A Guide to Buying Real Estate in the ACT
Navigating the ACT property market requires an understanding of its unique nature, including its leasehold system and property values. Whether you’re a first-time buyer or an investor, it’s essential to understand the local market. This guide will provide insights into the Canberra market, along with laying out the steps of a property purchase.
Understanding the ACT Property Market
Before jumping into the process, it’s important to understand the Canberra real estate market. As per data from 2024, the total number of residential dwellings has been steadily increasing in Australia. With the number of units increasing, the ACT property market is lucrative for first-time home buyers and property investors. Canberra ranks as the second highest in the average price of residential dwellings ($951,800).
The market has shown slow, but stable growth. There is a steady housing demand, driven by the presence of government agencies and a growing student population. The presence of government employees in Canberra leads to strong rental demand, especially for short-term leases, as these workers frequently relocate. In 2024, Canberra’s rental market experienced the smallest increase in prices compared to other major cities, which is good news for tenants too.
Canberra’s Leasehold System
The ACT property market has a unique leasehold system, where instead of buying land, you lease it from the government for a set period. This is typically 99 years. All ACT land is leasehold, not freehold.
In this system, buyers are essentially purchasing the right to use the land for a defined time. After 99 years, a residential leasehold is most likely to be renewed. In the ACT, you pay conveyance duty, not stamp duty. Within the leasehold system, the steps to buying Canberra property can be a little different.
Steps to Buying Real Estate in the ACT
Step 1: Research and Prepare
Start by researching the market and your suburbs of choice to understand current trends, prices, and locations. Consider the property type, amenities, facilities around you, and access to public transport. Make sure you gather information from a range of sources: online listings, market reports, real estate agents, and more.
Apart from researching the property market, make sure you familiarise yourself with ACT laws and concessions. Since land in the ACT is under leasehold, ensure you fully understand the terms of the lease. This includes the lease length and any other conditions.
Step 2: Secure Financing
One of the cornerstones of securing financing is saving for your deposit. Analyse your budget to see where you stand with the deposit.
Apart from collecting the deposit, speak with a mortgage broker or lender to get pre-approval for a loan. There are different types of government schemes and concessions available that can help you with financing your home, especially if it’s your first home. Look into your eligibility for the Home Buyer Concession Scheme, First Home Super Saver Scheme, and stamp duty concessions in the ACT. Talk to a financial adviser to help you make the most of these schemes.
Step 3: View Properties
Visit properties to assess their condition, layout, and location. Try to visualise yourself and your family living in the space. Think about whether this property would be a good option according to your future requirements. Narrow down your options and pick a property that meets your needs and expectations before making an offer.
Step 4: Make an Offer and Negotiate
Submit an offer through your agent. Your offer will be accepted or rejected. If rejected, you can negotiate the terms of the offer.
Step 5: Exchange Contracts and Insurance
Contracts are unconditionally exchanged between the buyer and the seller. This process is done by real estate agents or conveyancers on behalf of each party. At this point, the deposit is paid and a legally binding contract is in effect.
Once the contracts are unconditionally exchanged, the buyer is responsible for insuring the property (both for the unit and the contents).
Step 6: Conduct Pre-Settlement Inspections
At this point, you can arrange for inspections with the selling agent. In the ACT, the building and pest inspection and energy ratings are done in advance and included in the contract. As a purchaser, you can review this before you exchange the contract. If you prefer, you can conduct another round of inspections. Use professional inspectors to get accurate reports.
Step 7: Settlement
The sale is finalised when all the relevant checks are done. During this time, you’ll need to pay the balance of the purchase price and finalise the necessary paperwork. This also concludes the end of the cooling-off period.
Step 8: Transfer of Ownership
Upon settlement, the property title is transferred to your name, and you can take possession of the property.
Ways to Buy a House in ACT
The purchase of a new property, whether a unit, house or residential land, can be done in one of the following ways:
Private Treaty
In a private treaty, the vendor lists a price and you make an offer. Your real estate agent can negotiate on your behalf and help you decide on the final terms and conditions. There is a 5-day cooling-off period, which allows the buyer to finalise financing arrangements or take the time to be sure of their decision.
Tender
In a tender, there is no listed price. You submit an offer with a deposit, which the seller can either accept or reject. There is no cooling-off period.
Auction
An auction is a single event. The seller sets a reserve price, which is the minimum amount that they will accept. Buyers bid against each other to make the highest offer. There is no cooling-off period. The buyer will be required to sign a contract and pay a deposit immediately after the auction.
Buying off the plan
Off-the-plan investments in Canberra refer to buying a property that is under construction. This can be a home or an apartment.
Costs Involved in Buying ACT Property
Purchase Price
The purchase price is the agreed amount you pay to buy the property. This is typically the largest cost. A percentage of this amount (generally between 5%-20%) is put down as a deposit.
Conveyance Duty
Conveyance duty, or stamp duty, is the tax you pay when purchasing property. The rate depends on the property's value. In the ACT, the stamp duty rates follow a progressive scale and there are some concessions for eligible home buyers.
Legal Fees
Legal or conveyancing fees cover the cost of hiring a professional for the legal aspects of the property transaction. Legal fees depend on the provider and complexity.
Inspections
Inspections, such as building and pest checks, assess the property's condition. The cost of these inspections varies according to the property size and location.
Mortgage Costs
Mortgage-related fees include application fees and ongoing loan management fees. These are charged by the lender and can vary widely. It's important to get a clear breakdown from your lender before committing.
Hidden Costs
These are additional expenses you might not initially think of, but they can add up quickly:
- Utility connections, like electricity and water
- Council rates
- Possible land tax adjustments
- Insurance
- Repairs
- Moving costs
- Strata Fees (for apartments)
Tip: Always budget for both the obvious and hidden costs. Unexpected expenses can easily derail your financial plans if you don’t have a buffer.
Tips for Buying Property in the ACT
Buying Your First Home |
Successful Property Investment |
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Top Suburbs for Property Buyers in the ACT
- Kingston offers stunning waterfront views and a vibrant café culture, perfect for those who enjoy a lively atmosphere.
- Belconnen is ideal for first-time buyers or investors. With affordable apartments and proximity to educational institutions, it is family- and student-friendly.
- Gungahlin is a great choice for families, with modern homes and plenty of parks, schools, and amenities.
- Griffith has luxurious properties set among tree-lined streets, providing a prestigious neighbourhood.
- Denman Prospect is a suburb currently under development in the Molonglo Valley. It strikes the perfect balance between outdoor living, surrounded by nature, and the amenities that living close to the city offers.
- Phillip is a suburb in Woden Valley. Surrounded by some of the best restaurants and shopping spots that Canberra has to offer, Phillip is a vibrant and modern suburb.
Conclusion: Take The First Step Towards Your New Home Today!
The ACT offers opportunities for both first-time buyers and investors. But, understanding the local market and associated costs is key. With a structured approach and the right research, you can make an informed decision. Contact Independent Property Group for personalised advice on how to navigate your property journey in Canberra.
References:
- https://www.abs.gov.au/statistics/economy/price-indexes-and-inflation/total-value-dwellings/latest-release
- https://www.treasury.act.gov.au/__data/assets/word_doc/0004/2413687/TVD.docx/_recache
- https://www.corelogic.com.au/our-data/corelogic-indices
- https://www.abc.net.au/news/2025-01-13/rent-canberra-flat-comparison-other-capital-cities/104805776
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