Buying property in Australia

Australia is one of those unique countries whereby the vast majority of the population is housed in a relatively small part of the vast landscape of the country.  This has therefore led to various short-term swings in property prices, linked very closely to an economy that is dependent on commodity prices.

Historically in Australia, the purchase of home or apartment in the country has always been termed as a good long-term investment even with the market’s volatility. While the government is looking at ways to smooth out the property market curve, it is proving difficult to avoid short-term volatility.  However, as the economy grows it should become easier to control the property market, and in particular the various hot spots of Sydney, Melbourne – where most Expats moving to Australia wish to settle. One way to do this is with the real estate fees as explained in a post at the Australia Expat Forum last March 16, 2008:

Real Estate Fees, are different in different states too. If you sell you will pay the standard reiq fee with most recognised agents which is 5% of the first $18000 and 2.5% thereafter. its alot anyway!

Stamp duty on a $500,000 home is $10,000, this changes for different price houses……The country itself can be classified as a “new age” country that is really just finding its own feet after being under UK rule for so long.  The Australian population are renowned for their laid back approach to life, and enjoyment of various socializing events (very similar to the UK way of life).  This has helped to increase the profile of this beautiful country that has a mass of potential for the future, and a place where many see the chance to start a new life.

Contents: Property Market Performance in Australia | Property Costs in Australia

Australian Property Market Performance

As mentioned above, the property market has very often been subjected to volatile short-term swings, which can result in short term profits or losses, depending solely on the timing of any purchase.  As a rule of thumb, many of the property market experts advise renting if you are looking to stop less than three years, but buying outright if you are planning on an extended stay (or even full time Australian status).

While the Australian market is predominantly an outright purchase market, 29% of the population still rent – which can often leave opportunities for good value property in the right area.  While cities such as Melbourne and Sydney have probably expanded as far as they can in the short to medium term, this has created a limited number of properties in the market.  This is another element to the volatile nature of the market, with prices powering ahead when buyers appear, and prices dropping when buying interest dries up.

As if to highlight the volatile nature of localized property markets in Australia, overall houses price rose by 8.3% in 2006, but areas such as Perth (up 37%), Canberra (up 9%) and Melbourne (up 8%)  were set against areas such as Sydney (down 0.1%).  Even though some experts had been expecting a difficult market in 2006 through to 2007, this has yet to arrive.  There are however signs that the Australian authorities are looking to increase interest rates to rein in the property sector – which should take the steam out of some of the local hot spots. Also with the large influx of immigrants to the country, one way to keep a tight rein on runaway costs is shared in a post at the Australia Expat Forum last September 18, 2009:

It can depend on your visa and your regular income. We actually bought a house before moving to Australia (we already hadPR visa) because being self employed we were advised that we wouldn’t be able to buy for several years because we couldn’t prove our income. This was because we are self employed and needed Aussie tax returns to prove our income.

Long-term growth in property prices should not be forgotten in the headlines of short-term uncertainty.  For those looking to settle in Australia, a house purchase should be very lucrative in the longer term. This effect was clearly seen in the increasing prices over the past seven months at peaks of  6% overtaking previous peaks in 2008.

Australian Property Costs

While the average cost of two or three bedroom single storey home in the suburbs cost between $110,000 and $185,000, two storey homes with four bedrooms would set one back anywhere between $150,000 to $375,000. The cost of purchasing a property in Australia can increase by up to 6% (although it can be greater in some circumstances) when taking into account the array of fees and expenses connected with a purchase.  Some of the traditional fees to consider are

Stamp Duty – This is charged at upwards of 2% of the purchase price.  There are however concessions for first time buyers who do not pay the charge.

Land Transfer Registration – Again a variable charge often set anywhere up to 0.5% of the purchase price, depending on the state.

Legal Fees – Usually between 1% and 2% of the purchase price.

Solicitor’s Fees – Often a set fee in the region of $500 to $1,700.

Government Taxes – These vary from state to state.

The Australian system also ensures that other services such as pest inspection, strata inspection and surveys are carried out together with a general requirement for building insurance to be in place prior to the finalizing of any agreement.

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