Property in Australia has boomed over the past three years and all the major hotspots from Sydney to Brisbane and Cairns to Melbourne have seen significant rises in overall real estate worth. According to the Australian Housing Industry Association the outlook for the property market in Australia remains positive.
If you’re interested in buying property in Australia for investment purposes or you’re moving down under and will want to secure a home for your family, this article examines the Australian real estate buying process.
Australia follows a similar pattern to the UK in terms of home ownership with around 70% of Australians owning or in the process of owning their own homes, therefore buying property in Australia is a very straight forward process.
If you are not a permanent resident or citizen of Australia then you have to seek permission to purchase from the Foreign Investment Review Board before you seriously begin your property hunt. Check out their website for details of how to apply: - http://www.firb.gov.au/
With property prices varying massively across the entire continent your search will likely be focused on a small and specific area. Your search may be dominated by location because of work requirements, it may be driven by the investment potential of a particular hotspot. Whatever area you decide to search for property in you can begin by looking at local papers for an idea of what’s available to you for your budget. If you approach any estate agent to assist you - and you probably will - make sure that they are registered with the Real Estate Institute of the particular Australian State they are located in.
There are two main ways to buy in Australia, the first is at auction, and the second is by making a formal offer on a property and once accepted going down the ‘conventional’ exchange of contracts route. Let’s look at each one in turn…
Buying at Auction
If you’ve never bought a property at auction before we strongly advise you to take some time out to go to a few before you start bidding for your dream home! When buying at auction you will need a 10% deposit available on the day. If you’re the successful bidder you have to pay the deposit there and then and it is non-refundable if you change your mind about the property later. Therefore it’s essential you visit the property that you’re interested in a few times before the day of the sale and have any surveys, pest inspections and searches carried out on the property that either you or your lender require before you start bidding. Get finance agreed in theory on the property before you begin bidding and set yourself a maximum threshold above which you will not bid.
Buying Conventionally
The other route to purchase is what many of us are used to already. You find a property you like, make an offer on it and go from there. If the offer is accepted you can pay a holding deposit while the Contract of Sale is being drawn up. This holding deposit is refundable during this period if you decide to back out of the sale for some reason.
The Contract of Sale details all the restrictions and conditions of the sale and once you sign it is it usual to pay a 10% deposit which is not refundable if you later pull out - though in some Australian States there’s what’s called a cooling off period of a few days after both parties have signed the contract and in which you can change your mind, pull out and get your deposit back.
The contract will be subject to the usual satisfactory completion of all inspections and searches…and once they have been completed correctly the exchange of contracts takes place and the sale process is basically complete.
When it comes to legal fees, mortgage arrangement fees, taxes and the like you should budget for about an additional 5% of the purchase price but this can vary from State to State and also depend a little on the value of the property you’re purchasing. Therefore for a more accurate figure speak to the estate agent who assists you with the property hunt and purchase process.
