How much will rent or a house cost?
Rental costs vary considerably according to the size (number of bedrooms) and quality of a property, its age, the facilities provided, and – not least – the region, city and neighbourhood. Rents are lower in rural than urban areas and, as a general rule, the further a property is from a large city or town, public transport or other essential facilities, the cheaper it is. Average rents tend to be highest in Sydney, Melbourne and Darwin. Rents have skyrocketed in recent years, with increases of between 10 and 20 per cent in the major cities.
As a rough guide, average weekly rents for a two-bedroom apartment are from $200-400 and three-bedroom houses from $250-500. The lowest rents apply to modest homes in the less expensive suburbs of Adelaide and Perth (or in Tasmania), while the highest rents apply to the more popular areas in and around Sydney, Melbourne, Brisbane and Darwin. Average rents don’t include properties in the central business district (CBD) of major cities or in exclusive residential areas, for which the sky’s the limit: you can easily pay $1,000-$2,000 per week for a luxury two-bedroom apartment in a smart suburb of Sydney.
Rents are controlled in some states, although this doesn’t usually extend to new properties. Your contract may include details of when your rent is to be reviewed or increased, if applicable (the rent for a fixed-term tenancy can be increased only when provision for an increase is included in the lease contract). You must be given notice in writing of any rent increases and a rent tribunal can review excessive rent increases and the existing rent if services are reduced. It’s best to pay your rent by cheque or standing order, for which you should (by law) receive a receipt from your landlord.
An agent’s fee of two weeks’ rent for a one-year lease and one week’s rent for a six-month lease are the legal maximum fees, but most agents charge less than this. Usually you must pay two to four week’s rent in advance, depending on the type of property and the rental agreement, plus a bond (see below) against damages. Beware of hidden extras such as a fee for connecting the electricity, gas or telephone.
When renting property in Australia, a bond (deposit) must be paid in advance. The bond is usually equal to between two and six weeks’ rent (it’s usually higher for furnished than for unfurnished properties), and is unlimited in Queensland for properties with rents of over $500 per week. See the Rental Agreements DIY website for more information (www.rentalagreementsdiy.com.au/tenancy_laws_in_australia.php).
The bond is usually lodged with the state or territory rental authority, e.g. the Residential Tenancies Authority in Queensland or the Residential Tenancies Tribunal in South Australia, together with a copy of the inspection (condition) report. Information regarding rental bonds can be obtained from 13-3220 (local rate).
Buying a Home
Property prices vary considerably throughout the country and in the various suburbs of the major cities. Not surprisingly, the further you are from a town or city, the lower the cost of land and property. Properties in central and beach locations cost anywhere between two and four times as much as similar properties in less fashionable or convenient areas. Apartments are often as expensive as houses and townhouses (or even more so), as they’re invariably located in city centres, whereas most houses are in suburbs or in the country. For many buyers it’s a choice between a small apartment in an inner city and a large detached family home in the outer suburbs – in recent years the average Aussie battler (commuter) has had to move further and further into the outer suburbs of major cities in order to find affordable accommodation.
Advertised prices are usually around 3 to 8 per cent above a property’s ‘market value’, so you can expect to negotiate a discount of this amount, and substantially above its rateable value. A two single-storey home in most city outer suburbs is advertised at between $175,000 and $300,000; four-bedroom, two-storey homes cost from around $350,000 to $500,000.
There’s a high demand everywhere for waterfront properties, which have generally been an excellent investment, particularly in Sydney, whose 20 most expensive suburbs are all waterfront (harbour or ocean). Waterfront properties in Sydney can be astronomically expensive, and a reasonable two-bedroom apartment in an attractive building with water views costs over $1m ($2m homes are commonplace in Sydney and Melbourne and on the White Sunshine Coast).
The following table shows average house and unit (apartment) selling prices in June 2007 (source: Real Estate Institute of Australia).
City Average Price
Adelaide $310,000 $235,000
Brisbane $362,500 $273,000
Canberra $428,000 $330,000
Darwin $395,000 $279,300
Hobart $310,000 $243,000
Melbourne $420,000 $350,000
Perth $446,500 $360,000
Sydney $525,000 $360,500
A few kilometres can make a huge difference to the price of a property, with apartments in central areas costing up to $2,500 per square metre more than those in harbour-side developments a few kilometres further out. Land prices also reduce considerably from around 15km (9mi) outside a city and are at their lowest around 25km (16mi) from city centres. The cost of land varies from as little as $50,000 for a plot large enough for an average suburban house at least 25km from cities such as Adelaide, Hobart and Perth to over $400,000 for a similar plot within 15km of central Sydney (if you can find one). Even the cost of building a home varies with the location as well as with the quality of materials used. For example, brick veneer costs from around $800 to $1,000 per m2, depending on the location.
Buying property in Australia is usually a long-term investment and isn’t recommended for those seeking a short-term gain. You must pay capital gains tax on the profit made on the sale of an investment property. If you’re buying a home for a limited period or as an investment, you should obviously buy one that you hope will sell quickly and at a profit. Homes that sell best are exceptional period houses with lots of original features, and water- and beach-front homes (particularly in Queensland), which are in high demand and can be let for most of the year to holidaymakers if required. Luxury apartments in central Brisbane, Melbourne and Sydney have also been a good investment in recent years, but some are currently overpriced. In the long term, most experts agree that properties priced at the top and bottom ends of the property market (i.e. over $750,000 and under $150,000) offer the best investment, as the market for these properties is the most stable.
Property price indexes can be found on several websites, including www.residex.com.au and www.homepriceguide.com.au, and there are specialist property magazines such as Australian Property Investor, which monitors the latest so-called hotspots (the website www.hotspotting.com.au provides a similar service). You can find out the price of homes in any Sydney suburb through the Sydney Morning Herald Home Price Guide, which lists all the sales (both auction and private treaty) in Sydney suburbs for the last 12 months (it can be ordered online from Australian Property Monitors, www.apm.com.au). A similar service is provided by newspapers in other major cities, and you can also peruse property advertisements in a number of publications on the internet (e.g. www.sydneyproperty.com.au).
When calculating your budget, you should allow for lawyer’s fees and bear in mind that banks charge a mortgage processing fee equal to 1 per cent of the mortgage amount and require a deposit (usually $500 minimum) on application.
For more information see Living and Working in Australia by David Hampshire