couple talking to a real estate agent

Challenges and Strategies in Australian Residential Real Estate Investment

Australian real estate is a long-haul game reliant on seizing opportunities and holding the line to take advantage of the market cycles. Citizens and foreign investors alike can benefit from this in different ways.

Australian real estate can be a lucrative investment to both local and foreigner alike, provided they’re willing to play the game in the long-haul. Because of the prominence of demand in one region, markets are likely to recover even in the face of a massive drop in real estate prices. With the right choices, Australian real estate investors may still be able to maximise returns from their investments even as they wait out the market cycle.

Nuances of the Market

Australia is a vast nation, but just because a country occupies the entirety of a continent doesn’t mean that land prices are any lower than they are in other nations. On the contrary, land prices in Australia tend to be steeper despite its apparent abundance. This is mostly due to the popularity of the Eastern Coast; most of the continent’s major cities and infrastructure developments are located in this region. Most of the jobs, schools, and entertainment options are also subsequently found in this region.

Regardless of the current condition of the Australian property market, the general rule is that the further you are from the cost, the cheaper the land becomes. Property prices could drop up to 50 per cent once one is more than 100 km away from the coasts.

And prices have fluctuated.  In the past few years alone, there has been a drop in prices caused by the late 2000s financial crisis, which led to a rebound since 2013 and another drop in 2017, owing to greater tariffs and taxes levied from foreign and institutional investors.  Investors still willing to invest in the markets must be willing to play for the long haul.

Legal Challenges

Close up of lease agreement empty document with penIn Australia, the rules that govern conveyance that vary immensely between the states and territories. Property solicitors would explain that properties in Townsville, in Queensland, will have different requirements and procedures from one in Sydney, in New South Wales. This can be jarring for both the new resident and the cross-country investor, which has implications throughout the buying process.

Foreign nationals, in particular, may face unique legal challenges when investing in a residential property, which is heavily dependent on their status. An immigrant, for instance, may be allowed to purchase one established dwelling as their principal place of residence, provided they sell the property within three months of a change in address. In general, foreign investors are not allowed to own established properties (except maybe for employee housing) but are permitted to develop vacant land with foreign investment approval.

Weathering the Market

For Australian nationals, the volatile market of today may yet offer new hope in the form of rentals. With more people put off by the idea of selling their properties, renting it out for other families may represent a good means of generating value from their properties.

Renting isn’t an option available for new immigrants, as their properties cannot be occupied by anyone other than themselves. Meanwhile, Australian nationals and permanent residents alike who have yet to enter the property market may find themselves with a golden opportunity.  Assuming they can find people willing to sell, they would be able to secure homes at lower prices today.