Lauren Shaak
July 13, 2015
Guide to Investment in Australian Property
Overview
A prime real estate market, foreign property investment in Australia offers investors a unique opportunity to enter a growing market that promises a good return on investment. Australia is roughly the size of the United States but has only a tenth of the population. This equates to lots of undeveloped land, making foreign property investment within Australia a sound financial choice. A strong economy, a growing urban population, and steadily rising demand for new residential structures make Australian real estate a growth market. Unlike businesses that fall prey to mismanagement or obsolescence, residential real estate offers stability and reliability over
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After applying, investors can expect to hear from the board after 40 days. Unusual circumstances may delay the response, but investors can proceed with the buying process while waiting to hear from FIRB. Buyers can sign and exchange contracts provided the contracts stipulate that all contracts are contingent on the receipt of approval from FIRB. Investors must also pay a deposit, which amounts to 10% of the purchase price of the property.
Taxes
A good rule of thumb is to allocate approximately 5% of the purchase price of the property to cover taxes and related expenses. Buyers will need to pay a Land Transfer Registration fee. In addition, there are legal fees to consider, as well as the cost of mortgage application, local taxes, and building inspection. Investors will also pay a Stamp Duty and an annual land tax. The exact cost of the Land Transfer Registration fee, the Stamp Duty, and the annual land tax will vary on the location of the property. Many expenses are dependent on the state or territory in which the property is located. Foreign property investment in Australia is subject to the capital gains
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Growth areas are major cities—Sydney, Melbourne, Perth, and Brisbane—and suburban or coastal areas. Rental properties can yield anywhere from 3.5-5% profit. Increasing demand in urban and surrounding areas, home values will increase. The best Australian investment options are low-rise properties, rather than high-rise properties. Low-rises tend to keep maintenance costs down, and the land value of the properties is generally high. Apartments, townhouses, and small to mid-sized single-family homes are profitable