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.

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, we 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.

Gross rental yields graph

(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.

These areas with planned developments and infrastructure projects can offer substantial long-term growth potential.

Queensland, South Australia and Tasmania have in the past week made changes to their stamp duty and first home buyers grant offerings, so API Magazine has provided a clear guide as to what’s available in your state or territory.

Buying that first home is stressful enough as a life-changing commitment, so the added confusion around what the different states and territories offer by way of grants and stamp duty concessions only adds to the worries.

Queensland on Sunday (10 June) increased its stamp (transfer) duty threshold by $200,000 for first home buyers to $700,000. The concession then phases out up to values of $800,000.

The Steven Miles Labor Government estimated the changes would support around 10,000 buyers a year to buy their first home.

Foreign buyers will go some way towards offsetting the state’s lost revenue.

The Queensland Government has increased the foreign investor land tax surcharge to 3 per cent, which is closing in on New South Wales and Victoria who set their surcharges at 4 per cent. Transfer duty surcharge for foreign buyers is being brought into line with New South Wales and Victoria at 8 per cent.

State governments have become heavily reliant on the stamp duty fees (under whatever alternative name they prefer to apply to that tax).

In just Brisbane, for example, in the past four years the state government has collected $216 million in ‘transfer concessions’ applied to 17,660 first home buyer transactions in the state capital alone.

A further 76,241 homeowners had the transfer duty home concession applied to the purchase of their Brisbane home.

South Australia last week became the first state to completely abolish stamp duty for first home buyers.

For first home buyers, the financial burden is compounded by the uncertainty around what concessions and grants available to them.

To help first home buyers navigate the maze of offerings, API Magazine has compiled the following guide to what is on offer across the various jurisdictions.

New South Wales

A $10,000 First Home Owner Grant (FHOG) is available when you buy or build your first new home. The dwelling can be a house, townhouse, apartment, unit or similar that is newly built, purchased off-the-plan or substantially renovated.

For a newly built house, townhouse, apartment, unit or similar, the purchase price must not exceed $600,000.

If purchasing vacant land and signing a building contract with a builder then the government adds the value of the vacant land plus the value of the comprehensive home building contract plus the cost of any building variations done together. The total combined cost must not exceed $750,000.

The NSW Government also doesn’t charge first home buyers stamp duty on properties valued at up to $800,000, or vacant land valued at up to $350,000.

It offers discounted stamp duty for first time buyers purchasing properties worth between $800,000 and $1 million and land worth between $350,000 and $450,000.

Victoria

A FHOG of $10,000 is available for those buying their first home valued at up to $750,000.

Stamp duty is waived for principal properties of residence (PPR) valued up to $600,000, or a concession for a PPR with a dutiable value from $600,001 to $750,000.

Queensland

The first home owner grant was recently doubled and now gives eligible first-time home buyers $30,000 towards buying or building a new home in Queensland (but it’s only eligible until 30 June 2025).

As mentioned above, first home buyers now receive concessions on transfer duties for properties valued up to $700,000, up from the previous $500,000. The threshold for concessions will also rise on vacant land valued up to $350,000, from $250,000.

Western Australia

The WA Government last month changed first time buyer stamp duty property value thresholds for the first time since 2014.

As part of the 2024-25 State Budget, the Government increased the first home buyers transfer duty concession threshold for established homes from $530,000 to $600,000, and the exemption threshold from $430,000 to $450,000.

This means Western Australians buying their first home will pay no stamp duty on purchases up to $450,000 and will receive a concessional stamp duty rate on properties valued up to $600,000.

Eligible first home buyers can receive a $10,000 grant towards buying or building a new home, or a grant equal to the consideration paid to buy or build a house if less than that amount.

WA’s north and south are also treated differently. To receive the grant, those in the Perth metropolitan area must the limit the combined cost of land and building to below $750,000. North of the 26th parallel (from Shark Bay onwards) that value is $1 million.

South Australia

South Australia can lay claim to the friendliest environment for first home buyers looking for a helping hand.

June’s 2024-25 Budget abolished property value thresholds for both the stamp duty exemption and FHOG at a cost to the state of $30 million over four years.

With the abolition of property value limits, a first homebuyer who purchases a new dwelling broadly in line with the median house price of $750,000 will receive a benefit of over $50,000, including the First Home Owner Grant of $15,000.

The stamp duty exemption will be available to all first home buyers who buy a new home (including a house, flat, unit, townhouse or apartment), an off-the-plan apartment, a house and land package or vacant land to build a new home.

Tasmania

Liberal Party Premier Jeremy Rockliff on 26 May made good on an election promise by exempting first home buyers from stamp duty on properties valued at up to $750,000.

First home buyers might want to strike early though, as the exemption is expected to run until mid-2026 before being revoked or at least reviewed.

Eligible first home buyers in Tasmania can receive a $30,000 grant if they are purchasing or building a new home and unlike elsewhere in the country there is no price cap on the value.

Northern Territory

First home buyers in the Top End face a relatively harsh introduction to the property market.

While there is access to a $10,000 FHOG (known as the BuildBonus grant and Territory Home Owner Discount), stamp duty exemptions that were in place up to June 2021 are no longer available.

Australian Capital Territory

The ACT’s FHOG has been replaced by the new Home Buyer Concession Scheme.

First home buyers can save a maximum of $34,504 but the amounts vary according to the buyer’s income and family size.

For more detailed information, including the myriad terms and conditions that inevitably apply, buyers should check with their jurisdiction’s state or territory Revenue Office.

Article Q&A

Can first home buyers get stamp duty concessions?

Stamp duty rules vary around Australia’s states and territories, ranging from South Australia’s newly introduced complete exemption, through to the Northern Territory’s lack of any concessions at all.

What grants are available for first home buyers?

First home owner grants (FHOGs) range in value from $10,000 to $30,000 across Australia’s states and territories, with the Northern Territory, New South Wales, Victoria and Western Australia at the lower end, with Tasmania’s and Queensland’s $30,000 at the top of the tree.

Property price growth is forecast to hit record median dwelling value levels in a majority of property markets around the country, but that anticipated rate of growth varies significantly.

The Australian Taxation Office this week revealed the country’s top 10 occupations by income and aspiring home owners might want to consider one of those careers if they want to keep up with the property market.

Real estate technology specialists Domain on Thursday (20 June) released property price forecasts for the coming 12 months, with 7 (and possibly 8) of the 11 regions nationally expected to hit record price levels.

The price boom is expected to pan out for house prices in the capital cities and regions, while units will hit record prices in the capitals.

For units and houses alike, only Canberra, Melbourne and regional Victoria are expected to deliver anaemic growth rates or even, in the case of the latter’s house prices, go backwards.

The predictions will come as sobering news to prospective home buyers, at a time when even existing home owners are struggling to keep up with mortgage payments. CoreLogic on Thursday revealed that home loan arrears reached 1.6 per cent in the March quarter, the highest such reading on mortgage arrears since Q1 2021.

On the house price front, Perth, Adelaide, Sydney, and Brisbane are expected to lead price gains, reaching new records. Sunshine Coast, Gold Coast, and regional Australian house prices are also anticipated to be at record highs.

By the end of financial year 2025 (FY25), house prices will surpass $1.7 million in Sydney, $800,000 in Perth, with both Brisbane and Adelaide likely joining the million-dollar club.

House price forecasts by the end of FY25

House price forecasts by the end of FY25

Sydney, Brisbane, and Adelaide are expected to lead price gains in the unit market.

Unit prices across Sydney, Brisbane, Adelaide, Perth, Gold Coast, Sunshine Coast, and regional areas will reach record highs if the forecasts are accurate.

While unit price growth is anticipated to slightly accelerate in Melbourne and Canberra, Sydney’s forecasted growth remains similar to the 2023 calendar year and FY24. Melbourne and Canberra are the only cities where unit price growth is expected to surpass that of houses.

Unit price forecasts by the end of FY25

Unit price forecasts by the end of FY25

Dr Nicola Powell, Domain’s Chief of Research and Economics, said Australia urgently needed more supply to balance the market and make it more affordable for Australians to own a home.

“While the continued increase in property values is good news for Australians that own a home, we have to acknowledge that it’s becoming increasingly harder for many Australians trying to get into the property market.”

She said the forecasts for continued growth, albeit slower than the pace of price gains over the past year or two, were driven by an array of demand drivers and government policies.

“We predict that population growthconstruction challenges, and borrowing power will be the key drivers behind the price growth.

“Demand has risen as housing composition changes, and demographic shifts and robust population growth unfold.

“We have seen an increase in single-person households and a decrease in household size in general (fewer people, on average, living in each household), both amplifying housing demand, further compounded by migration.

“Home building has also struggled to keep up with population growth due to the scarcity of land, weak building approvals, and high construction costs, exacerbating the existing structural undersupply, which will lead to an ongoing limited supply of new homes on the market.”

Dr Powell added that additionally, as of 1 July, stage 3 tax cuts will mean more money hits Australian households, lifting borrowing capacity and, therefore, buying power across the country.

Property market not without its restraints

While expectations are that property prices will continue to rise like bubbles in bathtub, there are those who see the waters ahead as being more tepid than hot.

Property listings are on the rise, with that added volume of properties for sale helping to ease price pressure.

The direct correlation between listings and price growth is clear. The more modestly performing property markets have seen listings rise sharply.

According to PropTrack, the ACT (+32.4 per cent), Melbourne (+24.7 per cent) and Sydney (+17.7 per cent) have seen the largest increase in total listings over the past year among capital cities, while in the boom markets of Perth (-23.4 per cent), Adelaide (-8.7 per cent) and Brisbane (-3.4 per cent) falls have been recorded.

Robert Baharian, Partner and Chief Market Strategist, Ekam Capital, said the property market remains vulnerable to higher interest rates and rising unemployment in the second half of 2024.

“We’re already seeing slowing growth in house prices in capital cities, primarily in Sydney and in Melbourne, as high levels of debt and the cost of living weigh on households,” Mr Baharian said.

“We believe property prices in Brisbane and Perth will continue to hold at relatively high levels given the relative value in those cities, with a growing pool and share of the investor market looking outside of Melbourne to buy property,” he said.

“As expected, the RBA kept rates on hold and we do not expect any rate hikes soon, as the central bank has held rates too long for that.

Months between peak RBA cash rate and rate cuts graph

“The longer the Reserve Bank holds, the more the consumer will feel the impact and eventually we’ll see inflation come back down to the 2 to 3 per cent target as we are seeing in the US.

“We think rates might remain on hold at least to September, and possibly right through to April 2025 before the consumer sees any relief – we may have won the battle, but the war on inflation is not quite in the bag yet.”

Two-speed property market emerging

As listings and recent price data highlight, a growing divide is emerging between Melbourne, Sydney and the smaller cities of Canberra, Darwin and Hobart, and fast growing Adelaide, Perth and Brisbane.

Julie Kelley, Global Sales and Marketing Manager for aussieproperty.com, said a two-speed property market was rapidly asserting itself.

She said prices in Adelaide, Perth and Brisbane would continue to deliver stronger growth than other cities but also had a word of caution for investors venturing into those markets without doing their homework.

“It’s not just a case of stick a pin in the map and buy any property type in any suburb,” Ms Kelley said.

“Buyers in Perth and Brisbane should be wary of investing in areas where there is too much of the same stock.

“Too many apartments are being aimed at investors rather than home owners in it for the long term, and oversupply is reducing price competition for these dwellings.”

Ms Kelley identified some of the most susceptible areas for these issues as South Bank, Kangaroo Point and South Brisbane and, in Perth, inner areas such as the CBDBurswood and East Perth.

Another, often overlooked, factor investors had to consider in the unit market was the often alarming rise of strata costs.

“We are seeing some crazy body corporate fees being applied, so buyers need to go over their contracts with a fine toothcomb, and check their strata disclosures and the 7-10 year maintenance plans, otherwise they could see their investment cash flow badly impacted,” Ms Kelley said.

Top 10 wealthiest suburbs revealed

The past and forecast price rises are unlikely to trouble those living in the highest earning suburbs in the country.

The ATO this week listed the top 10 occupations by income and post codes in which they live.

Surgeons topped the list that was half filled with medical practitioners, while financial, legal, engineering and management positions dominated the latter half of the list.

Of the suburbs that were home to the highest paying earners, seven of the top 10 postcodes in the country were in NSW, with Sydney harbourside suburb Double Bay taking out top spot.

The average taxable income of residents living in this postcode (2028) during the 2021–22 financial year was $354,308.

WA and Victoria were the only other states to appear on the list, with the Perth suburbs of Cottesloe and Peppermint Grove included and Victoria’s Portsea and Toorak being that state’s top-earning suburbs.

Article Q&A

What will Australian property prices do in the next 12 months?

Property technology specialists Domain on 20 June released property price forecasts for the coming 12 months, with 7 (and possibly 8) of the 11 regions nationally expected to hit record price levels. The price boom is expected to pan out for house prices in the capital cities and regions, while units will hit record prices in the capitals.

What factors could slow the property market?

While expectations are that property prices will continue to rise like bubbles in bathtub, there are those who see the waters ahead as being more tepid than hot. Property listings are on the rise, with that added volume of properties for sale helping to ease price pressure. Potential interest rate hikes and rising unemployment could also stifle capital growth.

What are the wealthiest suburbs in Australia?

Of the suburbs that were home to the highest paying earners, seven of the top 10 postcodes in the country were in NSW, with Sydney harbourside suburb Double Bay taking out top spot.

Foreign property buyer numbers have taken off, with international real estate investors shaking off their post-Covid blues and turning their attention to Australia.

Foreign buyers are returning to the Australian property in large numbers, with total transactions soaring by 27 per cent over the previous financial year.

The Australian Taxation Office on Friday (21 June) released its Register of foreign ownership of residential land, which showed that Victoria had become the preferred choice of foreign investors.

Foreign buyers spent $4.9 billion on 5,360 Australian dwellings in the financial year to 30 June 2023 (the most recent data available), with Victorian investment leaping a massive 32 per cent over a year.

Foreign buyers paid an average price of $914,000, which is just below the overall average price across the country of $959,300 in the March quarter, according to the Australian Bureau of Statistics.

The data also showed that buyers were expressing a degree of confidence in the Australian property market, with buyers far outstripping sellers.

They sold 1,119 homes, with a total value of $1.0 billion. It is noteworthy that the definition of sale also includes when a foreign buyer becomes a permanent resident or citizen, even if they don’t actually sell the property, so the actual sales number is inflated against the buyer figure.

The number of offshore buyers in New South Wales was flat, and actually decreased by 1 per cent, from 664 to 656. Meanwhile, the number of buyers in Queensland and Victoria jumped. The number of buyers in Queensland climbed 17 per cent, while the number of buyers in Victoria jumped 32 per cent, by about a third.

Map of purchase transactions

(Source: ATO)

While Queensland attracted more buyers over all, New South Wales attracted more millionaire buyers. Foreign buyers purchased 284 homes in New South Wales during the year that were worth at least $1 million, compared to only 200 in Queensland.

“Victoria got by far the most millionaire buyers, with 569 foreign buyer transactions worth over $1 million each.

Overseas buyers not super wealthy

A widely held perception that foreign buyers are wealthier than local buyers was dispelled by the data.

Residential properties with values under $1 million formed the majority of residential property purchase transactions, accounting for 78.2 per cent of property transactions in 2022-23. This is an increase compared to 75.4 per cent in 2021-22.

Nor did this investment lead to any significant population growth. Of the 5,360 purchase transactions in 2022–23, 164 registrants became a permanent resident or gained Australian citizenship during the year (and are included in these statistics).

Daniel Ho, Juwai IQI Co-Founder and Group Managing Director, said the 27 per cent increase in buying last year shows that overseas buyers were bouncing back after the travel slowdown during the pandemic.

Purchase transactions by state, maps

(Source: ATO)

“Why do foreign buyers like Australia?

“This report, encompasses buyers from all over the world, including all parts of Asia, North America, South Africa, and the UK and Europe, and such a wide population has varying motivations, but they all have some things in common – they appreciate Australia’s strong economy, good education system, and attractive lifestyle.”

He added that these foreign buyers contributed to the government’s coffers.

“In many cases, these buyers paid 7 per cent or 8 per cent of the purchase price on stamp duty and tens of thousands of dollars, or more, on foreign buyer application fees (compared to local buyers) and once they own their property, at least until they become permanent residents or citizens, they will pay an additional land tax every year.”

Mr Ho said Australia’s apparent popularity was actually reflective of a wider international trend.

“People have been moving to Australia in record numbers, and that shows up in the foreign buyer reports but it’s not just Australia, because we see the same thing happening in the US, Canada, Europe, and the UK.

“There is a significant wave of post-Covid migration as people act on plans they had to put on hold during the pandemic.

“We also see it in Southeast Asian countries like Thailand, which have seen rapid intake of their golden visa programs since the pandemic.

“If the Australian government succeeds in reducing the number of foreign students and other migrants coming to the country, we can expect foreign buying to be affected.”

There are signs that foreign buyers are expanding their search beyond the east coast of Australia.

Victoria, New South Wales and Queensland still represent 86.9 per cent of all sale transactions, making up 91.3 per cent of the value of sale transactions for the reporting period.

But this is down markedly from 2021–22, when Victoria, New South Wales and Queensland represented 97.0 per cent of all sale transactions and 97.8 per cent of the value.

Tracking purchases over five years shows that South Australia features among the top three states, along with Victoria and Queensland, when it comes to transactions on vacant land.

Foreign buyers still a small pool

Foreign buyers comprise just 1.1 per cent of residential property sales across Australia.

Terry Ryder, Managing Director, Hotspotting, told API Magazine, that the latest number actually underlined just how little foreign investment there is in Australian residential real estate.

“There may have been a 27 per cent annual rise in transactions, but that’s from a really low base.

“Foreign buyers have been slugged in major increases in taxes in recent years, a trend that continued with the latest Federal Budget and some of the state budgets.

“It’s resulted in fewer foreign investors compared to historical norms and that has impacted the supply of apartments.

“Foreign buyers were once a major source of off-the-plan sales that allowed high-rise developers to get sufficient pre-sales to secure finance and proceed with a major project.

“Using foreign buyers as a cash cow with no electoral consequences is very short-sighted and has contributed to the rental shortage and the overall undersupply of new dwellings.”

Property buyers and sellers alike stand to save potentially big dollars if they time their property purchase right in relation to the seasons.

When considering purchasing an investment property, seasonality is often forgotten as one of the important aspects to consider.

Seasonal changes will have an impact on buyer and seller sentiment, which in turn influences property prices and the movement of the market.

Understanding the seasonal patterns will help property investors to time their purchases and sales, capitalise on seasonal trends, and maximise their returns.

How does seasonality impact property markets?

Spring/summer

While the overall effect of seasonality will vary by region and state, general trends and patterns can be observed when comparing the cooler months to the warmer months.

During the spring and summer months, the Australian real estate markets tend to be more vibrant.

Warmer weather encourages more open house inspections, auctions, and overall property activities (like gardening and renovating).

The warmer weather and sunshine often influences buyers to be more positive and optimistic and generally willing to get out and explore open homes in a positive light, which can influence the overall sales price for the seller.

The longer daylight hours and favourable weather conditions means there might be more stock available for sale on the market, more open homes, and more sales via auction campaigns.

Investors should take note of this, because when there is more activity and positive buyer sentiment, this is likely to increase real estate prices, particularly as it gets closer to Christmas and some buyers start to feel a little desperate to get into a home before Christmas, which might push up prices.

Sellers will usually take advantage of this increased activity and market their properties more aggressively, hoping to attract higher bids across the spring and summer months.

Characteristics of spring/summer markets:

  • increased buyer activity and competition
  • sellers are more willing to list properties
  • more open house inspections and auctions.

Autumn/winter

Conversely, the cooler months across autumn and winter typically see a decline in market activity.

Colder temperatures and shorter days may deter potential buyers from attending open houses and auctions, especially if it is unusually rainy or cold.

Seller sentiment may also wane, leading to fewer property listings.

This slowdown can be more pronounced in regions with harsher winter climates, such as Victoria, while warmer areas like Queensland we expect to see less of an impact.

Now consider Victoria, with its colder and more variable winter climate, experiences a more noticeable seasonal effect.

Buyers might be less inclined to venture out, and sellers may prefer to wait until spring or summer to list their properties.

It is likely some of the colder towns may experience reduced market activity and some supply issues when it’s cold.
There is an exception though.

Areas known for their cold climates might go through a period of heightened activity.

Think about the areas close to snowfields and snowy mountains that are buzzing with activity over the winter months and ski seasons.

We are likely to see more properties come onto the market, and more buyer activity because the properties will be shown off in their best light – with views over the snowcapped mountains or holiday homes listed for sale to show off how they are busy and booked over the winter months.

Sometimes visiting tourists love the location so much they start to investigate options to purchase a holiday home or even relocate if they love the area during their visit. There is more about this below.

Characteristics of autumn/winter markets:

  • decreased buyer activity and fewer open houses in most areas.
  • less motivation for sellers to list properties, unless in areas close to the snow.
  • potential for fewer auctions and slower market pace.

Other considerations

There are always going to be exceptions to these rules. This is just the overall impact that seasonality can have on property markets, so it is really important to understand the market you will be buying in as well as how the seasons will impact that area.

Think about the below considerations:

Queensland

Queensland is known for its generally warm climate. Because it experiences milder winters compared to southern states, the colder climates won’t have as large an impact on the property markets here.

Because of its warmer weather, winter does not significantly deter market dynamics and many people who live in the southern states might consider relocating to Queensland into coastal cities like Brisbane and the Gold Coast that experience more consistency in the property markets, even during winter.

Property prices don’t drop as much during the winter months in Queensland, as the weather remains conducive to outdoor inspections and tourism.

Strategic considerations for property investors

If you are investing in property it is important to understand these seasonal trends so you can make informed decisions.

Timing the market:

Investors looking for better deals might consider purchasing during the winter months when demand is lower, potentially securing properties at reduced prices. Selling during the summer months can attract more buyers and potentially yield higher sale prices.

Region focus:

In warmer regions like Queensland, investing can be more consistent year-round, reducing the need to heavily time the market.

In colder regions like Victoria, investors might find better opportunities by targeting winter purchases and summer sales.

Specialty investments:

In ski resort areas, focusing on winter investments can be highly profitable due to the seasonal tourism boom.

Vacation homes and short-term rentals in these regions can provide substantial returns during the winter season.

Market adaptability:

Staying informed about local market trends and climatic conditions can enhance investment outcomes. Whether investing in steady coastal markets or booming winter resort areas, a nuanced approach to seasonality can significantly enhance investment success.

Article Q&A

Do the seasons affect property sales?

While the overall effect of seasonality will vary by region and state, general trends and patterns can be observed when comparing the cooler months to the warmer months. During the spring and summer months, Australian real estate markets tend to be more vibrant.

Congratulations Helen for being announced as one of five finalists in the running to win MFAA State Excellence Award for Residential Finance Broker WA 2024.

The awards ceremony will be held at Crown Perth Grand Ballroom on the evening of Thursday 13th June. The state winners will qualify for the MFAA National Excellence awards 2024 held in Melbourne in July.  

The Specialist Mortgage team has had a winning start to 2024 with recognition in The Advisor Better Business Awards recently too.

View full list of state finalists here

View Specialist Mortgages full list of awards here

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.

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.

Investing in Australian soil? What you need to know.

Before you invest in Australian property, define your investment strategy and goals. 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.

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. 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.

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.

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.

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.

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.

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 us today and see what your options are.

Securing a loan in Australia can be challenging for self-employed individuals, especially when they are also expatriates or foreign buyers. 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;

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.

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.

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.

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.

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 us today for an obligation free chat.

Regardless of being self-employed, expatriate, or foreign buyer, maintaining a good credit history is vital for loan approval. 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.

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.

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.

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.

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 us today.