It has been nearly one year since I arrived in Australia.
There have been lots of changes in the past year. Job interview, IELTS, working visa, resign from Alibaba, move abroad, join a new company, pure English office, end the long-distance relationship with my wife. Then I continued to chasing up permanent residence and finally, I did it in March this year. I’m still not fully relaxed and adapt to that yet.
According to the Australian Immigration Department, the estimated time of granting permanent residence will take about 16-19 months. It only took 6 months which was really a surprise since it is faster than we can imagine. Previously, we planned to buy a property in early of 2020. Now, we can do much that earlier.
Like many others who are new to Australia, we know nothing about Australian property. The only thing I know is lots of local people live a bug house which looks amazing.
After two months of hunting, here is the knowledge I learnt about buying a property.
First of all, what does buying property really mean in Australia? The difference between Australian real estate and China is significant. It is necessary to understand the types of Australian real estate first.
Overall, Australia’s dwellings can be divided into House, Apartment/Flat, Townhouse, Villa, Rural, Off the plan, Land, etc. The apartment is closer to the concept of court in China, but the apartments in Australia are normally independent buildings without a fence.
House is absolute the mainstream of Australian property. If you take a look from the satellite map, you will find that the Australian dwellings are almost houses. House typically ranges from 300 square meters to several hectares. Generally speaking, closer to the CBD more smaller the land and more expensive price. House can provide a large space and offers a variety of additional expansion possibilities, such as a separate swimming pool, multiple parking spaces, and even a small yacht, RV. Australians love outdoor activities and a significant number of families buy small yachts and RV. Personally, I also dream of buying an RV and even a yacht. In addition to that, there are no strata fees, just a small amount of council fee. The land is freehold property, and there is no inheritance tax in Australia currently which means the property can be inherited generation to generation(It’s totally different in China because it is a communist country. Normally, People only has the right to use the land for 70 years.🥺). Although there are many advantages to a house, the disadvantages are also significant. Firstly first, the house with a reasonable price is always far away from the CBD and it will cost nearly two hours on commute daily. Moreover, the cost of public transportation is not cheap. For example in Sydney. the fare for a one-way train is about $3.5 and farther place could be $5 which is a significant extra monthly cost. The maintenance of the house is another issue. The maintenance of hundreds square meters yard is really costly since labour is extremely expensive. I always feel very tired after work. If I still need to maintain my house during rest time, it’s really frustrating. Being lazy is not practical because your neighbours will report to the local council, and it is very annoying to be fined. House is generally difficult to rent out, even if the rental price is very low, which is commonly referred to as low rental-to-sale ratio and indicating poor investment value.
Apartment is another mainstream choice for Australian. Compared to the house, the apartment is generally cheaper and can be very close to the CBD reducing plenty of commuting time. Besides that, the apartment’s maintenance cost is significantly lower compared to the house. Mostly just some cleaning. Most of the strata will equip the apartment with the monitor, access control and other facilities which means it’s safer to live in the apartment. Since it’s closer to the CBD, the apartment could easily rent out at a relatively good price which makes a better rental-to-sale ratio. However, when choosing the apartment, don’t forget to pay attention to age. This may not be the concern in China, but quite a lot of Australia’s apartments have existed for decades or even hundreds of years. The purchase of these old apartments carries the risk of high property maintenance fees. Usually, the strata fee is around 800-1500 AUD per quarter. Any strata fee exceeds 1,500 Australian dollars is quite expensive to most people. When those old apartments need to be repaired, the strata fee will rise significantly high, and I had seen several those cases happened recently the strata fee rising to 3,000 Australian dollars per quarter. So, the strata fee should be taken into consideration when choosing an old apartment. By the way, price is not valued upon the size. Different from China, there are multiple dimensions to measure the price, such as the number of rooms, quality of decoration, size, school catchment, sunlight, etc. There is no simple formula to calculate the price of an apartment.
Townhouse/Villa is a compromise between the house and the apartment. It tries to find a balance between them. Townhouse/Villa generally refers to tached or detached cottages that share a piece of land. Normally, Townhouse will be in a row and directly along the street; Villa usually has a relatively large enclosed courtyard. Villa has a better privacy. Townhouse/Villa is generally much cheaper than the house, the price is close to the apartment, but it has more living space than the apartment. However, Townhouse/Villa also has a strata fee, but it is usually much cheaper than the apartment. It’s about $300-600 quarterly, and will not encounter the problem of building maintainer fees, because everyone is a detached house. The Townhouse/Villa is between 100 and 300 square meters. Compared to House, the area that needs to be maintained is significantly reduced, and the space for activities is still quite large. I prefer this.
Off the plan means the developer sells the property before the construction is finished. All they have are the real estate model and development plan. After a few years, buyers can settle the property. This type of property is mostly apartment. If you have full confidence in the market, you can look at it as a good investment choice, but it is not recommended for self-occupation.
Land is also relatively small in the market. For ordinary homebuyers, buying land is not significant unless you have the energy to design and build a home. The process of building a house is cumbersome and time-consuming, requiring multiple government approvals, and Australian labour is particularly expensive and costly to build. Despite this, buying the land and designing it yourself is the best choice to live 100% satisfied with the house.
Rural is rarely seen, and the land is shared. I haven’t inspected rural yet. So, I do not know too much about it.
All the above are brief introductions to Australian real estate. Here are some common points that I want to share.
Property rights issue. Australia is a capitalist private state. Once a property is purchased, it is a private property with permanent property rights. There is no concept of China’s 70-year use rights. At the same time, unlike the United States, Australia currently has no inheritance tax and it is very easy to inherit property.
Price. Australian property price is complicated to calculate, not by area. In general, Apartment will also mark the area, which is the actual internal area, and there is no concept of pooled area. The number of bedrooms, the number of balconies, the number of parking spaces, and the area in which they are located will be considered together to calculate the price. Market conditions, negotiation ability can determine the final actual transaction price.
How to hunt the property. The Australian real estate market is relatively standardized, basically through the real estate agent to buy and sell the property. The agent usually schedules open Saturdays, sometimes on Wednesdays. The visit time is generally limited to half an hour. During the period, there will be many potential buyers to inspect the property. My inspection experiences are all from the open day during Saturday. On weekdays, people are generally reluctant to go out to. Sunday is Australia’s family day, it’s for a family reunion, and public transportation is capped at 2.7 Australian dollars, so there will be no schedule for an inspection. In addition to the open day, you can also make an appointment by phone or email agent.
How to find a listing. My experience is to use Internet products such as Domain, Realestate. Sometimes there are places to live. The surrounding property flyers will be sent to the mailbox.
Investment and self-occupation. The first thing to decide before buying property is whether it is for self-occupation or for investment purposes. Those two types belong to different categories. Self-housing can live by yourself, but there is no way to benefit tax rebates. Investment property cannot be self-occupied but can be rented, and can also benefit from the tax rebates.
Now comes the end, I’ll write about the deposit and tax problem next time.