment real estate
throughout Australia is taking shape in two general areas.
First of all, a growing number of people are seeking, finding and purchasing real
property in th major Australian
locations that is then leased to different types of business enterprises.
A surprising number of foreign nationals are involved in this type of investment
scheme. For example, many Europeans have taken to investing part of their capital
in commercial and business properties in the major Australian cities.
Generally speaking, investors have realized a fairly substantial return in this
type of investment in recent years. Indeed, from a long term investment standpoint,
real estate values have continued to rise significantly in all major
Australian locations for the past decade.
Second, a notable number of people who are seeking an investment in income producing
real estate have taken to putting their money into properties that are involved
in the tourism trade in Australia in one fashion or another. Tourism remains a primary
industry in the Down Under in the 21st century. An ever growing number of visitors
are trooping to Australia with each passing year.
Most real estate analysts in Australia maintain that no proverbial bubble is yet
in sight when it comes to the investment market Down Under. Therefore, most of these
experts agree that a present day investment in
real estate in Australia is a solid decision, not only for today but well
into the future.
Buying Residential Real Estate in Australia - Single Family Properties
As a nation, Australia is a country in which home ownership is a goal (and the reality)
for a vast majority of people throughout the country. In point of fact, at the present
time, over 70% of the population
of Australia owns residential property. A clear minority are tenants or
involved in some other living arrangement that does not include the ownership of
a home.
In today's Australia, the development and construction of single family residences
is being undertaken at a fast clip. The major Australian cities, for the most part,
have not yet been overbuilt. Thus, the demand for these properties continues to
outstrip supply, at least to some extent. As a result, and generally speaking across
the country, the Australian residential
real estate market remains a seller's market. Most industry experts and
analysts expect this status to remain over the course of the coming ten years.
The percentage of residential properties owned by foreign nationals within Australia
remains very small. Presently, most foreign nationals that are electing to live
a part of the year in the country still tend to be leasing property for that purpose.
However, and with that said, each year more and more foreign nationals are in fact
making the purchase of residential properties in Australia for their personal usage.
Residential Real Estate in Australia - Apartments
When it comes to tourism in Australia, a significant number of visitors to that country
plan extended holidays or travels within that nation. Many travellers who have Australia
as a destination are determined to stay in the country for a period of months rather
than weeks or days. As a result, the market for apartments and similar types of
housing situations remains strong.
Recognizing the strength of this market, many people have taken to buying up and
investing in apartments and other multi-family dwellings for investment purposes.
Some foreign nationals are getting into this mix themselves.
When it comes to buying and investing in this type of real estate, the number of
foreign nationals involved in the ownership of these properties understandably is
largest in the major Australian urban areas. However, with more and more visitors
to Australia -- as well as Australian citizens themselves -- becoming more interested
in life in rural areas, more apartment units are being developed in smaller communities
all of the time. These projects are ripe opportunities for many foreign investors
interested in gaining a foothold in the
Australian real estate market.
Buying a Holiday Property in Australia
Since the 1950s, when it come to the ownership of real estate in Australia by foreign
nationals, the most common type of property that a non-Australian can be found purchasing
is vacation real estate. Again, and as has been mentioned, tourism remains a primary
industry in Australia. Thousands of people who are citizens of foreign countries
have taken to purchasing vacation property
in Australia. By making these investments, these foreign nationals are able
to spend time on holiday or vacation within Australia and have a home base from
which to operate while in country.
Many such investors are taking the additional step of renting or leasing out these
properties during those periods of the year when they are not using the properties.
In many of such cases, the vacation property owner has found that he or she is able
to turn a tidy profit from this type of arrangement
Australian Mortgages Options
When considering the options for a
mortgage on your overseas property there are a couple of choices to consider:
- Do you consider raising finance on your existing property in the UK to cover the
whole cost of your purchase abroad? A good idea if the interest rate in the country
in question is a lot higher than it is here in the UK as you will pay a lot less
in monthly repayments.
- Do you secure a mortgage against the property from a local bank in the country of
purchase? This can be a wise option especially if the interest rate is lower than
our current UK interest rate. Most overseas mortgage / bank lenders will require
upto 30% deposit on mortgages. However, you will need to give some thought to how
you will service your mortgage payments each month especially if you are not living
or earning in that country as you may well lose out on exchanging money each time
to cover monthly expenses. Check out our
Foreign Currency page to see how you can save money in this example
- Some Builders and developers may well offer their own mortgage facilities on their
properties for sale. This can be beneficial to both parties depending on the logistics
of the mortgage or loan facility. Always check and compare with the two options
above before making your final descision.
For more details on Mortgages in
Australia visit our Mortgage page in the Australia section.
Property Abroad always recommends using a
Solicitor or Lawyer
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