The Complete Guide to Investing In Australia Property
AUSTRALIA PROPERTY INVESTMENT GUIDE
If you enjoy a decent level of financial resources, everybody will tell you to invest in real estate, which is something you had in mind as well, right? But it is quite challenging to make a smart investment and you probably don’t want to take in too many risks.
Nevertheless, property investments are probably the best thing you can do if you want long-term profits. This is a guide that will help you become much more familiar with the environment in which you want to invest so that you will be capable of taking the best decisions.
Go through each step and see why it is such a good idea to invest in the Australian property market and get your hands on the knowledge that will help you do so.
WHY INVEST IN AUSTRALIA PROPERTY?
Very many people dream of living in Australia, due to its stable economy, developing cities, and warm weather. This triggers a rather high migration rate toward Australia, people coming here from all over the world looking for a chance to lead a better life.
So, investing in Australian properties, especially in the big cities like Melbourne property, means that you will definitely have customers that will allow you to recover your investment and enjoy profits as well. Thus, you shouldn’t worry about the demand on this particular market in Australia, because the demand is there and the future looks even brighter.
What makes Australia such an attractive destination for both investors and people that are looking for a more enjoyable life? First of all, Australia is a calm country from a political point of view, because the political processes here are very transparent, as the legal system is strong and even if there is a level of bureaucracy, it is done at a highly professional level.
With an advanced healthcare system, it also provides an environment that is ideal for retirement, and a high life quality, which makes Australia the ideal destination for thousands of people. So, if you seriously considering investing here, you are not making a bad choice at all, as this country has a large degree of potential.
REASONS TO INVEST IN AUSTRALIA
What is great about Australia is that it has a high degree of land available for investment and development, much more than you’ll find anywhere else in the world. Just how much? The mass of the Australian land is as big as the United States, having only a 10th of US’s population.
You can practically make your dreams come true in Australia, which so many spaces ready to welcome its investors. Here are more reasons why investing in Australian properties is a smart step:
- It is one of the most profitable investment domains
When specialists looked at the various domains existent in Australia that attracted investments and compared their Return on Investment figures, property investment turned out to be the most profitable. Anywhere between 7 and 10 years the properties in which you invested will double their value, which makes this an incredible long-term plan.
- The GDP of Australia is predicted to grow continuously
Australia is developing successfully, there’s no doubt about it and this makes it an ideal environment for potential investors. Forecasts predict a steady growth from 2.5% to 3%, a growth fueled by a diverse and steady economy.
Big cities like Melbourne and Sydney will provide numerous opportunities. Still, investing in Melbourne property market is better than doing the same in Sydney, as Melbourne develops at a faster rate than the country’s capital. In fact, by 2021, the number of households in Melbourne is expected to grow to 20,975.
- The demand for new household will continue to increase
Before Australia reaches 2030, its constantly growing population will demand 620,000 new households. Only in Melbourne alone, the size of a household will drop from 2.6 to 2.25 people in the coming 10 years, which means that young adults will want to move on their own and will need a new place to stay.
But people aren’t just looking to buy new homes, but also rent properties. Currently, the rate of places free to rent is just 1%, which means that the demand is already high. People love renting places, even if it is for vacation purposes, near town centers or the beach.
- Australian property investors enjoy great tax advantages
The government wishes to attract investors toward property investment in Australia, so the country’s tax laws are more than generous when it comes to the tax advantages investors will enjoy.
- You can leverage and make an even bigger profit
Believe it or not, there are many lenders that end up lending their properties in a proportion of 100%, this aspect being fueled by the fact that Australian properties are considered to having the lowest degree of risks when it comes to investments and the potential of reaching a generous capital is very high.
- A property is an asset that won’t disappear in time
If you choose to invest in a property, you will still have the property in the years to come. Unlike various jobs and companies that can very well disappear in the new future, a property is always there and can’t be made to vanish. And considering the fact that costs of labor and buildings are continuing to rise, so will the value of your properties in Australia.
HIGH RENTAL YIELDS
A large part of the investors that chose to place their money on Australian properties is wealthy Chinese. So what do they do that most of us don’t? They discovered that the prices of properties in Australia, including big cities like Sydney and Melbourne, are extremely low in comparison with other large cities in the world.
Also, when they looked at the gross rental yield, they discovered that they are incredibly high, which made the idea of buying a property in Melbourne, for example, a great way to ensure long-term income by offering it for rent.
But, those that are looking to buy land and develop new residential units in Australia will also win out of this equation. This is due to the fact that the demand for houses is extremely high in this country, not only people living here looking to get a house but also foreign investors that are planning on buying property in Australia.
What are the advantages of buying a property for sale in Australia and renting it? Just think about the fact that rental yields in Shanghai are 1.5%, while in Sydney, for a property of the same size and with the same features, the landlord would take at least double the value.
And Sydney is not the city with the biggest rental yield. It is exceeded by Melbourne, which has a rental yield of around 4.5% and Brisbane, with a rental yield of up to 5%. At the same time, Sydney is the most expensive when it comes to property prices, followed by Melbourne, and Brisbane, which has the lowest prices in this particular example.
So, finding a property for sale in Perth, Australia, Brisbane, Melbourne, or other cities that are slightly smaller than Sydney, will ensure a higher rental yield in comparison with the price an investor has to pay for the property itself. Having all these in mind, there’s no wonder foreign investors see the real estate market in Australia as such a favorable place to increase their income and net worth.
HOW MUCH ARE PROPERTY TAXES IN AUSTRALIA
While property investments in Australia are rather accessible to its citizens, when it comes to foreign investors, things change a little. New taxes were adopted by the government, which means that investors that come from overseas and would like to invest their money in the Australian real estate market will have to pay extra taxes.
Such measures were triggered by the fact that a lot of foreign investors, especially from China, were attracted by the Australian property market in high numbers in the past year. The low prices on property and the certainty of making a great profit made very many foreigners want to invest in this particular country.
The most expensive Australian state to invest in, from the point of view of the foreign investor stamp duty surcharge, is New South Wales. The state started charging foreign investors with 4% but in present days this tax doubles, reaching 8%.
The next state is Victoria, which charges foreign investors with 7% stamp duty surcharge, followed by Western Australia, which joined this group of states recently, by adding a surcharge of 4%. And it doesn’t matter if you are an individual, company, trust, and so on because everybody that lives overseas and wishes to purchase properties in one of these states has to pay the surcharge.
So, for you to understand better, if you want to purchase a property in New South Wales, you’ll have to pay 5% duty, 8% duty surcharge, and 2% land tax surcharge, so that will be a total of 13.5% taxes as a foreign investor.
WHY INVEST IN AUSTRALIA NOW?
Australia is a country that always had a strong economy, a great governing system, a business environment that encouraged the developed of various companies, and a strategic geographical position very close to the ever-productive Asian markets.
Having all these aspects in mind, it’s no wonder people dream of moving to Australia, which has, as the main effect, a constant demand for residential units. At the moment, foreign investors have to pay an additional stamp duty charge if they want to purchase properties in sought after areas, like Sydney, Melbourne, although such extra charges are not applied throughout the entire Australia.
But, even with the existence of these stamp duty surcharges, it is still a good idea to invest in the Australian property market, due to the significant return on investment you can obtain. Although it would be wise to make such a decision as soon as possible because, if the government will notice that the number of foreign investors will continue to grow, there is the possibility for these surcharges to grow as well or other impediments to arise.
After all, New South Wales already doubles this surcharge since it was first adopted by the local government, which shows that, even though foreign investors are welcome, the government wanted to slow things down so that Australian residents have a good chance at investing in real estate as well.
So, now is a great time to start investing and buying property in Australia, before things change too much, in case you are a foreign investor. The potential is still great and you will make a great profit if you pay attention to the demand on the market.
While it is true that Sydney and Melbourne have become expensive cities with rental returns that are around 3% or even less than this, there are other cities that are developing and gather the attention of investors.
Hobart, for example, is facing a high demand for houses, especially in the suburb areas, like New Town and Sandy Bay. A property in Hobart usually receives multiple offers from buyers and sells in about two weeks, for more than it was initially listed.
Considering that an average property price in Sydney is $860,000 and in Hobart prices go around $363,200, it’s no wonder investors want to take advantage of this kind of accessibility. Also, the rental return can be anywhere from 4%, within the city, and 6%, in the areas located just 20 minutes away from the inner part of the city.
Thus, if you want to make a great investment with low capital, Hobart is one of the cities you need to consider. Of course, you can always go for a property investment in Melbourne or Sydney, but this will require much more capital and you will need to be careful where and how you are going to invest.
Nevertheless, Australia is indeed a great destination for people that wish to invest in real estate. Even if you live in Australia and would like to invest your money into something safe and profitable, you should consider the property market as it is easier to make such investment rather than someone that lives overseas.
IS THAILAND PROPERTY A GOOD INVESTMENT?
For the past decade, the real estate market stabilized in Thailand, plus it is very well positioned when it comes to its neighbors, allowing a 1-hours flying to any of the following destinations: Myanmar, Laos, Cambodia, and Vietnam.
It is also worth mentioning that the Thai Baht has been one of the most stable currencies in Asia for years in a row, so it is more reliable than the Japanese Yen or Singapore Dollar. The market has a low tendency to crash as well, so the risks an investor takes when choosing to exploit Thailand’s property market are extremely low.
WHY INVEST IN THAILAND NOW?
Many investors choose to have their headquarters in Bangkok just because they can travel so easily to all the surrounding areas, fast and comfortable. Not to mention that Thailand is such a pleasant place to live, with many opportunities that arise throughout the year and a constantly developing urban area and economy.
You can tap into the one-year investment visa program by simply investing 10 million Baht in properties in this country. You are also allowed to invest in various assets as well, such as mutual funds, stocks, bonds, and so on. Also, you can renew your investment visa over and over again, without limits, so you can enjoy doing business in Thailand for as much as you please.