This article gives an idea of how to buy property in Australia.
Steps
Step 1. Understand the value of buying property in Australia
Forget the American Dream: Today, the vast majority of people who imagine moving abroad consider Australia to be their favorite destination. A new life on the other side of the world attracts many people, young and old, as the seduction of a better climate, cheap housing, and a wide range of job opportunities seems to fuel this race. Despite being on the other side of the world, Australia, due to its negligible cultural differences, promises an uncomplicated move (apart from the aspects related to the English language). If you add to this a good quality of life and a low cost of living, you get a very attractive destination. In fact, the main feature of Australia is precisely this high quality of life, with its ability to spend time outdoors all year round, and a good availability of services and facilities to enjoy life.
- Keep the climatic aspects in mind when choosing a location, as some areas in the summer months are characterized by oppressive heat, while in others it rains more than you might expect!
- Australia underwent some "corrections" about four years ago, but the market has recovered and house prices have grown at a fairly modest pace over the past three years. The global economic downturn is starting to bite, housing price growth has cooled, and there are fewer buyers interested in buying in the market, so for those thinking of emigrating, there could be big deals to be done. Statistics reveal that the level of the economic crisis in Australia is lower than that seen in many other developed countries, so the recession should be less severe than in other places.
Step 2. When buying property in Australia, consider the most popular locations
Big cities like Sydney, Perth, Brisbane and Melbourne are experiencing the biggest increases in house prices - coinciding with rising immigration. Since the majority of immigrants who want to buy a home tend to do so only following a permanent move, these cosmopolitan cities provide the best job opportunities, especially for people who have a "Specialized Immigrant" visa. That said, the thriving tourism industry - booming - also provides an excellent income opportunity in coastal areas, with many immigrants choosing to start their own businesses in renowned regions such as the Gold Coast and Cairns in Queensland. If you want to try to save more, you should look in a more rural area - however, remember that, in Australia, "rural" could literally mean far away and isolated from everything, so first of all do a thorough research.
Step 3. Find out about legal matters
If you are not an Australian citizen, or do not have a permanent visa, it is very likely that before you can purchase a property you will need to obtain an authorization from the Foreign Investment Review Board (FIRB). After submitting the application, the FIRB must respond within 40 days, however it reserves the right to extend this term to 130 days in the event of extraordinary circumstances. Pending approval, contracts can still be signed, however it is necessary to make it clear that the contract itself is conditional on obtaining the authorization, otherwise there is a risk of becoming non-compliant with the contract and liable to financial penalties. While the authorization is pending, it is not possible to participate and be successful in the auctions (a fairly common practice in Australia), since the auctions are held without the possibility of providing for suspension clauses. If you are buying a newly built property, or a cottage, it may not be necessary to obtain permission from the FIRB - a legal counsel should be able to check whether the property in question is one of the exceptions or not.
Step 4. Buy your property
Once you have made your offer or an Australian owner has accepted it, the contract is quickly made. You have the right to a period within which to exercise the right of withdrawal (usually 5 or 10 days), and the contract will be subject to certain clauses (for example to an appraisal and approval of a mortgage), but basically you are bound upon purchase and you will have to pay a 10% deposit. It should be noted that the period for exercising the right of withdrawal does not apply in the event of an auction purchase. Your legal advisor will carry out the necessary on-site investigations, such as those that are also done in Italy, and will check the deed of sale of the property before you complete it. Completion occurs six weeks after the day of signing.
Step 5. Be aware that if you decide to sell for the purpose of moving to another home that has already been built, you will need to submit a new application for FIRB approval, so it is advisable to make sure that the first property to purchase is the one that best meets the needs for the near future
Step 6. Finance your investment
If you are planning to emigrate to Australia and apply for a mortgage, it would be a good idea to bring along a copy of your credit history, and perhaps even a reference letter from your former bank manager. With these documents the investigation process will be easier, since you are effectively starting from scratch and you cannot rely on a positive credit history that can facilitate access to credit. Most Australian mortgages take the form of a fifth assignment, and there is nothing that looks like a self-certification to get into debt; this means that all mortgage applications must be supported by certain proof of income. Mortgages usually finance up to 80% of the property value, but there is a wide variety of cases to choose from if you want to base the installments on your savings or current account balance. At the moment, foreign banks do not provide loans for the purchase of a property in Australia, so if you want to find financial coverage from home, you will have to find other ways, such as obtaining capital by mortgaging any other properties of yours.
Step 7. Be aware of the high commissions and fees
As in any country, buying a property in Australia is an expensive business: on average you will have to budget about five percent of the value of the sale to cover the bureaucratic costs. This includes the Real Estate Transfer Registry Tax, which varies from state to state; legal costs, which usually range from 500 to 1200 Australian dollars (350 to 850 euros); the costs related to the loan investigation; local taxes, which also vary from state to state; the costs of the appraisal, which in the area amount to about 500 dollars (350 euros), and the costs to insure the property.
In some states a certificate with site inspection is also required regarding the absence of parasites and termites, and if you are buying an apartment it would be advisable to have a thorough investigation carried out to make sure that the entire building has not had structural problems - or not. has been the subject of administrative problems. Australian taxes and fees also vary based on the state in which you establish residence. However, if you spend more than six months in Australia, you automatically become a taxable person for income taxes. Taxes on investment income affect any real estate except the first home, but the amount to be paid varies in relation to some personal situations
Step 8. Obtain the necessary visas, residency and work permits
It is of fundamental importance to know that the Australian Embassy in Rome does not accept applications for visas or citizenship. However, there are many other possibilities to choose from. It would be easier to get everything you need with the help of a specialized immigration consultant.
- Regardless of why you ask to be able to visit Australia, you must necessarily obtain a visa to enter the country; the type of visa depends on what you intend to do during your stay. Visas are divided into four main categories: by residence, for temporary work stays, for immigration, for tourism. A visa issued by the ETA (Electronic Travel Authority) allows you to stay in Australia for a period of time not exceeding three months, although in some cases it can be extended up to 12 months, and is the most popular visa.
- Visas for temporary residence, or for temporary work stays, are usually issued to skilled immigrants who are allowed to live in Australia for four years, usually after receiving the support of a sponsor. Alternatively, there are investor retirement visas, which allow people who have reached the age of 55 and intend to invest $ 500,000 (approximately € 345,000) to stay in Australia for up to four years in a particular state.
Step 9. Decide if you prefer a new building or a second hand property
The biggest advantage a new build property offers is the fact that it may not be necessary to obtain government permits to proceed with the purchase (see the legal aspects discussed above), however you may need to get it done quickly. Real estate developers sometimes try to get FIRB approvals in advance, so they have the ability to sell up to 50% of the building complex to foreign nationals, which makes properties designed for this purpose extremely popular.
Obviously, there is a much wider choice when it comes to second-hand properties, but the obvious disadvantage is the bureaucracy. However, once you get to grips with it, you will be in a much more favorable position to increase the value of your property, since newly built properties always include the builder's earnings. Second-hand properties can also have a better location - which is quite important since many properties in Australia have stunning views. It is also possible to buy a plot of land for the purpose of building your own house, however even in this case there are a number of regulations, the most important of which requires construction to begin within 12 months of the date of purchase. This could be a difficult commitment to keep, due to the need to obtain the building permit, the assignment to be given to the technicians and the identification of a good builder
Step 10. Understand the potential of investing in Australia
If you are considering buying a property in a city, the investment potential is high. Sydney in 2000 thanks to the Olympic Games saw a huge 50% growth in prices, while the overall growth on the east coast between 1997 and 2003 reached an impressive 112%. Obviously, the situation has calmed down since then, with Brisbane and Melbourne posting growth rates of just 3% last year - and Sydney has actually experienced an 8% decline since 2003. However, this situation should not discourage investors, just because such high growth simply cannot be lasting. On the west coast, Perth still achieves capital growth of 15% each year.
If you are thinking of renting out the property, city centers are a good bet, as are tourist destinations. If you shop in an urban development area that offers a rental program, expect to make between 3 and 6% annually
Step 11. Learn about Australian health and education standards
The Australian national health service is called Medicare, and it also protects Italian citizens residing in the country thanks to the Reciprocal Health Care Agreement (RHCA) currently in force between Australia and Italy. Permanent residents are also protected from a health point of view, but if entry into Australia took place thanks to a different type of visa, eligibility for this protection could be excluded. Retirees are a prime example of individuals not eligible for protection, so if you are moving to Australia on a retired investor visa, you will also need to budget for comprehensive health insurance provided by an Australian company.
Education in Australia has built a good reputation. As in many other countries, there is the possibility to choose between public and private schools, but in both, full-time attendance is required from the age of 6 up to that of 15 or 16. Schools usually they are run by individual state governments rather than by the national central government, while preschool is not compulsory and unregulated. College students, if they are not Australian citizens, have to pay higher tuition
Step 12. Evaluate the transport and connection options
In cities, public transport is of very high quality, with buses, trains and, in some places, even trams, always available. There are also taxis, and at relatively low cost. If you are further away from the city center, be prepared to drive long distances if you choose to travel by road - no doubt it would be easier to take a domestic flight if you have to travel from one end of the country to the other. Long-distance buses are a cheaper alternative, as are interstate trains which sometimes also allow you to enjoy unsurpassed landscapes.
If you are planning to stay in Australia for any length of time, it may be advisable to rent, or even purchase, a car. This could be a rather expensive process, due to the amount of vehicles that are imported, but if you are looking for a second-hand car you will find that it will be worth much more than its cost. Italian driving licenses are valid for one year in Australia, but must be translated and the translation must be certified by a NAATI translator or done at a Consulate. For periods of stay of less than 12 months, the international driving license issued by the appropriate bodies is also valid. If, on the other hand, the stay exceeds 12 consecutive months, it is necessary to apply for an Australian driving license and also take the related driving test
Advice
- However, if you are driven to buy a house for a lifestyle choice - such as wanting to emigrate or retire - Australia, and its real estate market, has a lot to offer. However, please bear in mind that transferring weapons and baggage to the other side of the world could lead to problems, such as a lack of relatives and friends. In this case, if possible, it would be a good idea to rent for a few months, just long enough to verify that you are making the right choice.
- Buying a home in Australia could be a complicated process. If you combine this with enormous distance, it could all turn out to be a daunting experience. Therefore, it is important to carefully consider the reasons why you actually want to buy a house: could your needs be met in other destinations as well? If you intend to buy for investment purposes only, the answer would probably be yes.
- To purchase, contact a broker.
