Why invest in Australia’s property market, you ask? Simply put, the Australian real estate market has shown time and time again that it is a highly stable and reliable market. Just in the last year alone, property prices increased by a whopping 16% - and yes, that happened during global lockdowns!

The truth is that If you’re considering buying property overseas, you might be tempted to dive in head first. But before you do, it’s important to know the ins and outs of the market you’re diving into, whether that’s the Australian or UK property markets. 

This handy guide will break down the latest market trends, tax laws, and long term growth in Australia and the UK, as well as some compelling reasons why you should invest in Australia’s property market. Your next great asset awaits!

When it comes to investing in Australia, while it’s important to know the right time to buy real estate, it’s equally essential to spend time in the market.

In fact, time in the market can actually be better than timing the market. Getting your foot in the door of property investment is the crucial part - once you’ve got yourself an asset, you can just watch it grow.

With that being said, a savvy investor still keeps an eye on the latest market trends before diving in. So, let’s have a look at how the markets in Australia and the UK are faring when it comes to:

When experts discuss why you should invest in Australia’s property, they’re not exaggerating when they say Australia is a hot market. And for those wondering - is the Australian property market about to crash? The answer is a confident and resounding no.

The Australian real estate market has always been stable and secure. Not only is the Australian property market absolutely not about to crash but, compared to other developed nations, it has continued to thrive even through the pandemic. That’s why for locals and for folks living overseas, knowing how to buy investment property in Australia can be a great way to tap into additional income.

It’s true - even through the COVID-19 pandemic, the Australian real estate market has experienced exponential market growth, and it hasn’t been confined to urban living either. Regional Australia property prices jumped up by 12.5% between June 2020 and June 2021.

The increase is likely to continue in 2022, with the growth rate slowing slightly. The robustness of the Australian property market is precisely why you should really consider investing in it.

In the UK we’ve seen a slightly different story. The UK market has been considered a recovering market with slower growth because of the economic uncertainty brought on by Brexit.

However, during the pandemic, home prices in all regions of the UK increased (between 2019-2020) including a 6.2% increase in London property prices.

So, while the increase in the UK market hasn’t been the same as the Australian market, it has been doing well regardless. Experts say that as of October 2021, growth has slowed but will continue.

Investors are sometimes eager to tie down a property and may end up rushing into something they don’t fully understand yet. It’s important to understand your financial liabilities and responsibilities before buying overseas. Tax is definitely a responsibility you should own inside and out.

We’ve summarised the tax requirements and financial liabilities related to investing in Australia Vs. the UK in the following table.

When you’re expanding your portfolio and making your mark abroad, you don’t want to get surprised by any sudden costs. 

Here’s a breakdown of the financial liabilities you need to be aware of so you don’t find yourself in that rather unsavoury situation.

Enough with the bills, it’s finally time for some good news! 

Did you know that you can offset your investment taxes in Australia and the UK? In fact, as we explain in our property tax guide, there is little that you can’t claim to reduce your tax bill.

Here’s an easy table breaking down what you can offset.

As long as your home is tenanted, you’re pretty much set for tax deductibles in any particular financial year.

In Australia, you can claim borrowing expenses and capital items or expenditure on investment properties after a few years. The key is to distinguish between repairs, maintenance and capital works. 

Another great tax offsetting opportunity in Australia is depreciation - if your property was constructed after 1988, you can claim a 2.5% depreciation deduction on the construction costs every year for 40 years after the date of construction.

Not too bad, huh?

When you’re an investor, you have to think of both short and long term growth and how one investment can enhance your entire portfolio. Depending on what you learn, the investment could prove to be a stroke of genius or a total fail. 

Let’s wrap up this race by giving you the lowdown on how the Australian and UK markets fare in terms of growth and diversification:

In a nutshell, both the Australian and UK property markets are good options for buying overseas, regardless where from. They provide good diversification opportunities and have similar financial liabilities, with Australia offering more flexibility on stamp duty - depending on the state.

The Australian property market has proven extremely reliable, faring through the 2008 financial crisis, booming through COVID-19 pandemic, and set to do just fine for the foreseeable future!

Disclaimer: The views, information, or opinions expressed in this blog post are for general information purposes only and should not be relied upon. We have not taken into account specific situations, facts or circumstances, and no part of this blog post constitutes personal financial, legal, or tax advice to you. You should seek tax advice from your accountant, specific to your situation.