Guide to Buying Property in Australia
Overview
The Australian Property Market
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.
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.
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.
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.
Specific steps to 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.
Property Abroad always recommends using a Solicitor
or Lawyer
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Further Reading on Australia