How to make Buying Australian Property as an Expat as easy as 1, 2, 3. (Your 2024 guide)
For Australian expatriates wishing to invest in property back home navigating the process can seem daunting. Being armed with the right information and planning makes buying Australian property as an expat a feasible and rewarding endeavour. Helen Avis of Specialist Mortgage is a seasoned professional when it comes to expatriate finance. Here, let Helen Avis step you through the basics to successfully navigate the Australian property market.
Are you ready to purchase Australian property?
Like everything in life you need to be prepared before starting anything. Before jumping straight in it’s crucial to research and understand the Australian property market. Consider factors such as market trends, property prices, rental yields, and economic conditions. Engage with local real estate agents and online resources to gather relevant information or speak to one of our friendly mortgage professionals and they’ll point you to the right person. We have a network of agents, accountants & brokers to provide you with the knowledge you need before embarking on one of life’s biggest investments.
Can you afford an Australian home loan?
Don’t forget about your financial goals and budget too. It’s all very well to know what suburb is providing a sound return on investment but can you actually afford it? It’s important to first know the purchasing budget you are working with. That way you, and your mortgage broker will get a better understanding of your purchasing range and the properties you can look at.
Having a chat with an experienced Australian expat mortgage broker will give you a good indication of your borrowing capacity, and how much deposit you will need to have for the Australian property you are going after. Your Australian mortgage broker will then being able to pin point some of the incentives you may be eligible for also.
Get professionals in your corner for all things Aussie Property.
We’re not experts at everything so why pretend to be? To navigate the complexities of the Australian property market, we do advise to engage the services of professionals such as a real estate agent, mortgage broker, and a solicitor. A reputable real estate or buyer’s agent can assist in finding suitable properties, your mortgage broker can help secure financing options tailored to your needs & a solicitor will guide you through the legal processes involved in property transactions.
Did you know if you purchase a property in New South Wales on the East Coast of Australia, whilst only holding a PR status and not hold an Australian passport, you would be subject to an additional 8% stamp duty surcharge on the purchase? It’s important to understand your liabilities and having an expat mortgage broker will only strengthen your options when purchasing Australian Property.
The Fund part – Accessing Australian home loans.
Arranging finance is tricky for everyone, and as an Aussie expat or repat there can be some loopholes and barriers. Exploring your financial options like securing a mortgage from an Australian lender or utilising existing funds in an Australian banking institution can really help. Talk to us, or consult a mortgage broker so you can understand the requirements, interest rates, and terms and conditions associated with Australian expat mortgages and non-resident lending.
Virtual Reality when purchasing bricks and mortar investments. The biggest question we get all the time is how can I purchase property in Australia if I’m not physically in Australia? I can’t go and inspect properties?!
Yes, its always best if you can personally inspect potential Australian properties but in this digital age it is not uncommon for even locals to not even set foot in their future home. You can now leverage technology to conduct virtual property inspections, seek detailed property reports, and engage with trusted individuals to assess properties on your behalf. Ensure the property aligns with your investment goals, location preferences, and meets necessary standards.
Once you have identified a property, (digitally or elsewise!) make an offer through your real estate or buyer’s agent. Ensure the offer is contingent upon due diligence, including property inspections, finance approval, and legal requirements and negotiate the purchase price and terms to reach an agreement beneficial to both parties. You can do this all electronically and remotely if required.
After due diligence and legal processes are completed, proceed with settling the property purchase. Coordinate with your solicitor, lender, and real estate or buyer’s agent to ensure a smooth settlement process. We too can take care of this entire process for you with our dedicated team that work with expat clients daily. We know the ins and outs and act as your proxy every step of the way.
Purchasing Aussie Property worldwide.
Buying Australian property as an expatriate may require additional considerations and processes, but with thorough research, professional assistance, and careful planning, it is an achievable goal. By understanding the market, adhering to regulations, and engaging the right professionals, expats can successfully invest in Australian property, benefiting from long-term capital growth and potential rental income. Is it time you invested in Australian soil?
Mortgage brokers are an intrinsic component in any real estate investment strategy, says award-winning finance expert from Specialist Mortgage, Helen Avis.
In the dynamic world of property investment, making informed financial decisions is crucial for long-term success.
As a seasoned property investor, there is an intricate web of factors that influence investment outcomes.
One of the key players in this realm is mortgage broker.
Their expertise can be an invaluable resource for any property venture, whether it’s a first home, investment property, or overseas purchase.
Helen Avis, Director of Finance, Specialist Mortgage, who has recently been recognised as a finalist in multiple categories of the Specialist Finance Group (SFG) National Awards, said an award-winning mortgage broker brings a wealth of knowledge that extends beyond the transactional aspect.
Why engage an award-winning mortgage broker?
Tailored solutions
A mortgage broker’s expertise lies in understanding the nuances of an investment strategy.
A personalised approach can ensure buyers’ financial needs are met with more precision than if left to an enthusiastic but unqualified investor.
Market insights
As a property investor, staying ahead of market trends is crucial.
An award-winning broker will be well-versed in the shifting dynamics of the property landscape, offering insights that can positively influence investment decisions.
Optimised financing
The ability to secure competitive financing options is a fundamental part of the broker’s role.
By assessing each unique financial circumstance and investment goal, a mortgage broker can guide clients towards loan structures that align with their long-term objectives.
Navigating complexity
Property investment often involves intricate financial arrangements and regulatory considerations. A mortgage broker’s expertise can help in navigating the complexities of financing and ensuring compliance.
Overseas property purchases
Investing in Australian property from overseas adds a whole new layer of bureaucracy and financial complexity. Mortgage brokers with specific experience in this field, with experience working with expatriates and foreign buyers, will simplify the process significantly.
Holistic approach
A mortgage broker’s role extends beyond securing loans. It takes into account an entire financial portfolio, aligning mortgage decisions with a client’s broader financial strategy.
“Whether you’re expanding your property portfolio, exploring your first investment, or navigating cross-border transactions, an award-winning broker can be your compass in the dynamic world of property investment,” Ms Avis said.
This year’s SFG National Awards will be held on 16 November.
For an obligation free consult contact Helen Avis or Specialist Mortgage today.
Insights from your mortgage broker, Helen Avis of Specialist Mortgage
Entering the new year, we are flooded with predictions and forecasts from the media as to what property prices, interest rates and what the direction the industry in general may or may not be heading. Each economist, commentator and journalist has either opposing or complimentary sentiments and its difficult to know where anything is heading!
Here are my thoughts for the year taking into account the varying shades of insight. The Australian property market is definitely poised for dynamic shifts and challenges and as a mortgage broker I’m at the frontline facilitating property transactions and may be able to offer some more tangible insights likely to share the real estate landscape.
Australian home loans – Interest rates and housing affordability
I do agree, there will be a continued impact of interest rates on housing affordability. As rates fluctuate, they play a pivotal role in influencing borrowing capacities and, consequently, property prices. Exploring competitive loan options and understanding interest rate movements becomes crucial for both first-time buyers and seasoned investors.
Buying Property in Australia
The trend of regional property resurgence is anticipated to persist. We’ve seen an increasing number of individuals seeking the tranquillity and lifestyle benefits offered by regional areas. This shift not only diversifies investment opportunities but also challenges the conventional notions of property hotspots.
The digital age and its effect on Australian Property and mortgages
In an era dominated by technological advancements, I am predicting an accelerated integration of digital tools in property transactions. From virtual property tours to streamlined online mortgage applications, technology is set to enhance efficiency and convenience in the buying and selling processes.
Changes in government policies and regulations often have a direct impact on the property market. Industry leaders have emphasised the importance of staying informed about policy shifts related to grants, incentives and lending criteria but it is hard to stay on top of and it is always changing, so if you are starting to look at purchasing options get in touch so I can update you on the changes that have been made and what’s potentially coming. These changes can significantly influence market dynamics and individual purchasing power.
Going green – Environmental sustainability when it comes to getting a home loan
A growing consciousness about environmental sustainability is influencing property preferences too. I’m seeing a higher demand for eco-friendly homes and properties with sustainable features. This trend reflects not only a shift in lifestyle choices but also an awareness of long-term environmental impacts.
Given the unpredictability of global and economic factors, we do seem to stress the importance of adaptability! Navigating uncertainties requires a proactive approach, strategic financial planning, and a willingness to explore diverse property investment avenues. I’ve got a great team behind me and we are here to help so that you don’t have to do it alone. We’ve got access to a great number of resources to assist you too.
As we navigate the intricate landscape of the 2024 property market, hopefully these insights serve as a compass, guiding both buyers and sellers. The ability to embrace change, stay informed, and leverage professional expertise positions individuals for success in the Aussie real estate environment and I am only a message, call or email away!
Helen Avis, Director of Finance, Specialist Mortgage
Helen Avis of Specialist Mortgage demystifies non-confirming home loans in Australia.
What is a non-conforming home loan?
Non-conforming loans, also known as specialist or non-standard loans, are designed to provide financing options for individuals who may not meet the strict criteria of traditional Australian lending institutions. These loans cater to borrowers with unique circumstances, such as self-employed individuals, those with poor credit history, or individuals with irregular income, or overseas property investors such as Australian expatriates or foreign buyers.
Are there additional eligibility criteria for non-standard loans?
Eligibility criteria may vary among lenders, but generally, borrowers should be prepared to provide additional documentation and meet certain requirements. This may include providing bank statements, business financials (for self-employed individuals), proof of income, and evidence of a steady employment history. Lenders offering non-conforming loans consider the borrower’s overall financial situation, including income, assets, and liabilities, to assess repayment capacity.
Are there higher fees and rates for non-conforming home loans?
These types of loans typically come with higher interest rates compared to standard loans. Lenders offset the increased risk associated with lending to borrowers who don’t meet traditional criteria by charging higher rates. Borrowers may encounter higher fees, including application fees, valuation fees, and lender’s mortgage insurance (LMI) fees if the loan-to-value ratio (LVR) exceeds a certain threshold.
The loan-to-value ratio represents the proportion of the property’s value that the lender is willing to finance. Non-conforming loans may have a lower maximum LVR compared to traditional loans. Borrowers may need to provide a larger deposit or have a higher level of equity in the property they wish to purchase. Limited LVRs help mitigate the lender’s risk and provide a level of security.
Do non-conforming home loans have any benefits?
Non-conforming loans often offer flexible features to cater to the unique circumstances of borrowers. These features may include options for interest-only repayments, extended loan terms, and the ability to make additional repayments. Borrowers should carefully consider the loan features and assess whether they align with their financial goals and repayment capacity.
How do I secure a non-standard home loan?
A mortgage broker may be your best option when looking for non-conforming loans, as they have knowledge of lenders who may approve your finance and understand how they assess your mortgage application. Working with a mortgage broker can also help borrowers access a wide range of non-conforming loan options and help you assess each product offering along with the advantages and disadvantages of them. Helen Avis and the team at Specialist Mortgage are here to help if and when you need to apply for an Australian home loan.
Specialist Mortgage is here to help
Given the complexity and unique nature of non-conforming loans, seeking professional advice from mortgage brokers or financial advisors is highly recommended. They can provide guidance on the available options, assess eligibility, compare loan terms and interest rates, and assist in navigating the application process. Understanding the eligibility requirements, higher interest rates and fees, limited LVRs, flexible loan features, and the role of specialist lenders is crucial when considering a non-conforming loan. Seeking this expertise can help borrowers make informed decisions and secure the most suitable non-conforming loan for their individual circumstances.
For an obligation free chat about your circumstances contact Helen Avis and Specialist Mortgage today.
Securing a loan in Australia can be challenging for self-employed individuals, especially when they are also expatriates or foreign buyers according to Helen Avis, Director of Finance at Specialist Mortgage. Traditional lenders often require extensive documentation and may have stricter criteria for non-traditional borrowers. With careful planning and preparation, self-employed individuals can increase their chances of obtaining a loan, let’s explore some of the options available to you;
Prepare Accurate Financial Records
As a self-employed individual, maintaining accurate and up-to-date financial records is essential. These records should include income statements, tax returns, profit and loss statements, and bank statements. It’s important to have at least two years of financial history to demonstrate a stable income stream and the ability to repay the loan.
Engage the Services of an Accountant or Tax Professional
Working with an accountant or tax professional experienced in handling self-employed individuals can be invaluable. They can assist in organising financial records, ensuring compliance with tax obligations, and providing guidance on structuring income to meet loan eligibility criteria. Their expertise can enhance the credibility of your financial documents.
Demonstrate Stability in Income
Lenders typically look for consistent income to assess the repayment capacity of borrowers. If you’re self-employed, demonstrating stability in income is crucial. Prepare a detailed business plan, highlighting long-term sustainability, client contracts, or agreements that demonstrate a stable income stream. This will provide reassurance to lenders about your ability to repay the loan.
Save a Solid Deposit for those Aussie Home Loans
Having a substantial deposit is advantageous when applying for a loan, especially for expatriates and foreign buyers. Lenders may require a higher deposit to mitigate potential risks. Aim to save a significant portion of the property’s value to meet the deposit requirements. A larger deposit also reduces the loan-to-value ratio (LVR), increasing your chances of loan approval.
Seek Specialist home loan Lenders
Specialist lenders cater specifically to self-employed individuals, expatriates, and foreign buyers who may not meet the criteria of traditional lenders. These lenders have expertise in assessing non-traditional borrowers and understand the unique challenges they face. Engaging the services of a mortgage broker can help connect you with specialist lenders who can provide tailored loan solutions. Specialist Mortgage have been servicing the expat community for over 30 years, if you want the expertise contact Helen Avis or her team today for an obligation free chat.
Maintain Good Credit History for a favourable mortgage
Regardless of being self-employed, expatriate, or foreign buyer, maintaining a good credit history is vital for loan approval and Specialist Mortgage can help you find out your credit score. Regularly review your credit report to ensure accuracy and address any errors or discrepancies promptly. Make timely payments on existing debts and avoid taking on excessive new credit to demonstrate responsible financial behaviour to lenders.
Provide Sufficient Supporting Documentation
Be prepared to provide additional supporting documentation as an expatriate or foreign buyer. This may include proof of income, employment contracts, visa documentation, and evidence of funds transfer for currency conversion. Thoroughly organising and presenting these documents will help strengthen your loan application and demonstrate your credibility as a borrower says Helen Avis.
Expatriates and foreign buyers face additional challenges when seeking a loan in Australia. It’s essential to plan ahead and be aware of the specific requirements. Consider factors such as visa status, foreign income sources, and currency exchange rates. Lenders may have specific criteria for expatriates and foreign buyers, and understanding these requirements will help you navigate the loan application process more effectively.
Want to know more, or how you can secure a loan? Contact Specialist Mortgage today.
Helen Avis of Specialist Mortgage discusses what you need to know.
Resident vs. Non-Resident Australian Tax – what is the difference?
Australia’s tax system is structured differently for Australian residents and non-residents, and it is important for individuals to understand the distinctions to ensure compliance and optimise their tax obligations especially if you’re interested in buying Australian Property as an Expat or non-resident.
As specialists in expatriate home loans we have a vast network of trusted advisors and if you want specific information to your circumstances you can contact us today for an obligation free consult. We can provide a detailed outline of the key differences in Australian tax treatment between residents and non-residents, including income tax, capital gains tax, and other related considerations. In the meantime, here’s a brief summary to get you started.
The first step in determining the tax treatment you need is establishing residency status for tax purposes. The Australian Taxation Office (ATO) considers various factors, such as the length of stay, intention to reside, and ties to Australia. Generally, an individual is considered an Australian resident for tax purposes if they reside in Australia or have significant ties to the country says Helen Avis.
Australian Tax and the different tax rates, what are DTAs and CGT?
Residents are subject to Australian income tax on their worldwide income. This includes income from employment, business activities, investments, and rental properties. Non-residents, on the other hand, are generally taxed only on their Australian-sourced income, such as employment income earned in Australia or income generated from Australian assets.
The tax rates applicable to residents and non-residents differ. Residents are subject to progressive tax rates, meaning the more income they earn, the higher the tax rate they pay. On the other hand non-residents, are subject to a flat tax rate on their Australian-sourced income, which is generally higher than the tax rates for residents.
Residents are also subject to Capital Gains Tax (CGT) on the disposal of assets, both in Australia and overseas. They are eligible for various exemptions, discounts, and concessions, such as the 50% CGT discount for assets held for more than 12 months. Non-residents are generally only subject to CGT on the disposal of Australian real property or certain taxable Australian assets.
Australia has Double Taxation Agreements (DTAs) with many countries to prevent double taxation. These agreements provide relief to individuals who may be liable for tax in both Australia and their home country. DTAs generally determine the taxing rights for different types of income and provide mechanisms for claiming credits or exemptions. Specialist Mortgage are part of the SMATSgroup and have access to tax agents should you require some personalised assistance.
Other considerations, its not a one size fits all.
Residents are required to pay the Medicare Levy, which helps fund Australia’s public healthcare system. The levy is calculated as a percentage of taxable income. Non-residents are generally not liable for the Medicare Levy, although they may be subject to the Medicare Levy Surcharge if they do not have private health insurance.
Superannuation, or retirement savings, is an important aspect of the Australian tax system. Residents are eligible to contribute to superannuation and enjoy tax benefits such as concessional tax rates on contributions and tax-free withdrawals after preservation age. Non-residents can only contribute to superannuation if they are employed in Australia.
There are additional tax considerations for non-residents, such as the application of withholding taxes on certain types of income, including interest, dividends, and royalties. Non-residents may also be subject to specific tax treaties between Australia and their home country, which could impact their tax liabilities.
Understanding the difference in Australian tax treatment between residents and non-residents is essential for individuals to fulfill their tax obligations and optimise their tax positions. Residents are subject to tax on worldwide income, while non-residents are generally taxed only on Australian-sourced income. Different tax rates, exemptions, and concessions apply to each category. It is advisable to seek professional advice from a tax specialist to ensure compliance and take advantage of concessions that may be available to you.
Want a detailed report? Contact Helen Avis or Specialist Mortgage today and see what your options are.
Investing in Australian property as a foreign buyer can be an attractive opportunity, given the stability and potential for growth in the Australian real estate market, especially at the moment.
However, as a foreign buyer you need to navigate certain regulations and considerations before making an investment. Helen Avis of Specialist Mortgage discusses.
Foreign investment regulations in Australia are governed by the Foreign Investment Review Board (FIRB). It is crucial to familiarise yourself with these regulations, as they determine the types of properties you can purchase and any restrictions or conditions that may apply. Different rules apply to residential and commercial properties, vacant land, and new developments. Ensure compliance with the regulations by seeking professional advice and consulting the FIRB website, concludes Helen Avis.
Investing in Australian soil? What you need to know to gain an Australian home loan.
Before you invest in Australian property, define your investment strategy and goals says Ms Avis. Consider factors such as capital growth, rental income, investment duration, and risk tolerance. Research different property markets across Australia to identify regions and property types that align with your investment objectives. The team at Specialist Mortgage can assist you with all parts of your Australian property purchase journey.
Engage professionals who are experienced in assisting foreign buyers can greatly facilitate the investment process. Seek guidance from a real estate or buyer’s agent specialising in working with foreign buyers. Specialist Mortgage is part of the SMATS Group and has a range of services available to their clients. Helen Avis and her team can assist with putting you in touch with a buyer’s agent and real estate professionals that are experienced with foreign buyers.
Consult with a solicitor or conveyancer who can provide legal advice and assist with due diligence, contracts, and property transfers. Additionally, consider engaging a property manager to handle rental management if you plan to lease out the property.
Explore financing options available to foreign buyers with Australian banks and lending organisations. While Australian banks generally require foreign buyers to provide a larger deposit compared to residents, there are lenders who specialise in providing loans to non-resident investors. Consult with mortgage brokers who have experience working with foreign buyers to access suitable loan options and obtain pre-approval before commencing property searches.
Understand the Australian taxation system and how it applies to foreign investors. Seek advice from a qualified tax professional who specialises in international taxation to ensure compliance with tax obligations, including rental income, capital gains tax, and potential tax benefits or exemptions. Regularly review your investment portfolio and monitor market conditions to assess the performance of your Australian property investment. Consider engaging a property investment advisor who can provide ongoing guidance and help optimise your investment strategy. Specialist Mortgage has access to tax agents should you need one.
Get to know the Australian property landscape.
Conduct thorough research on the Australian property market, including market trends, historical performance, and future growth prospects. Identify locations that demonstrate strong market fundamentals, such as population growth, employment opportunities, infrastructure development, and access to amenities. Research local property prices, rental yields, and vacancy rates to evaluate potential investment opportunities says Helen Avis.
Perform thorough due diligence on potential properties of interest. This includes obtaining building and pest inspections, reviewing strata or community title reports (if applicable), and assessing the property’s rental potential. Engage professionals to conduct property valuations and provide market appraisals on your behalf to ensure you make an informed investment decision.
Once you have identified a suitable property, negotiate and secure a Contract of Sale. Engage a solicitor or conveyancer to review the contract and handle the settlement process on your behalf. Ensure that all necessary documentation and approvals, including FIRB approval, are in order before proceeding with the settlement.
If you plan to lease out the property, engage a reputable property management company to handle tenant selection, rent collection, and property maintenance. Familiarise yourself with local tenancy laws and landlord responsibilities to ensure compliance with regulations and protect your investment.
Are you ready to buy Australian property?
Foreign buyers can navigate the investment process and make informed decisions to achieve their investment goals in the Australian property market, so what are you waiting for? Speak to Specialist Mortgage today and invest in Australian Property.
Helen Avis, Director of Finance at Specialist Mortgage, has been named a finalist in the Residential Broker of the Year category at the prestigious Australian Broking Awards 2024.
With years of experience in refinancing, sourcing Australian home loans, and assisting Australian expatriates in purchasing property while living abroad, Helen Avis has made a significant impact in the broking industry. Her dedication to providing tailored solutions and exceptional service to Australian borrowers has set her apart as a leading professional in the field.
The Australian Broking Awards is the pinnacle event for the broking industry, celebrating excellence among mortgage and finance brokers, brokerages, and aggregation groups. This year’s finalists list includes over 250 high-achieving professionals and businesses across 29 categories, highlighting those who demonstrate professional growth, innovative practices, and a commitment to their clients.
Managing Editor of The Adviser, Annie Kane, praised the finalists, noting the critical role brokers have played in helping borrowers navigate a complex financial landscape marked by interest rate uncertainty, tightened serviceability, and a competitive property market.
The awards will be presented at a cocktail luncheon at The Star, Sydney, on Friday, 30 August 2024.
Helen Avis expressed her gratitude for the recognition, stating, “Being named a finalist in the Australian Broking Awards 2024 is an honour. At Specialist Mortgage, our commitment to the broking industry and our dedication to connecting with the community and engaging with clients are at the core of our service. This acknowledgment reinforces the strength and impact of our efforts.”
The Australian Broking Awards remains a testament to the outstanding contributions and achievements of those at the forefront of the broking industry, and Specialist Mortgage is proud to celebrate Helen Avis’s success and continued dedication to helping Australian borrowers achieve their property dreams.
Buying a property for investment purposes is a different prospect to purchasing the dream family home, and addressing key parameters will help ensure financial success.
Helen Avis, Director of Finance at Specialist Mortgage discusses the factors to determine a successful investment.
Australian property investment has long been recognised as a lucrative venture.
The success of a property investment, however, largely hinges on how thoroughly you perform your due diligence and whether you understand what to look for when assessing a property’s investment potential.
There are a lot of factors that need to be determined to ascertain whether a property is going to lead to financial prosperity.
Here, I will break down how successful property investors look for potential.
Determine your real estate investment strategy
You need to put yourself first.
How can you find the right property, if you don’t really know what you are looking for?
The most important thing when buying an investment property and assessing whether it’s potential is to fully understand your strategy.
Start by thinking about what goals you want to achieve and what you want this property to do for you.
Having a clear mindset on what you are looking for is the key to finding investments that will help achieve those goals.
Define your objectives and whether you are looking for capital growth, cash flow, high rental yields, positive gearing, equity creation or a combination.
Your personal situation will influence this, in correlation with your level of risk tolerance. Strategy is based on how quickly you want to see gains, whether it’s short-term gains or long-term wealth creation.
If you carefully plan and align this strategy with financial goals and market conditions, you will reap better investment outcomes.
There’s more to choosing an investment location than it might seem
Look for areas with strong economic growth, robust infrastructure, and good transport links. Thorough research and strategic planning are essential for selecting the right investment location, but it’s not all about location.
When it comes down to looking at the specific property you want to buy, there are particular metrics that can help you evaluate a property’s potential.
Important metrics to consider when looking at a property’s potential include:
Past sales history
This metric helps you to understand how the property has appreciated over time.
Although future performance is not guaranteed, the sales history can give an indication of how the property might perform in the future, and the property’s growth potential. There are a few ways to find out the past sales history of a property, and subscriptions like RP Data and Pricefinder can assist.
Once you know what the property sold for five or ten years ago you can see what sort of potential you are looking at.
Also, if the property has been transacted multiple times in recent years this may be a red flag, because the property might have issues such as trouble getting development approvals, pest infestations, subfloor or under house/behind wall issues, or there might just too many small maintenance repairs that the cumulative cost becomes too excessive to repair everything.
Properties with a good track record would show the historical sales to double every 10-12 years.
If there is no past sales history available for a property, which is actually quite common if the property has had the same owner for a long period, then you can look at the locations sales history and metrics such as the average annual growth rate.
Days On Market (DOM)
The average days on market can indicate how popular an area is. Areas with a low DOM metric indicates higher demand, compared to areas with increasing or high DOM that indicate decreasing supply or overpriced properties.
This metric can help you identify locations that are strengthening so you can get into the market early.
Extremely low DOM means the market is quite hot and there is risk for buyers to get caught up in the rush and overcapitalise by paying too much.
Rental market
Investors look for areas that are in high demand which can be indicated by the rental market conditions. Areas showing low rental vacancy rates and a high proportion of owner-occupiers tend to offer stability and potential for capital appreciation.
It is important to know the percentage of the population living in that suburb who are renters in comparison to owner occupiers.
(Source: CoreLogic)
An area may receive good rental returns because it is a popular spot to rent, but if there is a low proportion of owner occupiers living in an area it might really hurt the future value and capital growth of your property when it comes time to sell, if no one actually wants to buy a property there.
An example of this is mining towns where there are a lot of ‘fly in-fly out’ workers who don’t actually want to live or buy a house there, but the companies they work for are paying top dollar to rent properties for their workers.
The rental return might be lucrative because the rental market is strong, but if you are unable to sell your property to anyone this will really damage your investment returns.
The ratio of owner occupiers to renters in an area can also be broken down to a more micro level to see the percentage or renters living in the same street, or even further down into the percentage within an apartment building.
Government-backed developments
To uncover the growth potential of a property, you can investigate what developments the government is funding in the suburb and surrounds.
Areas tend to go through strong gentrification and capital growth where the government invests into local amenities and parks, schools, and employment opportunities.
If you want to discuss your options further, or have a more personal analysis please contact me at Specialist Mortgage and we’ll get you on the path to home ownership.
Investors and first home buyers are making a big return to the property market, with three state capitals seeing particularly strong real estate demand and higher loan values.
As the inflation beast is gradually brought to heel, borrowers are becoming increasingly confident that interest rates have reached their zenith and are again borrowing with relative gusto.
It’s first home buyers who are leading the charge, with investors not too far behind.
The latest Australian Bureau of Statistics (ABS) data shows that in November new home and investment property loans were up 13.1 per cent over the year.
The value of new loan commitments for investors was rising higher than owner-occupier borrowers. Investment lending increased by 18 per cent to reach $9.72 billion while owner-occupier new loan commitments were up only 10.6 per cent over the year to reach $17.86 billion in loans.
But it was first home buyer activity that stood out, with a 25.8 per cent increase in the value of new loan commitments for first-time buyers that saw the value of new loans reach $5.25 billion.
(Source: CoreLogic)
Canstar’s lending expert, Steve Mickenbecker, said the figures suggested Australian had confidence in the property market excelling in 2024.
“You could say investors are back, with new lending up by 18 percent year-on-year, suggesting they hold a healthy expectation for property prices over the coming few years.
“Looking at the number of buyers, first home buyers’ participation represents 37 percent of all new loans.
“First home buyers have in recent years had to weather the impact of rate rises on borrowing power.
“Canstar’s analysis shows for the average income, a solo borrower has seen their borrowing capacity fall since April 2022 by $137,000 and likewise, a double-income couple’s budget has been depleted by $331,000.”
Real Estate Institute of Australia (REIA) President, Leanne Pilkington, expressed relief that there was a return of investors.
“The results follow the latest ABS data showing the consumer price index rose 4.3 per cent in the 12 months to November 2023, down from 4.9 per cent per cent in October.
“The 13 interest rate rises have finally curtailed inflation, with all signs showing the economy is now heading in the right direction.”
Ms Pilkington said owner-occupier loans recorded moderate growth in November with some states such as Tasmania and NSW showing signs of stabilising.
Investors as a portion of total lending by state (based on value, excluding refinancing)
(Source: CoreLogic)
ABS data shows new loan commitments in Queensland rose 3.3 per cent, Victoria rose 2.0 per cent, South Australia rose 6.9 per cent, in the Australian Capital Territory rose 9.4 per cent and in the Northern Territory rose 6.0 per cent while New South Wales fell 1.1 per cent, in Western Australia fell 2.9 per cent and Tasmania fell 15.2 per cent.
While new loans may have slipped in Western Australia, the value of the average loan size reached record levels there, as well as in Queensland and South Australia, reflecting the strong capital growth in those property markets over the past year.
Queensland reached $557,510, South Australia $510,057 and Western Australia $497,275 in average loan size.
Helen Avis, Director of Finance, Specialist Mortgage, said Perth was seeing a lot of interest from eastern states buyers.
“With stock levels so low – there are now just over 3,000 properties for sale in Perth and many are being sold as soon as they are listed – it’s little surprise that borrowers are taking bigger loans to achieve their property goals.”
Maree Kilroy, Senior Economist for Oxford Economics Australia, agreed that Perth could expect further strong growth in 2024.
Following the rebound over 2023, we expect 2024 will be a softer year with home prices increasing a more muted 2.7 per cent nationally.
“Units are expected to outpace houses as affordability pressures, migration patterns, and weak apartment completion volumes intensify competition in the city apartment markets.
“While Sydney and Melbourne are expected to record relatively softer growth, Perth is well-equipped to lead the pack as the city develops a more sizeable dwelling stock deficiency.”
Rate cuts could mean game on for refinancing
Refinancing largely stabilised in November after three months of steep declines.
The value of refinanced mortgages rose slightly in the month of November, lifting by a modest $121 million – the first increase in four months.
RateCity.com.au research director, Sally Tindall, said that while we’re now well past the peak in refinancing, the value of mortgages switching each month is still at elevated levels.
“Rock bottom rates in 2021 might have shone a spotlight on refinancing, but the rising cash rate has been the blowtorch that’s spurred many borrowers into action.
“The latest ABS data shows over 700,000 mortgages have refinanced since the start of the rate hikes, switching more than $360 billion worth of loans.
“Refinancing could well drop further in the first half of 2024, however, if we do see cash rate cuts later in the year it could be game on for some borrowers ready for their next move.
“It’s fantastic to see first home buyer numbers rising again in the month of November, despite rising rates and property prices.
“These numbers are likely to lift further in 2024, particularly when the government’s much touted Help to Buy scheme finally gets up and running.
“While this scheme will help lower-income first home buyers on to the property ladder without having to shackle themselves to super-sized debts, the places in this scheme are set to be capped at just 10,000 per year, which is unlikely to be enough to cater for the potential demand,” she said.
Article Q&A
Who are the most active buyers of Australian property?
The value of new loan commitments for investors was rising higher than owner-occupier borrowers. Investment lending increased by 18 per cent to reach $9.72 billion while owner-occupier new loan commitments were up only 10.6 per cent over the year to reach $17.86 billion in loans. But it was first home buyer activity that stood out, with a 25.8 per cent increase in the value of new loan commitments for first-time buyers.
Which states have the most new loan activity?
ABS data shows new loan commitments in Queensland rose 3.3 per cent, Victoria rose 2.0 per cent, South Australia rose 6.9 per cent, in the Australian Capital Territory rose 9.4 per cent and in the Northern Territory rose 6.0 per cent while New South Wales fell 1.1 per cent, in Western Australia fell 2.9 per cent and Tasmania fell 15.2 per cent.
