A Guide to Buying your First Home in Australia


Looking to buy a home for the first time but don’t know where to start? Here are some small tips that can help you on the road:

1. Australian citizenship – Legal and stature laws governing all Australian states are very strict when it comes to property businesses. You have to get approval from the government to buy your first home, except if you are already an Australian citizen, or a foreign expatriate holding a resident visa, then you are exempted from all approval requirements. If you don’t fit those requirements then you will need approval from the Foreign Investment Review Board, which sounds scary but really it isn’t, they are simply seeking to ensure that new investment from non-residents/citizens is channeled into increasing the supply of property in Australia, so effectively you need to build a new home, or redevelop an old one and increase the home supply, or buy in a new development. Foreign nationals can get more info from FIRB –  Buying a Home in Australia [PDF]

2. Eligibility for the First Home Saver Account [abolished as of May 2014]– A government initiative to help first home buyers save for a new home. In a nutshell, the you chip in a little, the government chips in a little and it’s all taxed at a lower than normal rate. The aim is to help first home buyers in getting started. For the exact mechanics of how it all works visit First Home Saver Account  – ATO.gov.au

3. Eligibility for Home Owner’s Grant – Introduced by the Australian Federal government in 2000 and governed by the respective state governments, there is a lump-sum one-off payment available to qualified first time home buyers. The size of the grant differs state by state and by whether you are purchasing a new or existing dwelling. Although it might not be sufficient enough to buy an expensive property, it is a good start kick-start. Please be aware that the grant is only applicable to properties, not land purchases. More about The First Home Owners Grant

4. How much you can borrow – the real question, you need to answer, know your allocated budget and how much you can safely borrow. Lenders have their own independent criteria to judge the types of buyers and grant loans based upon their incomes, salary sheets, and other criterion. Typically, this criteria varies from lender to lender. Take advantage of pre-approval services of many lenders so that you can get a ballpark estimate of the amount you can borrow, and the repayment terms and conditions.

5. Understand all the costs – Once engaged in the home buying process there’s a range of services you may need to engage and their bills can add up. For example you” possibly need services including building inspections, conveyancing, accountants not to mention bank fees and all kinds of taxes. More about the Costs of Buying a New Home

6. Know what you want and Research the  property market – what are you expecting form your home? You should have a focused idea about where, when and why, to start with so that you don’t end up wasting your precious time and monetary resources. You’ll probably want to answer questions like :

How far from your work are you willing to live?

What is the accessibility of the nearest market, schools, colleges, and hospitals?

Is public transport convenient and appropriate enough to travel throughout the city for any purpose?

How big of a home will you need? Apartment or house? Family planning, how many rooms for the future?

Closeness to recreation, parks and gardens.

And the list goes on…. At some point it’s about synchronising your goals with your budget and with whats available on the market.

6. Look for a real estate agent – Whenever you are buying your property, you will probably use the services of a real estate agent. In cities of Melbourne & Sydney, the service charge of a real estate agent for home buyer’s assistance is 2% of the property value. The Real Estate Institute of Australia official website provides valuable advice to home buyers like searching real estate agents, analyzing market reports and looking at the recently auctioned property listings.

7. Property inspection – Have you inspected the property the way it deserves to be? Make sure to visit the prospective property at various times of day and night to measure the noise & traffic levels. You’ll need to get various inspections done during the loan application process but you should also satisfy yourself that there’s no surprises.

There are questions that are easier to deal with prior to purchase than after, think of the long term. Questions such as

What do you like & dislike about your new location?

Does the home have all essential facilities like proper ventilation, sewerage, garage, balcony, and laundry, etc?

How sound is the growth history in terms of capital & investment of your area?

What is the likely rental income in the long run, should you wish to later move into a second home?

Ask for the complete history of the unit from a real estate agent with a small service charge.

More resources:

Housing and Property resources at Australia.gov.au

Home Buying Guide [PDF} from the CBA

Buying a Home at MoneySmart