What are the top three hardest states to buy property in, and which is the easiest? We take a deep dive into the buying process to help you navigate if your state is amongst the hardest property markets in the country.
Property economist and Principal of Suburbanite, Anna Porter has ranked the states and shared the top 3 Australian states where purchasing a property isn’t as easy as the rest.
Her four metrics when ranking the states are:
- Ability to undertake due diligence
- Agents attitude to buyers
- Costs associated with purchase
- Competition from other buyers
Porter buys property throughout the country and sees it on a state versus state type view and highlights that every state has a different set of rules, regulations and generally a different approach.
“For example, in NSW the contracts are often 30-40+ pages, very detailed and don’t offer much buyer protection by way of subject to finance or building clauses, they are simply unheard of in NSW; as compared to other states, like Perth where the contracts are only a few pages long and don’t offer as much security to the vendor,” she says.
“So, we have ranked the buying experience across the states and looked at some key fundamentals to help you work out if you are trying to buy a property in the hardest state of all.”
Coming in at number 3 is South Australia.
Adelaide is capital to the third hardest state to buy property in according to nationwide property buyer Anna Porter, of Suburbanite.
“This is not because the buyer doesn’t get a lot of protection, in fact they can get a substantial amount of protection by way of subject to the finance clauses and pest/building clause in the contracts which allows buyers time to get all their due diligence completed to a satisfactory level – this is known as a conditional contract and offers buyers a higher level of protection,” Porter says.
“The reason Adelaide makes the list is because there is strong buyer competition and a number of ‘cash’ buyers in the market at the moment. Making it tricky for buyers to get the property they want before someone else snaps it up.”
The other big fail for Adelaide is it has one of the highest stamp duty costs in the entire country, on a $500,000 purchase the stamp duty in SA is nearly $26,000, as compared to the lowest state being just over $10,000 in Queensland for the same purchase price.
Number 2 spot is held by Victoria
Victoria which is home to the capital city of Melbourne, and a host of smaller cities like Geelong, Bendigo, Ballarat and Wodonga is the second hardest state to purchase property in.
Porter says: “This is mostly due to Victoria being the auction capital of Australia. Agents and sellers most prefer to sell via auction, or at least have the buyer enter an unconditional contract.”
Last weekend alone, there were 773 properties scheduled for Auction in Victoria compared to 513 in NSW and 227 in QLD.
This means that the buyer has to do all of their due diligence prior to signing the contract or attending the auction.
“It is near impossible to get your finance unconditionally approved prior to an auction so every buyer that purchases at auction is taking on the risk of not getting their finances approved unconditionally and leaving them unable to settle,” says Porter.
“We also see a lot of buyers going to auctions having spent money on pest and building reports, solicitors fees to review the contract and then missing out to a higher bidder on the day,”
“This can be a costly process for a buyer and can run over $1,000 each time they try at auction. If they do this a few times over it is a very expensive way to miss out on buying property.”
Number 1, hardest location in the country to buy property is…… Sydney!
Sydney, NSW has the worst of all the other states wrapped up.
The stamp duty is some of the highest in the country, the contracts are also unconditional meaning you have to do all of your due diligence before signing or even worse, taking the risk of getting finance after the contract is signed.
“Whilst the risk of finance is one we simply don’t let our clients take, it is a common occurrence in the Sydney buying landscape,” says Porter.
“Mostly due to the buyer competition that drives people to sign contracts prematurely to avoid missing out, but also because the agents in Sydney can be some of the savviest, and skilled agents in the country who know how to influence buyers to get the outcome they want, often at the buyers’ peril,”
“Let’s not forget, the agent is there to look after the vendor’s best interest and not the buyer’s best interests, so it can be a case of ‘every man for himself’ on the buyer’s side of the equation.”
So, buying in Sydney is a mixing pot of being gazumped, missing out on auctions, being rushed through the process by a savvy and sometime scrupulous agent and trying to work out how and when you actually get to do your due diligence.
No wonder Sydney buyers get buying fatigue when they are house hunting….
The best state to purchase property in, is Canberra, hands down!
The Nation’s Capital comes in as the best state to purchase property in.
“Agents treat buyers with a huge amount of respect, they allow them time to do their due diligence without undue pressure and they encourage them to work with solicitors straight away,” says Porter.
“ACT is the only state that has pest and building reports in the contract of sale as mandatory, so the buyer has a full pest and building report to view before they even make an offer,”
“Once they have an offer accepted, the property is deemed ‘off market’ for about 2 weeks to allow them time to get finances and legals sorted,”
“The buyer then enters into an unconditional contract but has had the time to do all their due diligence first.”
The ACT also has the second lowest stamp duty in the country, making it an affordable buying process and generally a very pleasant process for buyers and sellers alike.