UK Investor’s Guide: Top 4 Benefits of Real Estate Investment in Australia

Buying an investment property in a distant land is not something many investors contemplate, at least at the beginning of their investment journey. However, hefty returns are one of the benefits of investing in Australian investment properties for UK investors.

Once you start to inspect your investment options as a British investor, you may want to consider dipping your toes in a foreign land, such as Australia, the land down under. In this article, we will be discussing why foreign property investment is booming in Australia, especially for UK investors. Keep reading.

Investment Property In Australia

Many property owners from the UK are in the investment property scene in many Australian cities, one of the most in demand cities being Sydney. They are acquiring impressive returns from their investments. During 2019-2020, it was reported by the Foreign Investment Review Board (FIRB) that UK investors spent $1.58 billion in the Australian property market.

Moreover, foreign property investment in Australia increased by 15.5%, which has been reported to be the highest in the last three years. This indicates why foreign investors are keen on directing their investments there.

There are many benefits of investing in Australian properties. This article will discuss all the concerns in the Australian real estate digest.

1. Property Value (Housing and Unit)

Median Australian housing prices went up drastically by 857% from 1993 to 2021. Unit prices also increased by 486% within the same period.

These numbers are unreal for UK investors, mainly if you know about the challenges of the English market trying to maintain the demand and price of properties. Compared to the Australian market, British housing prices only experienced a rise of 207% in 20 years (1999 to 2019).

If you analyse the numbers, you’ll notice the difference is not even comparable. The Australian market offers substantial benefits to its investors. This makes it the right time for real estate entrepreneurs in the UK to navigate the financial landscape in Australian land.

2.  Market Stability

Volatility is an absolute nightmare if you’re in the real estate game. Property markets that fluctuate regularly are not ideal for any property investor. Stability and the financial safety net that comes with it are your friends.

The prime reason foreign property investment in Australia is booming is perhaps because of the track record of stability in the real estate market. Now, this is music to any investor’s ears.

Did you know that owners occupy 70% of Australian households? This brings about a consistent undersupply of available housing in most liveable areas. The Australian housing market has never seen a fall beyond 20%, even during the Global Financial Crisis. If this isn’t proof of stability, we don’t know what is!

When the world hit a recession, every nation fell into the aftermath, including the UK. Reports state that housing prices in London collapsed by 19.8%. Luckily, Australia survived the slump and, in fact, witnessed growth in real estate prices.

Due to the rising demand in the property market, many foreigners are gaining interest in Australian investment properties, especially British investors. This is perhaps because the UK property market has not seen stability in the longest time. In 2020, the demand for property in residential areas dropped by 11%, which has impacted their stability immensely.

It’s safe to say that the Australian market is relatively more promising, and does not hold a chance of drastic overnight changes.

3.  Tax Concessions

Tax laws strictly depend on where you are located globally, and honestly, they are vital for your investment returns. One of the prime reasons UK investors are leaning towards overseas investment in Australia is the tax leniency.

To fully acquire tax benefits, investors should know about the negative gearing in Australia. For example, you must know your calculations of property costs and what your income looks like from these investment rentals. If the total expense of holding your Australian property, including utilities, mortgage payment, maintenance, insurance, etc., is more than what your earn from your rentals, you have a way to offset the net loss on other income avenues.

Negative gearing means paying less tax on your claimed incomes, even if that includes offsetting other Australian income streams. As an investor, you should know that this strategy is gold.

Australian Taxation Office declared that an investor could carry tax losses forward until they have figured out a way to offset them with other income avenues. So, when you are in a position to sell, you can also cross out the capital gains from your Australian property. Now, isn’t that convenient?

4. Diversify Your Portfolio

Another great benefit of Australian property investing is that it allows you to diversify your portfolio. This is an excellent opportunity for property investors that offers a financial safety net.

We all know real estate markets can be volatile. Property values can fluctuate quickly. For serial investors, when one of their property prices drops, you can offset it with another property that’s doing better in terms of valuation. This is why diversifying your portfolio comes in handy.

Conclusion

The bottom line is that the Australian Real Estate market is stable and promising. The government has been able to protect its property prices from substantial falls. This is something that most countries have struggled with, including the UK.

As discussed above, the tax laws favor foreign investors too. Plus, as an investor, you don’t want to take risks of dropping property values. There are changes in the real estate market post pandemic, which every investor should factor in, despite their location.

For British investors, Australian properties are a safe bet as far as investment returns, capital growth, and stability are concerned.