Purchasing a property can be a time-consuming and stressful experience, particularly if that property is located in another country or region. Having a clear understanding of the various regulations in the country/region you are buying into will greatly improve your purchase experience, as will a clear understanding of the specific market you are buying into.
Each property market is typically unique in nature, influencing what you are able to purchase in any given market. In this regard, the NSW property market comprises a range of sub-markets operating not only across different state locations, but also within many of its major cities. Often referred to as the City of Villages, Sydney is geographically very large and diverse and hence has a broad variety of properties, at very different price points, which are largely dependent upon where the property is located, proximity to the CBD, Harbour, Beaches and transport services.
Below are some answers to typical questions related to purchasing a property in Sydney/NSW.
Am I eligible to buy property?
As a non-permanent resident, there may be restrictions around your ability to purchase property in Sydney/NSW. The Foreign Investment Review Board of Australia processes all applications for non-permanent residents.
If you find that you are ineligible to buy in the Sydney/NSW market, or you decide that you would prefer not to commit to a purchase until you are more familiar with the location you are moving to, then you may need, or prefer, to rent.
What type of property can I purchase?
Having a clear understanding of the market you are looking at buying into, as well as clearly defined property purchase objectives, relevant property search criteria and a realistic budget, will all go a long way in improving both your property search journey and the likelihood of purchasing the right property for your needs.
In addition to locational criteria, such as proximity to specific services, such as schools, hospitals and transport, important property search criteria to consider includes the type, style, size, layout, aspect, features and condition of the property. These search criteria will be influenced by your individual purchase objectives/goals, life-style/life-stage, personal preferences and budget.
How do I find a property?
To find details of current properties Sydney/NSW, key search sites includes Domain and RealEstate.com.au. There are also a number a professional Buyers Agents that can assist with all aspects of your property search, including uncovering the many Sydney properties that are not advertised (typically referred to as Off Market properties).
There are a plethora of Real Estate Agents that service the Sydney/NSW property market, some which may offer to assist with your property search. It is important to note that it is not considered ethical in Australia for a Real Estate Agent to offer both purchase and sales services for the same property (owing to a conflict of interest). The Real Estate industry in NSW is regulated by NSW Fair Trading to monitor activities and performance of Real Estate Agents and Buyers Agents.
In addition, the Real Estate Institute of NSW is a member based organisation that has been established to assist the professional development and growth of Real Estate professionals, while the Real Estate Buyers Agent Association of Australia has similar aims for Buyers Agents. It is recommended that any Real Estate Agency or Buyers Agency you deal with are members of their respective member organisations.
It is important to ensure that any Real Estate Agency, or Buyers Agency, you select to assist with your purchase is professional and reputable. Please refer to following link for suggestions on how to determine that this is the case. (this is our article Are You a Property Expert?)
How do I finance the purchase?
If you need finance for your purchase, there are numerous financial options available in the Australian loan market. Although competition is healthy for the consumer, locating the best deal can often be complicated and time-consuming. An accredited Mortgage Broker will be able to source and provide you with a number of different alternatives (and associated costs).
Most lenders will require you to have a minimum 10-20% deposit of the purchase prices. Some Lenders will accept less than this amount, but this will likely involve the imposition of certain limitation on loan, loan-term or interest rate.
Most lenders will provide you with loan pre-approval, which is typically valid for 3 months (with the ability to extend).
The type of documentation that you will need to provide will vary amongst lender, but typically includes:
- Evidence of Income
- Details around your current financial situation
What are the typical methods of sale?
There are two main methods of purchase for properties in Australia:
- Auction – Properties are usually sold by Auction when demand is high. Auctions are typically the most popular way of selling real estate in Sydney in particular. If you are the successful bidder at auction you will be required to pay a 10% deposit and the contract will be unconditional (as such it is advised to ensure you are in a position to settle the purchase before attending the Auction).
- Private Treaty – Where a property is offered for sale at a negotiated price. The typical practice is for the Vendor (the current owner of the property), to set the price and negotiate, via an agent, with the purchaser until a mutually agreeable price is reached. The terms of the Contract can vary however in NSW it is generally accepted that a 10% deposit is required on exchange of the Contract with a 42 day settlement period.
Contract of Sale – the Contract of Sale is generally prepared by the Agent or the Vendors Solicitor. Ensure the Contract is reviewed by your Solicitor/Conveyancer before signing anything related to your offer/sale.
Settlement Process – once this becomes unconditional on the purchase, your solicitor/conveyancer will handle most pre-settlement conditions and (assisted by your Buyers Agent if you have one) will liaise with relevant stakeholders.
What are the typical costs associated with purchasing a property?
All properties sold in Australia require the payment of a government Stamp Duty. Stamp Duty rates vary across each State, with NSW being amongst the highest. Refer to the following for a stamp duty calculator.
While not compulsory, it is strongly suggested that you have the Contract of Sale and any Strata Report (if the property is an Apartment/Townhouse) reviewed by a Legal representative, before signing anything related to your offer/sale. Refer to FindLaw Directory for contacts. Costs will vary for these services but are typically around $500 for contract and strata review, if successful in the purchase total cost for conveyancing will be circa $2500.
It is recommended that a Pest and Building inspection report, is undertaken, particularly for houses, prior to making an offer. Again, prices vary for this service, but are typically around $300-$700 dependant on the size and complexity of the property.
Moving costs will also need to be factored into your purchase along with a number of ongoing costs such as Council rates, Utilities (i.e. Gas, Water) and Body Corporate/Strata Levies (when purchasing apartments/townhouses).
Contact Rose & Jones today to discuss how we can assist you with your property purchasing requirements in Australia.