property buying process in Australia is relatively straightforward and
foreign investors are permitted to own real estate in Australia as long
as the land or property for sale has been approved for sale to overseas
buyers by the Foreign Investment Review Board. Income
and capital gains derived from property owned in Australia has to be reported
to the Australian taxation authorities but there are certain incentives
in place for overseas property investors to reduce or negate their taxation
liability. In general the first stage of the property buying process in
Australia is to source suitable real estate or land for sale that suits
the particular requirements of the investor.
It is essential
to ensure that any particular property the investor is interested in has
Foreign Investment Review Board approval as previously stated, and then
it is possible to make a move on that real estate either by making a formal
offer to purchase or attending an auction and bidding.
in certain parts of Australia it makes sense to have a full survey done
on any resale properties that you are interested in because buildings can
be particularly susceptible to problems with damp, termite infestation
as well as a number of other unpleasant issues.
Industry Association or Archicentre both offer a survey review service
for a fee and there are also many private firms offering the service as
well on a region by region basis.
If you’re applying
locally for finance to purchase property in Australia many lenders require
a survey to be carried out to their satisfaction before they will actually
lend the money. However before getting to this stage a buyer who
requires finance to purchase property should speak to either a domestic
or international lender to determine exactly how much finance can be borrowed.
no point in finding ideal investment properties in Australia if you cannot
afford to buy them! With provisional finance terms
agreed it is possible to make an offer to purchase a property or bid for
it at auction.
If an investor
takes the latter route they should have up to 10% of the purchase price
readily available on the day of the auction for the securing deposit should
their bid be successful. Those who choose to use the services of
a real estate agent in Australia to find suitable investment properties
should make sure the agent is a member of the Real Estate Institute of
Australia. The REIA is the national professional association for
the real estate industry and about 80% of all estate agents in Australia
are members of the organization and are bound by their practice guidelines.
real estate agent will take down your property or land requirements and
then contact you when anything suitable comes to the market. If you
are in Australia you can visit the properties, alternatively you can employ
independent representation to view, review and survey investment properties
for you. Once you have found a suitable investment property you can put
in an offer for it whether it is going to auction or not as sometimes a
buyer can purchase pre-auction if the price offered is right.
Making an offer
is not legally binding and your offer may not be accepted. If you
wish to secure a particular property you may have to negotiate with the
Once an offer
has been made and accepted the conveyancing process begins and usually
investors choose to employ independent legal representation on the ground
in Australia to handle all the paperwork associated with the property buying
process in Australia.
The final step
in the entire process is signing the contract to purchase, the contract
should include all conditions of the sale and this contract is legally
binding so an overseas investor should not sign anything that they are
not 100% comfortable with and if English is not their first language it
is sensible to have the contract translated into the investor’s mother
tongue for review and consideration before they are asked to sign the purchase
to the circa 10% deposit that is required to secure purchase there are
additional fees and costs an overseas propertybuyer will have to pay when
purchasing investment property in Australia and these vary from state to
state but generally include legal fees, stamp duty on both the transfer
of the land or property and on any mortgage too, mortgage application fees,
insurances and what are known as ‘adjustments’ which include rates, council
taxes, water fees etc.
previously stated there are ways that an overseas or offshore property
investor can legitimately save tax on property purchase in Australia -
from capital gains tax to stamp duty - and it is wise to seek the guidance
and advice of a property taxation expert. Such an expert will be
able to advise you on which expenses are tax deductible and how depreciation,
building write-off and borrowing expenses can all be used to reduce an
investor’s property related Australian taxation liability.
Property Investment Facts
question whether property investment in Australia remains a profitable
possibility seeing as the real estate sector in Australia has been one
of the most positively affected markets during the latest worldwide property
As house prices
across the country are now at record highs in relation to income levels
in Australia this has made property ownership a less achievable goal in
real terms for many Australians, this has pushed up demand for rental accommodation
so far that a rental crisis is now looming in many major Australian cities
- thus creating a ripe market for the property investor seeking immediate
income and long term growth.
A recent report
in The Economist magazine highlighted the findings of many global forecasters
who speculate that because the Australian property market in the major
cities of Sydney, Melbourne, Brisbane, Perth and Adelaide has expanded
so quickly and so far, real estate is now over priced and due a correction
because in real terms property has become unaffordable to the local consumer.
these findings are the Housing Industry Association of Australia’s own
conclusions that the residential real estate market in Australia is due
an orderly short term slowdown until 2007. In the interim the HIA’s
Chief Economist has introduced a new issue into the equation and that relates
to the fact that many major Australian cities beginning with Sydney are
facing a rental accommodation crisis. If demand for rental accommodation
in Sydney continues at its current high level and approval for new property
developments in the city remain at their current low level, the city will
face a critical demand/supply situation by 2007 with other cities hot on
Sydney’s heals according to the Housing Industry Association.
findings there are two conclusions that can be drawn by a property investor.
Firstly rental prices will increase in all the major Australian cities
making any investment made today into a buy to let property potentially
immediately profitable; and secondly, property purchased now will be in
demand from a resale point of view in the medium to long term and because
the Australian market has proved so popular for so long there is no reason
to suspect that this situation will change.
So, in answer
to the initial question posed about whether property investment in Australia
remains a profitable possibility or not, the answer is most definitely
yes! In a bear market a property investor can still profit if he