If you plan to buy a house in Australia, here's some info to help you get started.
We purchased a house in Melbourne in May 2021. It was an especially competitive time for Melbourne property, in what is always a pretty intense property market!
After deciding we wanted to purchase a house we went along to half a dozen property inspections and were overwhelmed by crowds of 70-150 people waiting to go through each home. The competition felt intense and every quality property was snapped up extremely quickly and often at a price far above the listed guide.
At the same time we were applying for conditional approval for a home loan. This took about 3 weeks to complete through our bank, with some of that time taken up at our end gathering our documents together.
The conditional part of the home loan was primarily about the bank agreeing with the valuation.
In a hot market, this is stressful. We found that every property we looked at had a market value (i.e. what it was listed at or sold for) at least $200,000 above what the bank had in their system for that address.
This meant that the bank wouldn’t approve the amount we needed to offer or bid without physically inspecting the property - a process that takes at least 3 business days to organise and worst case up to 2 weeks. This left us in the risky position of potentially having to bid at auction for more than we had approval for, hoping that the bank would end up agreeing.
The first property we were seriously interested in put us in exactly this position. We called the agent on a Saturday afternoon and he told us that in order for our offer to be considered, we had to submit it by that Sunday night meaning we only had 24 hours. Obviously the bank is not open on the weekend so we had no way of checking in that time period whether they would agree to the market value of the property and our offer. We ended up withdrawing as it felt like too much of a risk.
Several weeks later we found another property we liked and after confirming the market value with our bank, made an offer. Initially we believed this was only a matter of the seller accepting, negotiating or declining our offer, but oh how wrong we were. After several phone calls with the agent in which it sounded like our offer had ‘caught the sellers interest’, he then told us that they would be holding a ‘boardroom auction’ between us and ‘other interested buyers’.
Great...just what we were trying to avoid.
At this point we were feeling daunted - unsure what a boardroom auction even was or how best to handle it. Without close family in Australia, or property-savvy friends, we knew we needed some expert advice and so decided to contact a Buyer Advocate.
After some online research we called and spoke to Claire at Ian Reid Buyer Advocates, who explained they could view the property, provide us with a report on the value based on other properties they were seeing, and also assist with bidding on the day for a reasonable fixed fee. This turned out to be very helpful for our understanding of the process and kept our stress levels at merely anxious instead of hysterical.
Unfortunately we lost out on that property when the price went higher than our limit (and what we felt was good value for money).
After weighing up our options for next steps - and the thought of weeks and months of weekends looking through alternative properties - we decided to use Clarie’s full services to continue the search. This included defining exactly what we wanted and where we wanted to purchase, down to preferred streets!, weekly lists of suitable properties and doing an initial inspection of any properties we were interested in.
This initially saved us a lot of time doing the leg work and also turned out to be very helpful psychologically as well as financially. During the 6-8 weeks we worked with her, Claire was like our support person - calling us most days with an update and answering all the questions we had along the way.
For example, although building and pest inspections are recommended good practice for any property buyer, we found that some real estate agents put you under a lot of pressure to skip these by implying that the market is so competitive the seller won't muck around with any time delays for these checks. Quite frankly they are often right. Many buyers do skip these checks because there often seems to be another buyer waiting in the wings to snap it up. A surprising number of buyers purchase sight unseen or after only a quick initial inspection.
However, Claire's experience meant she was able to make sure our building and pest inspections happened prior to us bidding or making an offer for every property we were seriously interested in, giving us a lot of peace of mind.
Two months after engaging Claire we had successfully purchased a home that met our requirements and was in our preferred neighborhood. The property was ‘off-market’, meaning it was an opportunity Claire found through her professional contacts. This meant we were able to make an offer and purchase before the property before it was listed on the market, avoiding competing against dozens of other potential buyers.
One final piece of advice from our experience is to keep your maximum spend limit close to your chest for as long as possible. You can tell agents your range, but keep that top level number to yourself for as long as you can to give yourself some flexibility and avoid maxing out your borrowing power.
If you have other questions about our experience buying a home in Australia you can ask us by posting in the forum and we'll do our best to answer!
We recently caught up with Claire again to ask her what she is seeing in the property market at the moment and to share some expert tips.
As we get into 2024, what is the property market like in Australia?
The property market is stable in the main capital cities of Australia, with a steady stream of real estate coming to market each week for both sale and rent.
However, this ‘steady’ market is underpinned by an overall lack of good quality real estate both to purchase and rent, meaning the A-Grade real estate is under heavy competition.
Vacancy rates on the rental side of things are extremely low, with many landlords choosing to sell off their investments due to changes in rental standards, rising taxes and costs associated. So on the buying side we are seeing a variety of poor quality, ex-rentals that require lots of maintenance and work to bring back up to ‘standard’, meaning that renovated or updated homes are ‘flying off the shelf’.
Despite the overall lack of stock and particularly good quality stock, buyer demand remains high and therefore the market strong and steady overall.
How long does it typically take for people to find the right property to buy?
Timing is everything when it comes to purchasing your next property, which means that it should take as long as it takes for you to secure the best property for your needs at the best price and on the best terms possible.
When we work with clients, we always say that it’s best to start the process formally when you are 100% ‘ready’, because sometimes the right property comes up right away! That said, we prepare our clients for a six-to-eight-week process that should result in education along the way and a successful purchase at the end.
When planning a move to Australia, when should people start the process of researching a house to buy? Is there a recommended or ‘right’ time?
When it comes to purchasing a property anywhere, the right time can only be dictated by your personal circumstances.
Do you have the means to purchase, including servicing a loan and attending to the maintenance required long term?
What is the purpose of your interest in buying and does it align with not only your current plans, but your future goals too?
Transacting real estate costs money and takes time, so it’s important to make sure you can take the time to get it right.
Always think a few years ahead where possible and look at your finances in a way that allows for ‘worst case scenario’.
Once you are comfortable with your own plan, you’re ready to start researching the market and speak with associated professionals (such as a Buyers Advocate) to understand your next steps and further timeline.
How can people prepare for buying a house in Australia?
The best way to start is by understanding your finances and borrowing capacity. You will need to work with a mortgage broker or banker and I recommend speaking with someone in New Zealand first and then potentially also speaking with someone in Australia in the state you are interested in.
You will need to understand your borrowing capacity as well as learn about the different costs associated like Stamp Duty, conveyancer fees and any other up-front costs, as well as the ongoing costs like rates, insurances etc.
A Buyers Advocate can assist you in understanding what to expect based on your budget and type of property you are likely to purchase.
Is there anything that surprises people about buying a house in Australia?
Each country has their own set of Real Estate laws and processes that you will need to understand before and during your search.
These things will likely include what an auction is and what the associated rules are for a particular method of purchase.
You’ll also want to get to know the different taxes associated with a purchase in Australia and how they could/will affect your purchase and budget capacity.
As an experienced professional in the real estate field, surprises are few and far between, so having someone on your side who can explain the ins and outs will be of great value and comfort.
There are 321 suburbs in inner Melbourne - or 1025 including greater Melbourne. How does someone new to Melbourne begin to work out where the right place to buy is?
They say ‘home is where the heart is’ and in my opinion this well and truly extends out beyond the four walls you will buy and right to the community and the area that surrounds your physical residence.
As a Buyer Advocate, we suggest understanding what your main priorities are. For example, do you want to be by the beach or surrounded by greenery? Are you searching for a certain type of education for children? Do you need access to the CBD via transport? How much will you rely on your car? etc, etc.
Answers to these questions help us understand what type of person/couple/family you are and then we can assist in pointing you in the right general direction.
I always encourage buyers to spend a day or two in a few areas that they think could suit, driving and walking around the neighbourhood and popping into the local cafes and shopping strips to get a feel for the area as well as the people that surround you.
Speaking with people who know the different areas of Melbourne will certainly help!
How does a Buyer Advocate help people buying a house?
A Buyer Advocates role is to assist people through the following key steps:
We do all the hard work for you in each step of the way.
We speak with agents on your behalf and put together extensive reports on each property we are recommending so we can understand the value as well as the best way to try and purchase that home.
If it is an auction, we bid on your behalf and if it is a private sale, we negotiate for you and ensure we are putting you in the best position to purchase at the best price.
There is no limit to the number of properties we source, inspect, or pursue. We simply continue until we purchase the right property for you.
Some people will wonder why they should spend more money on a Buyer Advocate when buying a home is already a very expensive purchase. What would you say to that?
When it comes to purchasing real estate there are always going to be associated costs.
Our advice is to look at the fees associated with using a Buyer Advocate in the same way that you would factor in conveyancing fees or costs for a building and pest inspection.
Buyer Advocates are an investment into purchasing the right property that will suit your needs both now and into the future. The cost of getting it wrong or overpaying will far outweigh the fees associated.
In addition, the right Buyer Advocate should be able to save you their fee in one of the following ways - but sometimes through a combination of all three!:
Finally, do you have any other tips or info to share with people new to Australia and wanting to buy a property?
Research is key: there is no such thing as having too much information when it comes to such a big investment.
Spend time understanding different areas and property styles and once you have narrowed down your search, spend time looking at comparable sold properties to try to understand the value of the properties you like before they sell.
Speaking with a Buyer Advocate is free and comes with no obligation to proceed, so having a conversation with an expert at any stage throughout your process will help you understand where to start and whether or not you’re on the right track.
If you’re interested in Claire’s help finding a property in Melbourne, here’s where to find her: Buyers - Ian Reid Buyer & Vendor Advocates.
Should you decide to enquire we would be so grateful if you mention you were referred by Grace & Damien from MTA. We may earn a small commission if you use Clarie’s services, which helps us keep this website running.
The most popular websites for listing property for sale are:
Real estate agents also publish weekly magazines with current property listings in the surrounding area, available from local offices.
Be prepared for the fact that property in the major capital cities can be a lot more expensive in Australia than in New Zealand (depending on where in NZ you are moving from - Auckland prices can be similar).
Sydney, Melbourne and Perth are especially competitive due to the sheer number of people moving to these cities every week and the current housing shortage.
Thatʼs not to say you canʼt find good value anywhere, but do be prepared for a longer search. Outer suburbs and regional areas are typically more affordable, but they are also further away from public transport and places of work.
Median House Prices in Australia (CoreLogic, October, 2023):
Auctions are a very common sale method in Australian cities. Here they are typically held outside the house on the footpath in order to attract as many people as possible. For potential buyers, this can mean a high pressure situation!
As a New Zealand citizen buying property in Australia, you may be eligible for the First Home Buyerʼs grant if the property you wish to purchase or build meets the conditions of the scheme. See the official site for more information.
Purchasing or building a new home gives you more benefits under the scheme than buying an established property.
When you buy property in Australia, youʼll need to pay a local tax called stamp duty on top of the purchase price. Stamp duty is a percentage of the purchase price or market value of the property - but exactly what this percentage is varies from state to state.
First home buyers are usually eligible for a stamp duty reduction as part of the First Home Ownerʼs Scheme.
To work out how much stamp duty youʼll need to pay, you can use this stamp duty calculator.
If you sell your home in New Zealand before moving to Australia, you wonʼt need to pay capital gains tax as you are still a resident of New Zealand for tax purposes.
However, if you move to Australia and rent out your house in New Zealand for a time before eventually selling it, you will need to pay capital gains tax. All investment property (overseas and in Australia) is subject to capital gains tax when sold.
Capital gains tax can be complicated, so we strongly recommend speaking with an accountant for advice on your specific situation.
For more information about CGT in Australia, you can also consult these guides:
Getting a mortgage in Australia is a similar process to New Zealand. You will need to show proof of income in the form of employer payment slips and tax returns, and have a deposit of at least 20 percent (the actual deposit required by a bank varies and is dependent on your financial position and the policy of the lending bank). Any less than that and Lenders Mortgage Insurance will be whacked onto your loan.
Be aware that financial institutions in Australia can and often will check your credit rating in New Zealand. If you are not sure where you stand, you can get a free copy of your credit file from Equifax (formely Veda Advantage).
Itʼs pretty much essential to get pre-approval for a home loan before you start looking for a property as the market is so competitive you'll be under a lot of time pressure as soon as you find a property you are interested in.
The rules and regulations for buying property in Australia do vary from state to state, so itʼs wise to learn how things work in the area youʼll be moving to before getting too far along in the buying process. Weʼve put together a list of useful guides for each state below.