Many reasons have lead people to buy a house in Australia. It might be for a second-home purchase, a permanent immigration, or a retirement there. Moreover, Australia’s market has become a buyer’s market. The rise in property prices is tending to flatten out. There are less buyers than sellers so you can find some great deals.
About foreign ownership
As a foreigner, you have the right to buy a residential property in Australia. But there are conditions. You need to apply for foreign investment approval. Priority is for purchases that would increase the housing stock of the country. Indeed the government strategy is to allow foreign investment in new dwellings. This way it creates extra jobs in the construction industry and supports economic growth. It also allows the government to collect taxes.
As a temporary resident, you may buy an established dwelling. But there are some conditions. First the property must be your principal residence place in Australia. If the property is not your principal home anymore, you have 3 months to sell it. Finally, you don’t have the right to rent any part of the property. To sum-up, temporary residents are not allowed to buy established properties as an investment property, to rent out, or as a holiday house.
So if you aren’t an Australian citizen or a permanent resident, you need to get permission from the Foreign Investment Review Board (FIRB) before any purchase. Note that if you decide to move to another residential property, you’ll need to apply for FIRB approval again.
Choose a location
First thing, choose a location for your new home! You might already know where you want to go. Each city has its pros and cons. Do consider the weather before buying a house as it can be very different from one area to another. Some areas are very hot while others are more rainy than expected. Brisbane and Adelaide are the cheapest Australia’s major cities to buy a home. Sydney, Melbourne, Canberra and Perth are more expensive.
You also have to decide what kind of property you want. A tip is to buy a property in a condominium (or strata), it is an appealing option in Australia. There’s no need to care about the building’s maintenance and repairs and it provides a wide range of recreational activities.
The most used websites for listing property for sale are:
Know the buying process
The first thing to do when you find your dream home is to get the approval of the foreign investment department. Once you have the permission to buy an Australian property, you’re tied into the purchase and required to pay a 10% holding deposit. Next step: the purchase documentation is prepared by a solicitor chosen by the buyer. The solicitor is either a lawyer or a land broker. He establishes a Transfer Form for execution of the sale.
Once the documents are signed by both parties, the contract and transfer form must be sent to the appropriate authority, where it is stamped and duties settled. The competent authority depends on the state.
Then the transfer form and certificate of title are sent to the appropriate authority for registration. The competent authority depends on the state.
A common practice in Australia is to buy at auction. Take care to set a maximum spending limit because it is easy to let emotions take over when buying at auction. If the bidding is successful for you then you should sign the contract and give a 10% holding deposit. There’s no cooling off period at auction purchases.
Anticipate the fees
Even if the rise in property prices is tending to slow down, it is still expensive to buy a house on the continent. The total cost of buying a property in Australia is more than 10% of its value. The GST (Goods and Services Tax) is already included in the price.
Below the expected fees:
- Real Estate Agent’s fees: negotiable.
- Legal fees: lawyer’s fees for the documentation necessary for a property purchase. Between AU $600 and $2’500.
- Land Transfer Registration Fee: fee for the transfer of ownership to the buyer. Varies from state to state. In some states it is a fix fee while in others it’s a variable fee based on the purchase price.
- Stamp duties: depends on the property value and the state. Get your stamp duty estimation.
- Property’s insurance: depends on the property type and value.
- Local council fees: local taxes which depends on the city you live in.
- Strata fee: if you buy a unit in a condominium, this is the fee for the maintenance of common areas.
- Mortgage fee: if you buy a house with a loan from a financial institution. For the information a deposit of 20% of the property value is required to get a mortgage.
- Money transfer fee: buying a house in Australia with foreign currency can be costly. You’ll need to exchange a large amount of money into Australian dollars. This is not without fees.
Get a home purchase cost estimate.
Finance your purchase
By buying a house in Australia with foreign currency, a big concern of yours is how you’ll convert your money into Australian dollars without paying ridiculous fees? The Australian dollar is among the most traded currencies in the world. There’s no restriction on buying or selling Australian currency. But, it is very expensive to send money to Australia as banks take huge fees on international money transfers.
Here are two good practices to optimize your transfer.
First, consider the Australian exchange rate: converting your money a day the exchange rate is high and you make the most value out of your money. Especially on home purchase as it is about a significant amount of money. The best is to check regularly the exchange rate in order to track a good moment. A useful tool called Neomy can definitely help you with that.
You can also set a forward contract with a money transfer company. If you’re scared of the rate to decline, you can lock an exchange rate in advance for a future transfer. Or a spot contract which means you buy now Australian dollars for a future delivery.
Second, find the best way to transfer your money: Banks are not your best option. They offer a poor exchange rate compared to what you can get on the transfer market. Look for a money transfer company to get Australian dollars. There are plenty. Find the best rate on a comparison platform.
Get more information on how to send money to Australia.