Australian Residential Property

Australian property transactions are governed primarily by state and territory law, creating variation across jurisdictions. This slice covers common national patterns, but rules differ significantly between New South Wales, Victoria, Queensland, and other states. Always verify state-specific requirements.

The Settlement Process

Australian transactions proceed through: offer and acceptance, contract signing, cooling-off period (where applicable), settlement preparation, and settlement. The process is handled by conveyancers or solicitors, with real estate agents facilitating the sale but not the legal transfer.

Offer and acceptance varies by state. In NSW, offers are typically verbal until contract exchange. In Victoria, signed contracts with deposits are common at offer. Queensland uses standard REIQ contracts. Understanding your state's process prevents misunderstandings.

Cooling-off periods provide buyers time to withdraw after signing. NSW allows 5 business days; Victoria allows 3 business days; Queensland allows 5 business days. Waiving cooling-off (common at auction or vendor request) removes this protection. Withdrawal during cooling-off typically costs 0.25% of purchase price.

Auctions have no cooling-off period. The fall of the hammer creates a binding contract. Buyers must complete due diligence before auction day, have finance pre-approved, and bring deposit funds. Auction clearance rates and strategies vary significantly by market conditions.

Settlement is when ownership transfers. Buyer's funds are exchanged for title, typically through PEXA (electronic settlement platform) in most states. Settlement periods vary—42 days is common in NSW, 30-90 days negotiable in most states. The settlement date is fixed in the contract.

Key Parties

Conveyancers or solicitors handle the legal work: contract review, title search, settlement coordination. Conveyancers are licensed specialists; solicitors are lawyers who may offer conveyancing. Both can complete residential transactions. Costs range from $800-2,500 depending on complexity and location.

Real estate agents market properties and negotiate sales. Commission is paid by seller, typically 2-3% in metropolitan areas, higher in regional areas. Buyers typically don't have dedicated representation—the agent works for the seller.

Mortgage brokers help buyers find and secure financing across multiple lenders. Paid by lender commission, not buyer fees. About 70% of Australian mortgages are arranged through brokers.

Settlement agents coordinate the final exchange of funds and documents. PEXA has largely automated this process in most states.

Stamp Duty

Stamp duty (called transfer duty in some states) is the largest transaction cost. Rates and thresholds vary dramatically by state and change frequently.

NSW: Tiered rates up to 5.5%, plus additional surcharge for foreign buyers. First home buyer exemptions and concessions apply below thresholds.

Victoria: Tiered rates up to 5.5%, plus foreign buyer surcharge. First home buyer exemptions available for new and established homes below thresholds.

Queensland: Tiered rates up to 5.75%. First home concessions available.

First home buyer benefits vary significantly. Some states offer stamp duty exemptions or reductions, first home owner grants (typically for new builds), and shared equity schemes. Eligibility criteria, thresholds, and benefit amounts differ by state and change with policy.

Foreign buyer surcharges add 7-8% on top of standard rates in most states. Definition of "foreign" includes temporary residents and foreign-controlled entities.

Always calculate stamp duty for the specific state and property value. Online calculators from state revenue offices provide current figures.

Financing

Australian mortgages differ from US and UK patterns. Most are variable rate by default, though fixed-rate options exist. Loan terms of 25-30 years are standard.

Loan-to-Value Ratio (LVR) affects approval and costs. Most lenders allow up to 80% LVR without lenders mortgage insurance (LMI). Above 80%, LMI is required—this can add tens of thousands to costs. Some lenders allow up to 95% LVR with LMI.

Lenders Mortgage Insurance (LMI) protects the lender (not you) if you default with less than 20% equity. It's a one-time premium that can be paid upfront or capitalised into the loan. LMI is not transferable if you refinance.

Genuine savings requirements vary. Most lenders want to see 5% of the purchase price accumulated over 3+ months in your accounts, demonstrating saving ability beyond just having funds.

Serviceability assessment tests your ability to repay at higher interest rates (typically 2-3% above the actual rate). This buffer protects against rate rises but limits borrowing capacity.

Offset accounts are transaction accounts linked to your mortgage. The balance offsets your loan principal, reducing interest. A $50,000 offset on a $500,000 loan means you pay interest on $450,000. Common feature of Australian mortgages.

Redraw facilities let you access extra repayments you've made. Unlike offset, funds are technically part of the loan until withdrawn.

Property Types and Titles

Torrens title is the standard for houses and most properties. You own the land and building outright, recorded in the state land registry. Clean, simple ownership.

Strata title applies to apartments and townhouses. You own your lot (the unit) and share ownership of common property with other lot owners through the owners corporation (body corporate). Strata levies fund common area maintenance and building insurance.

Company title is an older structure (mainly older Sydney apartments) where you own shares in a company that owns the building. More restrictions, harder to finance, requires board approval for sales.

Community title combines individual ownership with shared facilities (common in gated communities). Similar to strata but may include houses and larger developments.

Due Diligence

Building and pest inspection examines structural condition and termite activity. Essential for houses, strongly recommended for townhouses. Cost $400-700. Reports identify defects and may note areas requiring specialist assessment.

Strata reports for apartments review body corporate records: finances, meeting minutes, bylaws, planned works, disputes. Cost $200-400. Essential—reveals upcoming special levies, building defects, and management issues.

Title search verifies ownership and identifies encumbrances: easements, covenants, caveats, mortgages. Your conveyancer handles this.

Planning certificates reveal zoning, proposed development, flood risk, contamination, and heritage listings. Included in conveyancer's searches.

Pool compliance certificates required in most states if the property has a swimming pool. Non-compliance can prevent settlement or transfer liability.

Key Numbers

Deposit: Typically 10% at exchange (5% in some states), with balance at settlement. Deposit is usually held in trust until settlement.

Stamp duty: Varies by state, approximately 3-5% of property value for most buyers. First home buyers may pay significantly less or nothing.

Conveyancing fees: $800-2,500 depending on state and complexity.

Building inspection: $400-700 for house, less for apartment.

Strata report: $200-400.

LMI: Varies by lender and LVR—can be $10,000-40,000+ for high-LVR loans.

Settlement timeline: 30-90 days, commonly 42 days in NSW, 30-60 days in Victoria.

Investment Property Considerations

Negative gearing allows investment property losses (when expenses exceed income) to offset other income, reducing tax. This tax benefit drives significant investment activity.

Depreciation on building structure and fixtures provides non-cash deductions. Quantity surveyor reports (cost $500-800) maximise claims. Rules changed in 2017 for second-hand properties—depreciation on plant and equipment only available for items you purchase new.

Capital gains tax (CGT) applies when you sell investment property. The 50% CGT discount applies for properties held over 12 months. Main residence exemption doesn't apply to investment properties.

Land tax applies to investment properties in most states (main residence is exempt). Rates and thresholds vary by state. Calculated annually on land value, not property value.

Common Misconceptions

"The agent works for me as the buyer." The agent is engaged and paid by the seller. They must be honest but their duty is to the vendor. Get independent advice.

"Building inspection covers everything." Inspectors examine visible and accessible areas. They can't see inside walls, under slabs, or assess areas without safe access. Inspections reduce risk but don't eliminate it.

"I can withdraw anytime before settlement." After cooling-off ends (or at auction), the contract is binding. Withdrawal means losing your deposit and potentially being sued for the difference if the property sells for less.

"Pre-approval means I'll get the loan." Pre-approval is conditional. The lender still needs to value the property and verify your circumstances haven't changed. Finance clauses in contracts provide protection.

"Stamp duty is the same everywhere." Rates vary dramatically by state. A $800,000 property might attract $30,000 duty in one state and $45,000 in another. Always calculate for your specific state.

"Strata fees are the only ongoing cost for apartments." Special levies for major works (facade repairs, lift replacement) can add tens of thousands beyond regular levies. Check the strata report for sinking fund and planned works.