Learning to Buy a House… Adelaide style.

Bored of funny videos and crusading posts? Surely not!

So let’s go back to blogging about stuff what I did and stuff what I do/don’t know….

From an Expat point of view, I guess I’ve been learning a lot about the way in which the housing market seems to work here in Adelaide. The process of house hunting, making an offer, viewing a house, paying costs etc. No. We haven’t actually bought a house yet but we have managed to spend the last 4 weeks viewing properties and almost buying them… (lol). It’s a complicated business and one that’s (as usual) ever so slightly different to the U.K. – just enough to throw you a bit.

The good/bad news is that the housing market is very buoyant. There are a lot of houses on the market and they are selling pretty quickly. Well at least they are in the areas that we’ve been looking in ( Port Noarlunga / Christies Beach / Moana ). The houses are also rather expensive. The reason that we’re not looking for a house in the area we currently live in is that we can’t. We can’t afford to buy anything here. The house we are renting at the moment is probably worth in the region of 500 – 600 thousand dollars… When looking at a mortgage based on affordability and cost of living we can JUST about afford a mortgage for about 350  ( at 6.99%) with a 10% deposit. And that would make the mortgage payments (interest only) $138 more than we paying in our rental — and that make me uncomfortable. It’s worth noting that all of our very detailed and well considered sums are based upon us paying for our lifestyle on one wage. (That’s because, of course, we’ve been trying to start a family and when that happens I won’t be working).

The reason it’s more expensive it partly due, of course, to the fact that (just as it is in the UK) when you’re renting you don’t have to cover things like buildings insurance or council tax (or rates are they are called here) There are some subtle differences in how these things are calculated too. For example, when living in Birmingham and paying council tax rates your fee is worked out based on the area in which you live.  If you are in band B you pay £90 a week for example.  Here the amount you pay is worked out on a case by case basis and is calculated on the capital value of your home.  SO, if you’re house is worth more, you’ll pay more tax – another reason to pay less for it! 😉

When I asked for two fictional buildings insurance quotations (on two different homes we were considering) that turned out to be a little different too.  I don’t remember the insurance policy for my building ever being affected by whether or not I had an alarm.  Sure, that was taken into consideration when I was looking at the contents – but not the building itself.  Then again… I guess in the UK I wasn’t being covered for floods, cyclones and tsunamis…. all of which will obviously be scared off by an alarm 😉 In all seriousness, I’m guessing that it’s to do with them having to replace windows and doors if they are damaged because you were easy pickins’. The house without alarms or security screens was going to cost $9.71 a week to insure.

The cost of actually buying a house seems to be more expensive than it was when I did it last in the UK…. and we don’t have anything to sell this tim. Stamp duty, for example, is a bit harsher too!  It seems to be about 5% of the cost of the house! 5% regardless of how much you’re paying.. That makes the stamp duty on a 350,000 home 17,000.  We do of course qualify for the first home owners grant of 7,000 – thank god!

and…

If you’re taking out a mortgage that is for more than 80% then you need to pay mortgage insurance.  In the UK we had to do that aswell… It was £2544 a year.  Here it comes to an upfront cost of  $7,170.00 but that’s added to you mortgage. Here’s what the sums look like:

House Buying Costs:

House Cost

$310,000.00 

£195,818.85

$315,000.00 

£198,977.22

$320,000.00 

£202,135.59

$350,000.00 

£221,085.80

House Deposit

$15,500.00 

£9,790.943

$15,750.00 

£9,948.861

$16,000.00 

£10,106.78

$17,500.00 

£11,054.29

Mortgage Insurance

$6,351.00 

£4,011.76

$6,453.00 

£4,011.76

$6,555.00 

£4,140.62

$7,170.00 

£4,529.10

 

House Loan Amount

$300,851.00 

£190,039.67

$305,703.00 

£193,104.55

$310,555.00 

£196,169.43

$339,670.00 

£214,560.61

Mortgage Setup Fee $0.00 $0.00 $0.00 $0.00
Stamp Duty

$14,600.00 

£9,222.436

$14,900.00 

£9,411.938

$15,200.00 

£9,601.441

$17,000.00 

£10,738.45

Inspection Fees

$700.00 

£442.172

$700.00 

£442.172

$700.00 

£442.172

$700.00 

£442.172

Conveyancing Fees

$600.00 

£379.004

$600.00 

£379.004

$600.00 

£379.004

$600.00 

£379.004

Arbitrary Moving Costs

$1,000.00 

£631.674

$1,000.00 

£631.674

$1,000.00 

£631.674

$1,000.00 

£631.674

Total

$32,400.00 

£20,466.23

$32,950.00 

£20,813.65

$33,500.00 

£21,161.07

$36,800.00 

£23,245.59

Benefits
First Home Buyers Grant

$7,000.00 

£4,421.72

$7,000.00 

£4,421.72

$7,000.00 

£4,421.72

$7,000.00 

£4,421.72

Total $7,000.00 $7,000.00 $7,000.00 $7,000.00
Net Total

$25,400.00 

£16,044.51

$25,950.00 

£16,391.93

$26,500.00 

£16,739.35

$29,800.00 

£18,823.88

Currency conversion from XE.com today (27/02) 1 AUD = 0.631674 GBP)

I’ve actually never looked at these costs in pounds ( my brain is firmly processing only $s these days)…  having sat and converted all of these sums I can see that the exchange rate is really not in our favour is it!!  I was imagining a 350,000 house was worth £175,000.  And it’s not at all! Not that, that is too helpful when looking at the costs from Adelaide and living on dollars not pounds 🙂

I have no idea what the market is currently like in the UK or what the costs might be in 2011 to buy  a new home.  I have heard that you now have to have a 40% deposit to purchase a home.  I can get a way with 10% here so I guess we should be thankful for small helps 🙂  I don’t know if the government in the UK is giving free money to first time buyers either and they are here!  BONUS! but still.. it’s a bit confronting. I guess these things always are!

We haven’t made an actual offer on a property but we did get close and so the agent explained to us how we make an offer.  Some agencies seem to do things differently and accept a letter of offer.  (That means that others can also do the same thing and out do your offer.)  This is where you make a written offer – there is definitely NO SUCH THING as a phone offer that then gets relayed back to the vendor as it does in the UK.  The agent we were talking to was asking us to fill in a formal offer document ( from REISA)… pages of it.  We would have had a meeting with him. Sat down and filled it in and he would then present that to vendors who would come back to us until everyone had signed it… that’s the contract… you’ve bought the home… no solicitors looking over it… It’s done in a different order.  Instead of being sold subject to contract it seems that a house is sold subject to finance / buildings inspection.

The contract includes a copy of the deeds for you to view and a list of what will be sold with the property (fixtures and fittings) .  These are usually the things that Amanda (our UK solicitor) looked into and took weeks to come through. Instead the agent has all of this in a folder…  So quick!  SOLD – and then you have to get the money.  We’ve been advised to always only ever sign subject to finance as some people get themselves into a position where they sign that contract without having the mortgage finalised … then… when the mortgage is denied (for what ever reason) they’re screwed and in BIG trouble.. they have a house they can’t pay for.

With all of this in mind we’ve decided NOT to look at houses that are up for auction.  To make an offer  you have to have cash.  You have to have the mortgage money waiting… and that doesn’t seem possible. So NO auction properties for us.  We have been told numerous times that offers will only be accepted on an unconditional basis. That is just too scary for us right now!

Needless to say we’ve become a bit overwhelmed with it all.  We’re looking with one eye on the property market but we know we have over 6 months left in our rental contract and rather than rushing to stop paying rent and pay towards an investment we’re going to hold off a bit.  That is unless the perfect house appears and is not on for auction!

Please note that these ramblings reflect my experiences only…  They are based on real life experiences and sums and our lifestyle.  Please feel free to comment if you have any more information / help to offer 🙂

1 Comment

Comments are closed.

  1. Ann 8 years ago

    Hi. Never having bought a house (although I have lived in some) I can only offer unconditional sympathy and good wishes!! Do make sure it has the doors you specified in the email you sent us. X

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