Buying property in Sydney
The process of buying property in Sydney
Though the process may seem daunting, there are basically five essential steps to getting your hands on property in Sydney, which we will go into more thoroughly below. If your visa status allows for the purchase of property, or you have permission from FIRB to make a purchase, then you will generally proceed through the following steps:
- Research the Australian property market
- Secure financing
- Engage a reputable real estate agent
- Do your diligence
- Finalize the purchase
These steps provide a general framework for buying property in Australia as an expat, but it's important to note that the process can vary depending on individual circumstances and local regulations. Working with a reputable real estate agent can help ensure that you navigate the process smoothly and effectively.
Buying property as a foreign resident in Sydney
If you are a foreign resident in Australia, you cannot buy an established residential dwelling in Sydney either directly in your name or through a trust relationship or business. Severe penalties can apply for breaking this law. You are classified as a foreign non-resident by the Foreign Investment Review Board (FIRB) if you hold a visa that allows you to stay in Australia for 12 months or less.
FIRB is a governmental regulatory body created to ensure that property sales in Australia to non-residents are made in accordance with the law. However, foreign residents can purchase other types of Australian residential property, including new dwellings, vacant land, and property that is to be redeveloped, but you must first get approval from FIRB. Applications and application fees are required to have your situation reviewed by the board before a purchase can be made.
Buying property as a temporary resident in Sydney
If you are a temporary resident, you can buy an established dwelling to live in as your sole residence in Sydney after first getting approval from the FIRB. The property cannot be rented out as an investment property while you are a temporary resident, and you may be required to sell the property if you leave Australia permanently. You are classified as a temporary resident if you hold a temporary visa, which allows you to remain in Australia for more than 12 months, and/or if you are residing in Australia and have applied for a permanent visa while on a bridging visa until a decision has been made on your application.
The Sydney property market
Sydney's property market has been experiencing a downturn in recent years, with property prices expected to drop by 6% in 2023. The expected median house price in 2023 is forecast to be around AUD 1,141,650, while the median unit price is projected to be approximately AUD 978,800. Of course, this is still a huge amount of money, but the downturn has made things a little more affordable for those just entering the market.
Despite the downturn, Sydney's property market is still known to be one of the most expensive in the world, with house prices varying significantly depending on the location. In general, properties closer to the city center or coastal areas tend to be more expensive, while those further out or in less desirable areas can be more affordable.
Some of the most expensive areas in Sydney include suburbs such as Mosman, Point Piper, Vaucluse, and Bellevue Hill, where the median house prices can exceed $5 million. Other pricey areas include the Eastern Suburbs, the Lower North Shore, and the Northern Beaches.
On the other hand, there are also some more affordable areas in Sydney, such as the South-Western suburbs and the Western suburbs. These areas tend to have lower median house prices, ranging from around AUD 500,000 to AUD 1 million.
Overall, buying a house in Sydney can be a challenging and expensive undertaking, but with the right research and guidance, it is possible to find a property that meets your needs and budget.
How to find property in Sydney
House hunting in Sydney can be pretty tricky for everyone, but this holds especially true for ex-pats. The first thing to do is to determine your budget. After that, research! Scour advertisements, newspapers, and the internet to the best of your capability. The Home Price Guide can be very useful, as can the Australian Property Monitors. We recommend hiring a real estate agent to help with this process. Although it is possible to purchase property without one, an experienced and reputable agent can provide valuable guidance on everything from identifying suitable properties to negotiating the best deal, understanding local regulations, and navigating the purchasing process. This can save expats time, money, and hassle in the long run.
It's important to note that while it is possible to purchase a property in Sydney without a real estate agent, doing so can be more challenging and risky, particularly for those who are unfamiliar with the market or the legal and financial aspects of property transactions in Australia.
Online property search tools
There are several online search tools that can help you find properties for sale in Sydney. Some useful sites include:
Auction vs. private sale
There are a few ways to buy property in Sydney, but the two most common methods are through auction and private sale. An auction is public, with potential buyers gathering to bid on the property. Auctions can be exciting, competitive and fast-paced, and the highest bidder at the end of the auction typically secures the property.
Important:
Before attending an auction, it's important to have financing in place and to thoroughly research the property to determine its value. Don't get carried away in a bidding war!
Private sales, on the other hand, are negotiated between the buyer and seller, often with the assistance of a real estate agent. Private sales can be more flexible than auctions, allowing buyers and sellers to negotiate on price and other terms of the sale.
Financing property purchase in Australia
As an expat trying to purchase property in Sydney, you will be viewed as a high-risk borrower by Australian banks, meaning you may encounter more tough lending criteria than a permanent resident. This can include requirements for a higher deposit or proof of stable employment and income. It's also very important to understand the different types of mortgages available, such as variable rates or fixed rates, and the associated fees and charges. Expats should be aware of the potential tax implications of taking out a mortgage, particularly if they plan to rent out the property. It's always a good idea to seek professional advice from a mortgage broker or financial advisor before making any significant financial decisions. Unless this is your area of expertise, we recommend hiring a professional to help with the mortgage. Though this may seem like an extra expense, it nearly always saves you money and stresses down the line.
Before you start looking for a property in Sydney, it's important to research potential lenders and compare their rates, fees, and lending criteria. You may also want to consider working with a mortgage broker who can help you find the best deal and navigate the application process.
Once you've found a lender, you can apply for pre-approval to get an idea of how much you can borrow and what your repayments might look like. Pre-approval can give you a competitive edge when making an offer on a property.
Good to know:
Be wary of the additional costs when buying a house; stamp duty, loan application, land title transfer fee, council rates, legal and conveyancing costs and any repairs, and the cost of moving. If you are to become a permanent Australian resident over time, you are eligible for a First Home Owner's Grant, which will allow you to cut costs off the stamp duty.
Due diligence
Once you've found a house you like in Sydney, it's important not to take it at face value. There may be structural or invisible issues with the building that you need to know of before making an offer. This is where due diligence comes in and can include the following:
Building and pest inspection: A building and pest inspection can help identify any structural issues, pest infestations, or other potential problems with the property.
Strata inspection: If you are buying an apartment or townhouse, it's important to conduct a strata inspection to review the strata records, financials, and any issues affecting the strata scheme.
Title search: A title search can help confirm that the seller is the legal owner of the property and that there are no encumbrances or restrictions on the title.
Land survey: A land survey can help confirm the property's boundaries and identify any encroachments or easements.
Council records search: A council records search can help identify any planning or building approvals, zoning restrictions, or other issues affecting the property.
Valuation: A valuation can help you determine the property's fair market value and ensure that you are paying a fair price.
Finalizing the property purchase in Sydney
Finalizing a property purchase in Sydney involves a few key steps, including exchanging contracts, paying a deposit, conducting final inspections, settlement, and registration of title. Work with a reputable conveyancer or solicitor to ensure that the process goes smoothly and all necessary documents are completed correctly.
When you exchange contracts, you will sign a legally binding agreement with the seller outlining the terms of the sale. A deposit, typically around 20% of the purchase price, is paid and held in a trust account until settlement.
Before settlement, a final inspection is conducted to ensure that the property is in the same condition as when the sale was agreed. On the settlement date, the balance of the purchase price plus any other fees or charges are paid, and the seller transfers ownership of the property to you.
Finally, the transfer of ownership is registered with the relevant state or territory authority, and you become the legal owner of the property. Congratulations! You've now got the keys to your new home!
Last update on 13 May 2023 19:47:51