Australia has established itself as a popular market for Asian investors looking to purchase property overseas – either as a means of generating wealth or gaining residency. Sealing the deal and getting the keys to your Australian dream home, however, may not be as simple or straightforward as it seems. Here are five things every Asian investor should know before buying Australian real estate.
1) Property market performance varies from city to city
Although Australia on the whole provides an attractive investment environment – which boasts stable GDP growth and consistently low interest and unemployment rates – the property outlook can vary significantly from city to city.
According to Tim Lawless, the head of research at CoreLogic, the Australian housing market delivered a total annual return of 14.7% in 2016, after factoring in gross rental yields and capital gains.
Propelled by strong population growth and robust economic activity, the cities of Sydney and Melbourne experienced positive property market performance last year, as did the smaller cities of Hobart and Canberra.
On the other hand, mining and resource-centred cities like Perth and Darwin saw weak housing market conditions in 2016, but CoreLogic data suggests that these areas may be poised for a recovery in the near future.
The bottom line is that investors looking to purchase Australian properties should take the time to research and carefully evaluate various cities based on past performance and potential growth and yields.
2) Not every type of property is up for grabs
As a foreign investor, unless you are residing in Australia, you are typically only permitted to buy:
- A new dwelling that is built on residential land and has not been previously sold or occupied for more than 12 months.
- Vacant land designated for residential dwelling development.
- Certain established dwellings, which have been designated for redevelopment.
Generally speaking, foreign non-residents are prohibited from purchasing established (second-hand) dwellings that have been previously sold or occupied to use as homes, holiday homes, or to rent out.
It is important to note that there are many conditions and exceptions to these rules. Foreign buyers should refer to official government websites such as the Australian Foreign Investment Review Board or speak to a real estate professional to ensure they have a good grasp of the regulations.