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  • Writer's pictureAlison Wong

Australia Property Purchasing Process:What You Need To Know Before Buying?(Step-By-Step Guide)

Updated: Apr 11



Deciding to buy property in Australia will probably be one of the most life-changing, and perhaps daunting, decisions of your life with many factors to carefully consider.


Buying a property in Australia is actually not as complicated as imagined. Although the process seems to be a lot, but Australia's laws are very sound, so professionals will help you deal with all matters, and you don't need to work hard yourself.


At the same time, overseas people can also apply for mortgages when buying properties in Australia, and the procedures are simple, and the interest rates are not too high. In addition to self-occupation, houses can also be rented out. The rent is used to offset the monthly housing payment and there is still a surplus. This is "housing to support a house".


Of course, the most important thing is that as personal permanent property, Australian real estate can be passed on from generation to generation without any inheritance tax. It is a good choice for family wealth inheritance. Many wealthy people from all over the world will regard Australian real estate as a must-have option when making asset allocation.


So, if you want to buy a property in Australia, what preparations should you make? This article will explain in detail all the processes and precautions that you have to go through when buying real estate in Australia, and help those who want to buy overseas, especially Australian real estate, but suffer from lack of experience, to realize their dreams.



Guide:

1. How to choose the major cities in Australia?

2. What types of real estate are there in Australia?

3. How much does it cost to buy a property in Australia?

4. What are the specific procedures for buying a property in Australia?



How to choose the major cities in Australia?


The major capital cities in Australia are what we focus on when we invest. Among them, the total population of Melbourne and Sydney accounts for half of the total population of Australia, and they are also the two cities where Chinese people like to settle. Specifically:



1. Melbourne


Melbourne is the capital and most populous city of the Australian state of Victoria, and the second-most populous city in both Australia and Oceania. Since many people prefer Melbourne's livability and high-quality education environment, the investment strategy for buying property in Melbourne is to occupy a good location as soon as possible, because it will be more expensive and more remote in the future. We must know that the city of Melbourne is rapidly growing, and the cost of buying a property has increased accordingly. In the next 30-40 years, the population of Melbourne will surpass that of Sydney and become the most populous city in Australia.


2. Sydney

Sydney is the commercial, trade, financial, cultural and tourist center of Australia, as well as the hub of sea, land and air transportation and communication in Oceania. My advice to investors who want to buy property in Sydney, Australia is to be cautious. Because in the past few years, everyone said that buying a property in Australia is buying Sydney, and its property prices have been pushed up very high, and the affordability is poor. However, purely from an investment point of view, you can also buy properties in more remote areas of Sydney, and choose properties that are currently not expensive but have a large potential for future appreciation.


3. Brisbane

Brisbane has a warm climate all year round and the scenery is like spring. 365 days a year, there are very few severe cold and severe heat. The 2032 Summer Olympics will be held in Brisbane, Australia, driving up property prices in Australia's third-largest city. It can be said that the next ten years will be the golden decade of Brisbane's real estate growth, and it is an important investment location when everyone considers buying a property in Australia. If you plan ahead, build a real estate investment portfolio reasonably, and buy a property in Brisbane, Australia, the next ten years will most likely be a good opportunity for investors to achieve their financial freedom goals as soon as possible.


4. Perth

Perth is the capital of Western Australia and the fourth largest city in Australia. With a pleasant climate and a beautiful environment, the city is known as the "City of Wildflowers" and has been ranked among the best cities in the world for livable cities many times. In addition, Perth also has excellent performance in tourism and education. With the recovery of the mining industry, Perth's economic indicators are even better. Overseas people buying properties in Perth, Australia are also increasing year by year.


5. Adelaide


Adelaide is the capital city of South Australia. It is loved by overseas people for its vast and numerous parks, blue-gray sandstone buildings and relaxed and pleasant lifestyle. From the perspective of property purchase investment in Australia, Adelaide is like a blue chip stock. The rate of return may not be comparable to that of Melbourne and Sydney, two international metropolises, but the cost of property purchase is very reasonable in Australia, especially It is exactly half of the cost of buying a property in the two cities of Sydney and Melbourne! It can be said that the real estate here is low-risk, stable and long-term.



6. Gold Coast


Gold Coast is the sixth largest city in Australia. It is located on the eastern coast and is famous for its abundant sunshine, white sandy beaches and clear blue water. Every year, the number of international tourists continues to increase, and more and more people buy properties, further stimulating the development of the economy. In addition to the well-developed tourism industry, the economy, education, medical care, and welfare in the Gold Coast area are all well-developed. And these factors will definitely attract more overseas people to immigrate and buy properties in this seaside city in Australia. The increase in immigration waves will accelerate the development of the property market and stimulate housing prices to rise.


What types of properties are there for buying properties in Australia?

Australian real estate buildings are roughly divided into 3 categories: House, Townhouse and Apartment. Each has its own advantages, each leading the way. If you plan to buy a property in Australia, you must also think about the type of property you want to buy in advance.


1. House detached house/villa

The villa house in Australia is a one-story or two-story detached house with its own independent yard and its own house. Each House is built independently, and the style can be varied, and the homeowner can rebuild the house according to his personal preferences. Generally speaking, the cost of buying a House in Australia is the highest.


2. Townhouse

Townhouse’s townhouse nature limits the size of the yard. Generally, several houses are designed in a unified style, and even part of the interior decoration may be unified. The price of buying a townhouse in Australia is lower than that of a house, but it also has a private garden and terrace, which makes the occupants feel like living in a house.


3. Apartment

Apartment is a common apartment in China, with at least 3 floors, each building has one or more units, and each unit has one or more households on each floor. Generally speaking, the security of Apartment is the best, and most of them have access control system. Suitable for students and young skilled immigrants, the apartment area is about 80-90 to more than 200 square meters, with strata property rights. For overseas people, apartments are their first choice when buying properties in Australia, because apartments are mostly new houses, and modernized with high rental returns, they are very good investment products.



How much does it cost to buy a property in Australia?


The first thing in buying a property is to prepare, by making sure your financial situation will enable you to make the purchase. To get your finances in order it’s a good idea to have a budget, establish a savings goal and work out how much you can afford to save each week, fortnight or month towards buying a house. As most people need a home loan to finance their purchase, engage with your lender or mortgage broker early to see how much you can afford to borrow. This is known as pre-approval.



More importantly, some miscellaneous expenses that may be incurred when buying an Australian property will increase the cost of buying a house to a certain extent, not only in terms of money, but also in terms of time. Therefore, planning all the expenses required for buying a property in Australia in advance will avoid unexpected financial constraints as much as possible.


In addition to the cost of buying a property in Australia, you should also be aware of the cost of holding it. In general, these costs include: FIRB, stamp duty, legal fees, real estate loan agency fees, housing property insurance premiums, city appearance construction fees + sewage charges + land tax or property fees, etc.


1. Foreign Ownership Fee (FIRB)

For overseas people, FIRB (Foreign Investment Review Board Australia Foreign Investment Review Committee) is a cost that must be calculated when buying a property in Australia. According to current regulations, foreigners (those who have not yet obtained permanent residence in Australia) need to obtain FIRB approval to buy a property in Australia. They need to fill out a residential real estate application form and pay an application fee. The amount of the fee depends on the value of the property. .


Residential real estate that overseas people can apply for buying a property in Australia includes: new housing, second-hand housing (with restrictions), redevelopment properties, off-plan housing and idle residential land.


2. Stamp Duty

All state governments in Australia charge stamp duty on the purchase of real estate, and the basic tax rate is 5.5%. However, for overseas buyers who want to buy properties in Australia, in addition to the Northern Territory, other states and territories will also charge stamp duty surcharges. Taking Melbourne as an example, it is 8%. However, compared with the 20 per cent surcharge imposed on foreign buyers in Singapore and Vancouver, the foreign stamp duty surcharge for buying property in Australia does not seem to be that high.

In addition, buyers who purchase land and villa projects in Australia can also save stamp duty on the housing construction part.


3. Conveyancing Fees

When buying a property in Australia, the legal transfer of real estate ownership is generally carried out by a lawyer who handles the real estate transfer certificate professionally. There is no way for individuals to handle it. Therefore, lawyer fees are also an inevitable procedural cost. Every time you buy a property in Australia, you need a lawyer to participate, and the lawyer's fee generally ranges from $800-$2,000 +GST.


4. Housing loan agency fees (Finance Broker Fee)

Generally speaking, there is no fee to consult and apply for a loan before buying an Australian property, but there may be account opening fees and other related handling fees involved. Customers can make more comparisons of specific interest rates and fees according to their own needs, and then choose the institution they want to borrow. The mortgage consultant will also give relevant professional advice.


5. Home property insurance (Insurance)

In order to prevent any damage inside the house and the loss of property inside the house, after purchasing an Australian building, the general buyer can consider purchasing this insurance to ensure that the damage inside the house is guaranteed. If it is an apartment or a multi-set townhouse, the property The management will generally bear the cost of insurance outside the house, and the owner does not have to pay.


6. Council Rate+Water Rate+Land Tax

The purchase of buildings such as houses and townhouses in Australia generally involves city appearance construction costs, sewage charges and land taxes, which are usually charged quarterly. Generally speaking, after buying a property in Australia, especially a house, you need to pay a municipal fee of about $1200 a year, which will vary depending on the government. Sewage charges generally range from $500 to $1200, and are paid to the government by the landlord or agent. The land tax varies according to the assessed value of the land, and usually costs several hundred Australian dollars. If you are an overseas person, there is an additional tax rate. .


7. Body Corporate

When buying a property in Australia, it should be noted that property management fees will be charged for three or more townhouses and apartments on one site, but correspondingly, the land tax and municipal fees for these two types of properties are relatively low, or do not need to be paid. Property management fees for Australian buildings are levied according to the types of public facilities provided by the community or real estate. If the public facilities are very complete, including gymnasiums and swimming pools, the fees will be relatively high.


8. Agent Management Fees

Taking care of the property through a leasing agency can effectively ensure the collection of rent and the payment of various housing expenses. Even if the landlord is overseas, there is no need to worry about buying an Australian property. Generally, the management fee for long-term rentals ranges from 5.5% to 7.5% of the rent, and the intermediary will also give the owner a detailed statement of the expenditure, which reduces the complicated matters for overseas owners.



What are the specific procedures for buying a property in Australia?

There’s no denying Australians have a love affair with property. Around two-thirds of us are homeowners1 and for many, buying a home is a lifelong dream.


It’s also the most expensive purchase many people will ever make, so given the stakes, it pays to do your research and understand what’s involved in the buying process before making a leap into the property market.



1. Choosing the suburb and type of property

Before buying a property in Australia, you must choose the city you want to invest in, and then it is best to choose a suitable property to buy through an intermediary who holds a photo of an Australian real estate agency. When overseas people buy Australian properties, they must pay attention to the screening of intermediary qualifications. If your intermediary does not have the qualifications to sell properties in Australia, once a dispute arises, it can be said that the laws of the two countries will not protect you.


2. Find a lawyer

Australia is a country with an extremely sound legal system, and a lawyer must be involved in buying and selling real estate. However, please note that when buying a property in Australia, the lawyer is only responsible for checking the contract, confirming legal compliance, etc., and does not comment on the value of the house. The buyer must bear the risk of buying a property in Australia. Floor plans, brochures, etc., if they are not part of the contract (usually they are not), are for reference only and are not legally binding. The contract usually does not specify the area in square meters, but only the legend of property rights.


3. Apply for FIRB

Overseas buyers need to submit an application to the Foreign Investment Review Board (FIRB) before buying a property in Australia. The application must be made for a specific property in Australia that overseas buyers intend to purchase.

Overseas buyers must obtain FIRB approval before signing the purchase contract, or sign the contract as Subject to FIRB, otherwise they will be deemed to violate FIRB regulations and be fined or even more severely punished. This process is recommended to be assisted by the buyer's lawyer. Please refer to the information on the official website of FIRB https://firb.gov.au/guidance-notes.


4. Sign the contract

Buying a house in Australia, the buyer and the seller must sign the house purchase contract before they form a contractual relationship. For existing homes (including brand new homes and second-hand homes), the seller usually requires that what you see is what you buy, and the price is based on the current state of the property. Once the buyer finds that some facilities are inconsistent with the state before the exchange contract during the final inspection before delivery, relevant evidence needs to be provided.


5. Pay 10% deposit

When buying a property in Australia, after signing the purchase contract, the buyer needs to transfer a 10% deposit of the contract price to the trust account of the intermediary or the seller's lawyer. According to the practice in Victoria, when the off-plan housing contract is delivered, the buyer does not delay delivery or refuse to deliver on the condition of loan or status change.


6. Cooling-off period

Generally speaking, after deciding to buy a property in Australia, the buyer has a cooling-off period of three working days after signing the contract, which will vary according to the laws of each state. During the cooling-off period, the buyer can decide not to buy the property but will lose 0.2% of the contract price, but the seller cannot go back and forth. If the 10% deposit has been paid, the seller will return 9.8% of the buyer's contract price. After that, the buyer and seller are bound to perform the contract, that is, the buyer must buy and the seller must sell, unless there are special terms to be met.


7. Getting home loan pre-approval

Buyers who need to apply for a loan need to note that when buying a property in Australia, the loan is paid after the property is delivered. Therefore, it is particularly important to complete the loan application in advance before the settlement.

For existing home buyers, you can apply for a loan pre-approval from a bank or a loan intermediary before you sign a contract to purchase an Australian property; or start preparing materials to apply for a loan after signing the contract.


8. Property inspections

Regardless of whether the person is in Australia or overseas, before buying an Australian property, the buyer needs to make an appointment with the real estate agency for a final inspection. If a problem is found, the buyer's lawyer and the seller's lawyer can be notified to negotiate and solve the problem. The seller who fails to deliver on time can charge fines and penalty interest (usually 12% annual interest or higher) on a daily basis, and additional legal fees (at least several hundred), etc. If the overdue exceeds 14 days, the seller has the right to terminate the contract and confiscate Deposit, and sue for additional compensation for additional losses (if any) and not give the room.


9. Moving into your new home

On the day of delivery, the buyer needs to pay all the final payment, and the items in the cost of buying a house in Australia also need to pay stamp duty, as well as third-party fees such as government and water bureaus, property companies, etc. Overseas people also need to pay for buying Australian properties. additional surcharges. After that, you can get the keys when you buy it, and the real estate has been successfully delivered!



You can also watch the video below to learn more about buying property in Australia:




 

Alison's Story

Born in Hong Kong an moved to Australia, I have been associated with real estate all my life. As the plane slowly landed on the runway of Melbourne Airport, my life and career also changed to another runway. I changed from a Hong Kong real estate agent to an Australian real estate agent, and successfully obtained the Australian lawyer qualification.


When I was working in a law firm, I was surrounded by highly educated professionals. Even though their wages are very well, and they are absolutely the elites in society, but their lives are full of hard labor, and it’s hard for them to get rich through buying properties.


So I spend all my time and effort on learning financial and real estate investment knowledge, hoping to achieve financial freedom as soon as possible, and let my parents who have worked hard for many years live a good life.


Now I will share with you the knowledge and experience of investing in Australian real estate, and embark on the road to financial freedom together.


Alison Australian real estate information platform

The original intention of Miss Alison to establish investwithalison.com is to provide neutral Australian real estate information through this platform and help investors establish the most suitable investment strategy.


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