Tips for Foreigners and Expats Buying Property in Australia
Australia’s real estate market is red hot at the moment and is garnering attention from investors far and wide. And by looking at the numbers, it’s not hard to see why it’s a prime destination for real estate investors.
Over 70% of households are homeowners, which leaves little space for speculation. In addition, most capital cities are experiencing an undersupply of housing units, and prices have never fluctuated more than 20% in one year, making it one of the most stable markets on the planet. If you’re interested in the idea of investing in Australia’s booming real estate sector, here are a few details for ex-pats and foreigner who want to get in.
First of all, Research
First things first, you have to make sure that you have a clear budget and plan in place before you even start thinking about investing in Australia. Maybe you heard of one area, particularly that was heating up, but unless you have feet on the ground, you can’t really feel the pulse of the local real estate market correctly. Instead, it would help if you started with real estate agents and developers who could guide you towards areas with the highest possibility for returns.
Working with developers is also a great way to discover hidden gems. They will often have access to prime lots and can guide you through the whole building process. Make sure that you do your due diligence and go for an agency with a pristine history and a reputation for delivering results.
Making sure that you actually have the budget for the type of property you’re looking for is essential as well. You won’t find an Australian bank that will be ready to give you a loan if you don’t have proof that you can actually repay it, so make sure that you are realistic about what you can actually afford before you leave.
Start Looking for the Hot Spots
It would be best if you had a clear area in mind of where to invest in Australia. Major cities like Perth, Brisbane, Melbourne, and Sydney are seeing the highest rise in real estate prices. They are also experiencing a major influx of ex-pats as well.
There are also many opportunities in the coastal areas due to the booming tourist industry. Australia is very popular with tourists from around the globe, and owning property on the coast could be a great source of income. And if you’re adventurous, there are some opportunities in rural Australia. But make sure that you don’t mistake rural for remote, or you may be in for some surprises.
Take Care of the Legal Aspect
Make sure that you have all the legal issues covered. If you’re an ex-pat or foreigner, then chances are you’ll have to apply with the FIRB before you can invest. After your application has been submitted, you will usually receive a response within 40 days. However, there are some cases where it can take over 130 days due to certain circumstances.
You’ll be able to do things like exchange contracts while you’re waiting. However, you have to make sure that they are contingent upon approval. If they aren’t, you could find yourself actually breaching the contract and having to suffer penalties. This means that you can’t start bidding at auctions since they don’t allow conditional clauses. However, if you’re purchasing a new-build property, the chances that you’ll have to ask for permission will be lower. Your solicitor will tell you whether a piece of property is exempt or not.
Buy a Property
Now you can proceed with buying a property.
Once your offer has been approved, contracts will usually be exchanged very fast. You should know that you’ll have a cooling-off period of about five to 10 days and that some steps have to be taken before the sale is completed, like mortgage approval and a survey. But you are now entering a legally binding contract and will be required to pay 10% as a holding deposit.
However, please note that there are no cooling-off periods on houses bought at auction. Your solicitor will proceed with the searches and check the title before the sale can be completed. Completion is usually within six weeks following the exchange day.
If you plan to emigrate to Australia and get a mortgage loan, it would be wise to bring a copy of your credit report and even try getting your bank manager to write a letter for you. This will allow you to facilitate the application process since you’re starting anew and can’t rely on your credit history to get financing. Most mortgages in Australia are repayment and require proof of income since self-certification loans don’t exist. Therefore to afford your loan repayments, you’ll need to know if you can afford them and your lifestyle. 🙂 One way to find out is to assess the cost of living in the city that interests you.
So which city has the higher cost of living? Foxie.com.au – where you go online to find the top gas and electricity connection providers, say in their research there is a lot of disparity between cities however Melbourne and Sydney have a similar cost of living. Utilities are slightly cheaper in Sydney, but rent is a lot higher. Make sure you do your research into living costs so you can live comfortably and afford your mortgage repayments.
Consider Going for New-Build Property
Going for a new-build property has its fair share of advantages, especially for ex-pats. For one, they are much less likely to require permission from the government to be purchased. And two, you’ll be able to rely on a developer’s reputation instead of the previous landowner. Groups like Villa World, for instance, have prime properties all around Brisbane in Australia and have a proven track record that’s easy to verify.
Yes, you can always invest in resale homes, but you also have to be ready to deal with the red tape. Another option would be to buy a piece of land and develop it, but there again, you might have to deal with some restrictions. For instance, you’ll have to start construction on the land within twelve months following the purchase. This can be a challenge since you’ll have to get permission and find a developer to build it for you, so be prepared for that.
Investing in Australian real estate is a great way to diversify your investment portfolio and bet on one of the most stable real estate markets in the world. So, make sure you come prepared and be ready to work your up.