The property is the modern way to express value, and Australia’s voice on the world’s market is, of course, very loud. As a developed country with lots of wealthy people, it builds property, worships property, and chases property in eternal dissatisfaction. The Australians love talking about housing; for residents of huge cities (such as Sydney or Melbourne), it is a source of constant aspiration and stress. Affording property here gets harder as the standards and a status value of this welfare increases. The property is kept expensive intentionally in Australia, and only top earners can afford to buy and maintain a personal property.
House prices in Australia rise 2 times faster than the household incomes. In 2011, the number of households who couldn’t find a suitable and affordable housing was 500,000. According to recent surveys, in order to buy a house, one average household needs to put their annual income by during 4-5 years (not spending a dollar from it). The government intentionally restrains new construction initiatives in order to boost prices and stir up the demand in existing housing options. Most of the households have to satisfy themselves with “eternal” renting spending over 20% of their disposable annual income on holding roofs above their heads. It is more than the average of the Organisation for Economic Co-operation and Development which is 18%. Renting accommodation in Australia is said to be 10% costlier than in the United Kingdom.
Prices, of course, vary from location to location, but the general tendency is the following: the farther from the cost the cheaper. Most of the Australians live on the country’s eastern coast; that is why coastal urban areas such as Sidney and Melbourne are the most expensive. Here, prices vary from 350k to 550k Australian dollars. The prices tend to halve as you move 100 kilometres inland; however, in case with Australia, it is not always possible to save on housing by moving deeper in the outback: the employment options are scarce there and the infrastructure worsens as you go deeper into the continent. However, the government has an intention to restructure its urban planning in order to make it more transit-oriented (so-called “transit-oriented developments” (TODs)).
Types of Housing
Public housing (affordable and secure housing provided by the state) does exist in Australia meeting needs of citizens and residents with the lowest incomes; however, this sector is quite modest and cannot satisfy the growing demand. For example, within a decade by 2007, the population of Australia grew by almost 3 million people while the number of public housing options grew only by 32 thousand dwellings.
The highest percentage of housing rented from the state is 17.12%, and it is on the northern coast and the centre of the country. The most premium area on the east has the lowest percentage of public rents. Funded by the federal and state governments, Australian public housing commonly goes in 2 types: either multi-storey apartments (walk-up flats or 22-story towers) located inside the city or townhouses/detached houses which are usually built in suburban areas. It often happens that townhouses get bought out by long-term tenants and become private property.
Most of the public housing options were built in the period of 1945 and 1980. Meeting needs of the soldiers returned from the WW II and improving conditions of inner suburban areas (in big cities, they are first-ring areas around the business district where initially the working class dwelled). The experiment with inner-city high-rise buildings hadn’t been acclaimed by the community which eventually led to curtailment of the social program. Now, the market of public housing sees a dramatic slowdown: it seems that both the federal and state governments invest in affordable dwelling more reluctantly. The market of social housing is still developing thanks to efforts of non-profit organizations, charities and providers.
Buying your own property is, of course, the most desirable way to settle in the country. The location is the first important thing to consider before buying a house down under. As mentioned above, Sydney and Melbourne located on the most populated eastern part of the country would cost you a fortune. The atmosphere here is all about money, and, therefore, living here is a matter of status. If you are looking for a more relaxed atmosphere, opt for Brisbane. Not only it is warmer there, but also the lifestyle is more informal. As Australia is a huge country (its 8 states are huge as well), it is wise to select a property that is really close to your work or school as living in one state and working in another one sounds unreal in case with Australia. Do not buy a house before landing a job.
The purchase can be made in 3 popular ways: through open sales, through private sales, or through an auction. Up to 50% of all purchase deals in Australia are made on the auction. It is possible to lend some money from financial institutions; however, they became more demanding to the amount of the down payment. If you are interested, make a research about requirements of the biggest Australian banks: Commonwealth, ANZ, National, and so on.
Foreigners pursuing owning a property in Australia, unfortunately, don’t enjoy absolute freedom as there are certain restrictions. If investing in property is of paramount importance for you, we recommend you to study the legal base for such purchase. Foreign Investment Review Board’s website can be a great source of valuable information. Learn your rights in advance in order to contribute your money to a winning deal. After you have determined on the location and the type of property, use property portals (like Domain.com.au or Realestate.com.au) for matching your money with a perfect accommodation. Please bear in mind that the size of the house (which is usually expressed in square metres) can mean the size of the roof instead of the house’s actual square.
Another important thing to bear in mind is the additional costs that apply when somebody buys property in Australia. First of all, it is the Stamp Duty tax (2-5%) which is calculated depending on the property’s value, its location (the rate varies in different states), the type of property, and so on. The Stamp Duty is paid by the purchaser. If you buy a new house or a land, the Goods and Services Tax (10%) can be applied, so ensure you ask whether you need to pay this tax or not (in some cases it can be included in the final cost of the house). If the house isn’t new, but the seller is the investor owning several houses, the GST can apply. Add to this the state’s fee for processing your contract (about 30-100 AUD), and the fees of a solicitor who will handle the conveyancing. If you own several properties in Australia, you will be imposed an annual tax. The good news for first-time owners is that the government offers sizeable grants (up to 15k AUD) that help not only to cover all required taxes but also to save a lot.
Foreigners wishing to buy property down under should bear in mind that every state has its own set of procedures and legislation concerning transferring property ownership. The solicitor you might choose is also authorised to act only within their state (more seldom - within two states if they live on the border of two states). That is why you should look for legislation and the conveyancing services in the state you buy property in.
Renting is a very popular option in AU. The Australians rent not only because they cannot afford to buy but also because it is simpler: there are lots of people who prefer renting even if they have enough means for buying. Such approach stirs up the competition and keeps the prices inexorably high. The exact price will depend on the property’s location (how far it is from the city and stops of public transport), the number of bedrooms, remodelling conditions, and availability of facilities in the neighbourhood. Rents in such cities as Darwin, Sydney, and Melbourne are said to be the highest. An unfurnished studio would cost you 250-350 AUD per week while for a 2-bedroom apartment/house for the same week rent period you will have to sacrifice up to 500-750 UAD.
Most of the rented properties are managed by the agents, so in order to get considered, you must meet some criteria. If you make an appointment with the agent, dress smartly for this occasion. In order to get registered with the agent, you will also have to provide some papers that prove your trustworthiness: for example, passport, driving license, references from your previous landlord and present employer. Your chances of winning the deal greatly depend on your status: students, unemployed people or single parents are treated as less reliable, and, therefore, have much lower chances. In Australia, you must prove your paying capacity.
Bear in mind that your rental cost will also include the agent’s fee which is usually equal to the cost of 2 weeks of rent per year of a contract. Commonly, rented properties are let on lease unfurnished down under. Tenants are often asked to pay a one-month rent in advance; in some cases, a bond against damage is applied. Very often tenants have to pay deposits for utilities (such as gas, telephone, or electricity).
Contracts are usually concluded for 12 months, and you aren’t recommended to break the one because the cost of the procedure is very high. Commonly, a tenant that vacates a property earlier has to pay until the contract ends or suggest another tenant who would take over the rent. For the sake of propriety, you must let your landlord know about your leave beforehand – 3 weeks before the decided date of the contract termination. The landlord, on their side, can also terminate the contract (usually after the first period of 12 months), but they must let the tenant know about it 2 months before the termination.
Signing a tenancy agreement with an agent or an owner is urgently necessary. Requirements of this agreement and the minimum number of clauses depend on the state where the property is located. Another important document is the inspection report (inventory) that must be made by the landlord (or an agent): they check and describe the condition of the rented property in order to avoid any possible complaints about damage of furniture or appliances in the future. Readings of all meters (gas, electricity, or water) in the property must be taken to ensure the tenant gets the just bills.
Other Rental Options
Due to a very congested property market and high prices, lots of Australians (especially those unmarried and young) save a lot on rent cost by choosing such renting options as boarding houses, lodging, or sharing.
- A boarding house means that an owner shelters a number of lodgers and provides them with half-board services (breakfast and supper).
- Lodging means taking in a tenant or two whom you shelter in your home as family members and provide them with breakfast and supper. This option is often used by foreign students.
- Sharing is a popular option for young people in big cities that means living in one house or apartment with other tenants and sharing not only a bathroom and kitchen but also often a living room and even a bedroom.
The cost for such alternative renting option will depend on the location and amenities and on whether you are provided with a separate bedroom/bathroom or a shared one. For example, occupying one bedroom will cost you approximately 100 AUD per week while if you prefer to have your own bathroom, the weekly cost would be up to 250 AUD.
Although the Australian property market is congested, it is still possible to find an appropriate dwelling for an affordable price. Becoming a permanent resident increases your chances of buying a more affordable property as you get access to the public housing sector. The best way to survive in a stressed property-obsessed society is to realise that the real house is not just walls and roof but rather a place where your heart belongs and where your nears and dears are happy and protected. For this goal, Australia has plenty of options to offer you.