Unending stretches of sand, vibrant underwater landscapes, paradisal island destinations and unique wildlife make Australia a top destination for travellers and investors all over the world.
On Wednesday 24th March, Amy and Vivek Gohil, Real Estate Specialists of Fine & Country Perth joined us from the other side of the world to reveal the unbeatable lifestyle opportunities in Australia, the property purchasing process for international buyers and the general housing market currently and as we look to the future.
Watch our webinar to discover everything you need to know about buying property in Australia, with a focus on the city of Perth.
The lifestyle in Australia
According to the Quality of Life Index, Australia ranks as the sixth best country to live in the world. Read on to discover the factors contributing to a high quality of life.
Driving up Australia’s overall quality of life ranking is its sunny climate. Australia is a substantial country with plenty of untouched and undeveloped land and most residents flock to the busier coastal regions where there is a varied climate from region to region to suit everyone. Find a tropical climate in Queensland, a typical European climate in Melbourne, temperate weather conditions in Adelaide and a Mediterranean-type climate in Perth or Brisbane.
Economy and work opportunities
Whatever your trade, whether you are a doctor or a builder, with its powerful economy, Australia offers excellent opportunity to increase your income and further your career. The Australian Government is keen on welcoming foreigners who offer job skills that are in shortage to support the economy and with a considerably high minimum wage, so you are typically likely to increase your earnings.
Life is centred around being outside, especially in the warmer climates and warmer months. Across the country there are sporting facilities for all ages, around 10,000 beaches, vineyards and outdoor walking trails, as well as music festivals, markets, community events and even open-air cinema showings around the cities. From the east to the west coast, you can drive to find remote, deserted beaches and camp by the water, under the stars or discover the more popular beaches of Australia, surrounded by trendy cafes, amazing snorkelling spots and stylish boutiques.
Properties in Australia
Housing types vary across Australia, depending on the location. Generally, homes are larger than in the UK and Europe and usually feature a separate laundry room, a scullery, large verandas, outdoor entertaining spaces and swimming pools, if you are lucky. Not only are there incredible new-build properties, but lots of beautiful architecture and history, too. You can come across ornate Victorian terrace-lined streets, Californian bungalows, Federation or Edwardian homes and Art Deco homes with curved facades and decorative brickwork.
The country Down Under boasts high-quality state-paid schooling for all ages. Independent schooling can also be found throughout the country, but the standard of education in Australia is considered to be world-renowned with around two-thirds of Australians and an impressive portion of expats choosing public schooling.
There are also 37 top universities in all states of Australia, attracting international students studying an array of subjects.
The Australian healthcare system is a blend of public and private services. Australia’s national healthcare, Medicare, provides affordable, quality healthcare for Australians, funded by a form of income tax. Residents typically use a combination of public and private healthcare. The large, private medical care system is on par with America’s system and is more affordable than private healthcare in the UK. The partially subsidised and partially private healthcare system allows patients to be seen by specialists immediately.
Australia during the COVID-19 pandemic
The success of how Australia has fared during the Covid-19 pandemic has been the envy of many countries in the world. The country has been very strict in terms of restrictions including snap-lockdowns, quarantining after travelling between different states and very strict borders. This activity has caused many issues for Australians around the world, leading them to reconsider their situations and choose to return to the country. Now, there are very few Covid-19 restrictions and all amenities are open with contact tracing still being practiced through mobile apps.
Most Australian cities are served by all major airlines and is very connected worldwide. A direct Qantas flight from Perth to London takes only 17 hours.
There is a highly developed and mixed economy in Australia. Even with major droughts, bushfires and the effects of the Covid-19 pandemic, Australia has a very stable and resilient economy. Austrade reported, “The Australian economy is set to become the world’s 12th largest economy in 2021, up two places from 2019, according to the International Monetary Fund.”
Western Australia has an export-oriented economy as the largest goods exporter in the country. The state exports almost half of Australia’s annual goods, including minerals, petroleum, agri-food and specialised manufactured goods. It is also strongly intwined with business in Southeast Asia, sharing the same time zone as Singapore.
Politically, Australia is stable. Currently, the Liberal party is in power and is providing a stable and transparent political environment, underpinned by economic resilience. According to the Index of Economic freedom 2021, Australia is a leader in economic freedom and is the third freest of all countries in the world.
Buying a property as a foreigner
As states have different rules and regulations, Amy and Vivek Gohil shared their expert knowledge of the property purchasing journey with a focus on the Perth region.
Generally, the sale of a property is mandated by the seller. Using a buying agent, to help negotiate the price, assist with legal aspects and ensure the sale is settled at the right time, a UK resident can still purchase a property while they cannot visit the country. The use of buying agents is very common at the moment as thousands of people are returning to the country.
When making an offer, a buyer is making a legally binding contract and carries out due diligence first and marks the terms from the deposit to settlement day. Whether a buyer has another property to sell first or has another circumstantial term, all terms are written with the offer. The seller then agrees to the terms, making it an official contract. There are a number of days to conduct reports as outlined in the contract. This process for making an offer eliminates time wasted by ensuring there are only having serious buyers. Additionally, this contractual offer decreases the time taken to complete a transaction.
All elements of the property sale are transparent and upfront. Information about bylaws, costs to maintain the property and service charges is shared with the buyer, aiding to remove blind offers. The average duration of a sale is about two months.
Terms of buying a property as a foreigner
Foreign investment is encouraged in Australia. The combined investment in 2020 for residential and commercial estate by foreign buyers was over 87.8 billion dollars. These investors are from all over the world, including the United States, Canada, Singapore, Hong Kong and China.
To be able to invest in property in Australia, a buyer would have to apply to the Foreign Investment Review Board. Only certain types of properties are eligible for foreign investors.
This Government policy is designed to channel all foreign investment into new homes to create jobs in construction and to support the Australian economy. The FIRB encourages the investment of new buildings only, including townhouses and apartments. Investors may purchase vacant land for the purpose of building new properties – this includes the purchase of established dwellings with the terms that new properties will be built on that land.
In other cases, foreign investors can buy a home if they are a temporary resident, such as a student. In this case, a temporary resident may purchase any property while they reside in Australia, then this property must be sold when they leave the country.
New builds and off-plan
With off-plan and new-build properties, there is a long period of time between a property’s release to the market and it being built. Typically, these properties are constructed within two-to-three years. When a buyer purchases an off-plan property, 10% of the value is paid in a deposit to secure the sale, they then settle on the property when the building is finished, and the titles are ready to be transferred.
Are there rental guarantees in Australia?
There are developers that may offer two-to-five per cent gross, guaranteed for between two-to-five years. Additional costs, such as Strata costs may be involved and many investors use a property management company, which take care of the property, bills, offer a tenant-finding service and will take up to eight per cent of the gross rent.
For a $2million or more apartment with two bedrooms and a beautiful river view, there would be approximately $6-8 thousand dollars a year of Strata levees. These costs vary per development, depending on the quality of facilities and location.
What to consider prior to investing in Australia
Similar to anywhere else in the world, before making a property investment in Australia, look at the location, particularly the proximity to beaches and Central Business Districts. For rental property investments, look for good transport links and ensure it is close to amenities.
As a foreign investor, you must have approval from the Foreign Investment Review Board prior to making a purchase. An offer can be made “subject to Foreign Investment Review Board approval” and for eligible applicants, the offer is likely to be approved within only 30 days.
For a property costing around one million dollars, there would be a six-thousand-dollar fee to apply for approval.
Can a foreign buyer get a mortgage loan in Australia?
As an international buyer, getting a loan for purchasing a property is not an easy process as many mainstream lenders will only accept Australian citizen or permanent resident. There are some lenders who offer mortgage loans to foreign lenders, but the terms will be very strict, fees will be higher, and a buyer should expect to pay at least a 20 per cent deposit on the property.
The general housing market in Australia
Currently, the Covid-19 situation has fuelled a boom in the Australian market. There is not much migration in and out of Australia, which normally dictates the market. Secondly, there are lots more Australians “cashed up” from regions around the world looking to return to Australia, creating a high demand in Australia for renting, and causing an increase in properties being purchased. This activity is particularly high in the Eastern states, such as Victoria and New South Wales, and the sellers’ market has never been that high with over 90 per cent of auction properties in Sydney sold on that day.
CoreLogic, a data insights company for property in Australia, reported the total advertise listings were 26 per cent in March year-on-year, representing that there is less stock in market. Additionally, regional house values are rising at twice the pace of capital cities. Investors are also coming back to the market due to the increased yields driven by a shortage of rental stock and a surge of demand from expats in Australia.
Future market growth
Due to lack of migration and due to covid there is less stock in market and record-low interest rates, as with many parts of the world, and it has created a real boom in real estate in Australia and in Perth more specifically.
House prices have seen the sharpest monthly increase since August 2003, with analysts at CoreLogic reporting the market is now entrenched in one of its strongest growth phases ever recorded. Major banks and analysts now predict Perth will see the most growth of all Australian capital cities and it has been forecasted to rise between 20 and 25 per cent over two years.
The market in Perth
The housing market in Perth has grown over 3.8 per cent in the last three months. The gross yields on apartments now are at 5.3 per cent on average, a very big jump for the local market. Looking at guaranteed rental yields is less relevant now, as it is easily achievable in Perth. The selling time in Perth is 26 days on average, which is dropping on a monthly basis.
Why is Perth performing so highly?
Perth’s market has remained stagnant for a number of years due to the previous mining boom, which slowed down and dictated the market growth. The market has not moved as much as the East coast. On average, it is still much cheaper to buy property in Perth than in Sydney or Melbourne. There are also larger rental yields in Perth, due to the rent to buying price ratio. From an investor’s perspective, Perth is possibly more attractive for this reason. Further, it is predicted that Perth could see the biggest capital growth in the market compared to the rest of Australia.
Types of Properties in Perth
The city of Perth is built on the coast of Western Australia overlooking the crystal-clear waters of the Indian Ocean where the Swan River meets the coast. The most premium properties are built around the water and any property with a prime water view commands a higher premium.
There is a major new-build market in this city and many world-class homes have been built here. There are also attractive suburban properties as you move further from the city centre. Perth Hills, just 45-minutes from the CBD, offers a very rural location with beautiful buildings and larger plot sizes, ideal for those more interested in having more space and a rural lifestyle.
Approximate price points of properties in Perth
Property prices vary depending on location and type of property. Looking at the top end of the market, here are a few examples of property prices in Perth:
New build apartments range from $500,000 to well-over $5million for prime penthouse apartments, depending on the size, location and views.
House prices in prime Perth suburbs depend on land size. A small home on smaller land will cost around $1million up to $3million for a more substantial property. Homes benefitting from prime water views will generally cost more than $6million and exclusive, luxury properties will cost over $10million in the suburbs of Perth.
Best areas to live in Perth
A particularly sought-after location is known as the Golden triangle, in the western suburbs of Perth offering the most prime selection of real estate. Properties here are generally very close to the CBD and beaches, as well as the top schools and private hospitals. The main areas within these suburbs are Peppermint Grove, Dalkeith, Claremont and the most in-demand beach suburb with similarities to Bondi Beach, Cottesloe.
South of the river, close to the CBD but further from the beach, are incredible homes with fantastic river views in Applecross and Mount Pleasant.
Dardanup and Margaret River are popular tourist destinations and seaside towns, situated in the tip of the southwest of Perth. These locations are close to award-winning wineries, world-famous beaches and are the ideal surf break locations.
If you have further questions on the property purchasing process in Australia or would like to begin your property search in Perth or Sydney, contact Fine & Country Perth or Fine & Country Sydney today.
Learn more about how you can buy and invest in property elsewhere in the world, such as Mauritius, Spain, Portugal, Germany, Portugal and France, with our previous Worldwide Wanderlust Webinars.