What is the difference between Australia’s school district housing and China’s?
1. Different concepts of property rights
Property rights include the ownership, possession, control, use, income and disposal rights of property.
House property rights refer to the property owner’s ownership of the house and the right to use the land occupied by the house. As real estate, a house and land are an inseparable whole. When a house is transferred or other property rights change occurs, it must be done as an integral part of the house and the land. It is impossible to separate the house from the land for disposal.
Domestic real estate only includes 70-year use rights and does not include ownership (see the Land Management Law, that is, the state can also expropriate land use rights that have not expired). In Australia, house and land sales are handled separately. When you buy a house, you sign a contract, which is a Land & House Package contract. You sign a land transfer contract first, and then sign a house sales contract with the developer. If the buyer has more requirements, he or she can buy the land first, find a designer to design it, and then submit it to the government for approval. If you buy an Apartment, you also have land ownership, called Joint Land, which is jointly owned with others, which can save you a lot of trouble and the annual Land Tax.
2. Different value-added potentials
The rapid development of my country's economy has driven the rapid growth of the real estate market. Countless people have become well-off and rich by relying on real estate or simply flipping houses. I heard from friends that the housing prices in Shanghai doubled in three months when they were at their most exaggerated, which can only make people regret that they didn’t catch up. Who said that in real estate, the first person to buy it earns the money of the next person?
In Australia, the trend of housing prices is quite stable, with an annual increase of 7-10 years and doubling in about 7-10 years. Especially since the 1990s, against the background of global economic easing, growth has been particularly rapid. This is mainly caused by white culture. Foreigners prefer renting to buying a house. Nearly 30% of Australian residents live in rented accommodation. However, the continuous flow of new immigrants in recent decades has brought a large demand for housing to Australia, and also brought about the concept of buying a house to settle down. The annual population growth of 2.1 has greatly boosted domestic demand and stimulated the economy. Among these immigrants, the Chinese have made the greatest contribution.
Although the growth rate of Australian house prices is not as good as that of China, this is also the performance of mature markets. Precisely because of the prevalence of renting culture, Australia's real estate industry is healthier than other countries, and the risks are relatively small.
The basic differences between buying a house in Australia and buying a house in China
3. Risk differences
3.1 Vacancy rate (vacancy rate)
Vacancy rate It refers to the ratio of vacant housing area to the total housing area at a certain time. It is one of the standards to measure the health of a country's real estate industry. According to international common practice, the vacancy rate of commercial housing between 5 and 10 is a reasonable area, and the supply and demand of commercial housing are balanced, which is conducive to the healthy development of the national economy; the vacancy rate between 10 and 20 is a dangerous area for vacancy, and certain measures must be taken to Measures should be taken to increase the sales of commercial housing to ensure the normal development of the real estate market and the normal operation of the national economy; a vacancy rate above 20 indicates a serious backlog of commercial housing.
A vacancy rate of 10-20 is a vacancy danger zone. In Shanghai, it is 60.2. In Beijing, we don’t even dare to calculate it by area, but by the number of vacant rooms/total rooms. According to official statistics, it will take at least 42 years to digest the number of vacant houses nationwide. In other words, according to the normal economic system, within 42 years, even if housing prices do not fall, there is no reason to continue to rise. Taking Melbourne as an example, what is the vacancy rate? 2-3 float.
As mentioned above, 30% of Australians rent. Therefore, when you buy a house in Australia, you don’t have to worry about not being able to rent it out. Because only one or two of the 100 houses are unoccupied, they may still be extremely remote cases.
For international students, most of them have had the experience of renting an apartment. It is not uncommon for dozens of people to line up to grab a house. There are more people but less housing, and supply exceeds demand. This is the true situation in cities and towns across Australia.
3.2 Rental return ROI (return on investment)
In short, rental return is the annual rent divided by the house price. The survey shows that currently in the four first-tier cities including Beijing, Shanghai, Guangzhou, and Shenzhen, the average return on investment for ordinary residences is less than 3.5. Among them, the return on investment in Beijing is even lower. Except for the northern region, which is outstanding, most other regions are below 2.5. Beijing is not alone. Shanghai’s overall rental return rate is only 2-3.
In sharp contrast is the rental return rate of Australian real estate. The rental yield of Sydney properties remains at around 5.3. Due to the explosive population expansion in the center of Brisbane, the return rate can reach 6-6.5. Melbourne remains around city 7. If you were in a mining area or military area such as Gladston or Townsville, with many people and few houses but no high-rise buildings, the rental return rate would be unimaginable 11-13!
4. Government position
4.1 Government subsidies
As mentioned above, excluding government subsidies and tax rebate income, ROI is already 5.2, basic and housing loan interest rates (around 5.5) unchanged. Therefore, in Australia, renting a house is not as good as buying a house yourself. However, Australians value freedom and early consumption. Even an old lady in her seventies, with a government pension, goes out to work every week just to live alone in Manly Beach. This is what she wants! The government is worried, "Please, buy a house, I will give you money, a large sum at one time, and a refund every year! If you buy a house, it will be good for you and me. I can refresh the data and lower the price." You can make a fortune from the pension burden, not counting your inheritance tax! Buy it, or the Chinese will lose it!”
This is not an exaggeration, the above statements are well-founded. . In New South Wales, first-time homebuyers who purchase new homes or off-the-plan properties below $650,000 (median house price) will receive a subsidy of AUD 15,000, which will be reduced to AUD 10,000 from January 1, 2016. In Queensland, first-time homebuyers can apply for a government subsidy of AUD 15,000 from September 12, 2012, but the total house price must not exceed AUD 750,000, and it must be a new house or off-the-plan property. Stamp duty is exempted if the total house price is less than A$400,000. The Victorian government has launched a new first-time homebuyer subsidy starting from July 1, 2013, with a subsidy amount of A$10,000; in addition, the stamp duty discount rate has been increased to 40%.
4.2 Australia is the only country that implements Negative gearing tax return.
Many people call it negative gearing. As the name suggests, a negative makes a positive. Not only will no tax be deducted, but tax compensation will also be provided. Of course, there is also a prerequisite - investment purpose. In order to encourage real estate investment, the ATO Taxation Bureau regards the rental of personal houses as a small business that can generate assessable income! As we all know, there is a principle in accounting called accrual accounting, which is called "accrual basis" in Chinese - it refers to the recognition of current period's income and expenses as well as claims and liabilities based on the actual acquisition of the right to receive cash or the occurrence of the responsibility to pay cash. Debt, that is, revenue is recognized based on the occurrence of cash receipts and future cash receipts; expenses are recognized based on the occurrence of cash disbursements and future cash disbursement debts. In layman's terms, it means: if you include depreciation when doing the accounting, you may seem to be losing money, but in fact you are not losing money, because no one cares about your depreciation when you sell the house.
Since the higher the income, the higher the tax rate, real estate investment has a better tax avoidance effect for high-income people. For example, if the annual salary reaches 200,000 Australian dollars, the annual tax refund on this property will be 8,100 Australian dollars. My wife works in an accounting firm and often helps companies or individuals with tax refunds. She has discovered that high-income earners like doctors and lawyers must have several sets of real estate under their accounts to use for tax deductions. Therefore, the annual tax paid by high-income earners is usually lower than that of low-wage earners, and they may not even pay any tax at all. This also reflects the so-called law in capitalist society that the poor are getting poorer and the rich are getting richer.
4.3 The Australian government very much hopes that "its own people" will buy houses.
However, in this country that pursues so-called "democracy and fairness", people without PR cannot be treated differently, so institutions like FIRB (Foreign Investment Review Board) were born to restrict non-residents. Quantity limit for each Project purchase. Generally, it cannot exceed 50, and the application must be submitted to FIRB through a lawyer. If you buy a new house or off-plan house, the government will issue 100 FIRBs, so you can buy with confidence. Even if the visa expires and returns to the country in the future, the purchased house can be kept at your own disposal (vacant, rented, or resold).
5. Loans
5.1 Loan Difficulty
In Australia, it is much easier for real estate investors to apply for loans from banks. Even international students can apply for loans. Although international students have no income or less income, they can use their parents as guarantors and use the guarantor's income to guarantee your loan. After receiving professional guidance from BROKER, you can generally apply for a loan of 80%. These professional guides include canceling your credit cards to reduce credit defaults and more. No additional collateral is required, the house itself is your collateral. This is enough to show that the banking industry has sufficient confidence in the Australian real estate market!
Imagine, if there is a problem with your repayment ability or you go bankrupt, the bank only needs to take back the property and auction it at the current price. Capitalist banks will not take too many risks. If a bank dares to do so, it can only say that it is sure that the market price after recovery will definitely be higher than the price it paid when lending (the loan interest rate is only one percentage point higher than the deposit interest rate). It’s a profitable business! You know, on average, ten properties in Sydney are repossessed by banks and auctioned every week... The theory of real estate bubble is self-defeating.
Moreover, various recent economic indicators and data indicate that there is indeed very little real estate bubble in Australia. Australia is the only developed country that still maintains its AAA sovereign rating from S&P, Fitch and Moody's. Especially in this era of intensifying European debt and US debt crises, Australia's budget deficit in the 2011-12 fiscal year accounted for roughly only 3% of GDP. The Australian dollar even already has some safe-haven functions. Even a once-in-a-decade economic crisis has had no visible impact on the Australian real estate market because the real estate market plays a role in balancing Australia's economic development. Whenever there are expectations of instability in the world economy, the Australian government will take a series of measures to encourage the real estate market and stimulate domestic demand. These policies include interest rate cuts, policy subsidies, etc.
5.2 Loan down payment
House loans play the role of financial leverage in investment. As the saying goes, a small amount can make a big difference. Gain greater investment returns with smaller investments. Especially in Australia, where rent and loan interest are the same, the lower the down payment, the better. The down payment for buying an Australian property is only RMB 10. In contrast, in China, the State Council issued an order in 2005 that the down payment for personal housing loans should be raised to RMB 30, and the down payment for second home loans should not be less than RMB 50. If the second home purchased is used for investment purposes and is rented out, the investment value has been theoretically lost. Because "Rich Dad Poor Dad" said, "Simply expecting a house to increase in value to gain income is an irrational and incorrect investment."
Parents of international students who have a little understanding of the Australian housing market have begun to make plans to "support their studies with housing." Indeed, taking the median house price in Sydney this year of 600,000 for a two-bedroom house as an example, the deposit for purchasing an off-the-plan property is only 5-10, or 30,000-60,000 Australian dollars, which is less than one year's tuition and living expenses for an international student. After the building is completed two years later, based on an annual growth rate of 7, the house has grown to 684,000. With the government subsidy of AUD 5,000 for investors, the profit will be two years of tuition. If you later use this house for self-occupation and pay a loan that is similar to the rent, you will get a house.
If you rent this house to offset the loan and sell it in a year when house prices are high, you will get a large capital gain. If you live in it yourself, you can also rent out the master room of this house. Go out and live in a small room by yourself, and increase the rent for tenants every year (the loan will not increase with the house price). Not only will you save your own rent, but you will also get capital gain when selling the house. Of course, in such a professional country, you must You need to find a professional broker to help you realize the loan, a professional lawyer to protect your maximum rights, and a professional accountant to help avoid taxes.
5.3 Only pay interest
Australian banks allow home buyers to only repay the loan interest (interest) and not the principal (principle)! Why can I only pay interest? Referring to the issue of property rights above, the right to use a house in China is 70 years, so of course the money must be paid off within the period of use of the house, otherwise wouldn’t it be in vain? Houses in Australia are private property, that is, forever, indefinitely, so you can pay it off whenever you want!
First, since purchasing real estate is an investment, maximizing benefits and minimizing risks is our pursuit. Investors are divided into risk preferences and risk aversions, and their confidence in investment projects varies. If you are not confident, invest less and put the extra money in your pocket. If you are very confident, it is better to use the pay-off money to buy a few more properties in other areas, which can maximize benefits and spread risks.
Second, paying only interest can also maximize annual book losses and refund as much tax as possible. On the contrary, what should I do if the rental income exceeds the depreciation after pay-off? Not only can’t you get a tax refund, but you also have to pay taxes on investment profits!
You can also apply for an off-set account from the bank, put your house payment into it, and the bank will automatically withdraw money from it every month. It is interest-free because interest on deposits and interest on loans cancel out. The advantage is that the off-set account is your own account and you can withdraw money at any time. As long as the original amount is deposited back before the end of the month, there will be no loan interest.
5.4 Refinancing
When house prices rise, for example, a house priced at 600,000 rises to 700,000, then you can use the 100,000 increase to apply for refinancing from the bank. Use this "invisible" 100,000 as the down payment for the second house and buy the second house "for free". By analogy, you can apply for refinance from the bank every few years and easily embark on the right path of investment and financial management. This is the Western version of the story of a hen laying an egg and the egg turning into a hen. In developed countries, the chance of getting rich overnight is very low. Huge wealth is often accumulated slowly through the efforts of several generations. With the correct investment philosophy, everyone can live a good life.
6. Different trading systems
Australia has a short history, but its system is very strict, and most of it follows the British tradition. This is reflected in various sectors, including the home buying and selling market. For example, the third-party system. The owner Vendor and the buyer Customer will not meet each other, and the entire buying and selling process will be completed through a third party - the intermediary Agency. With the cooperation of the buyers and sellers' lawyers, the intermediary exchanges contracts for both parties. Of course, a series of tedious tasks such as contacting lawyers and inviting brokers to help with loans can also be entrusted to intermediaries. Even, because the intermediary has a large bargaining power (gathering buyers, equivalent to group buying), sometimes it can seek benefits for buyers from developers.
When it comes to intermediaries, Chinese people tend to get angry. This is due to the various irregular and unethical behaviors of domestic intermediaries and the lack of effective legal mechanism for supervision. In Australia, the situation is completely different. If you want to enter the real estate market, even if you just do the job of holding keys and showing people the houses, you need a professional qualification certification (RealEstate Registration Licence).
As the position is promoted, the rights become greater, and it is mandatory to undergo re-education in relevant courses and obtain various certificates.
The entry-level License mainly trains professional ethics and legal knowledge. The course lasts for one week, plus the examination until Fair Trading issues the license, it will take two to three months in total. The cost of formal training is about 700 Australian dollars. There will be many case studies in the class, probably all of which say that this business is very dangerous, you may be sued at any time, and anything you say may be used as evidence in court. Don't exaggerate and say things you don't understand. There are some things that are not allowed to be left unsaid. Disclosure is very important. For example, if someone has died in the house, the sewer will be blocked, and a house should be built next to block the light, you must say it. Otherwise, the intermediary is the sole responsible person. After an agent joins a company, there is often a training period of three months to six months, because modern people have increasingly higher requirements for agents. They must not only master real estate knowledge, but also have an understanding of finance, economics, structure, materials and even Feng Shui.
The process of buying a house in Australia is also different from that in China. Real estate projects in Australia usually start selling after being approved by DA (development approval).
The developers sell the houses as they build them, and the more they sell, the more expensive they become. By the time the houses are built, they are almost sold. So if you want to buy a new house at a suitable price, what you often see is the building model, simulation drawings, floor plan and construction site...pay a certain amount of deposit first, and then pay 10% of the house price (the 10% down payment will be directly deposited into the lawyer No one has the right to use the trust bank account, which to a large extent avoids risks for home buyers). After it is built, you pay 10, and then you can see what your house actually looks like. Based on the above procedures, it is better to buy a property in the early stage of the project than in the later stage because there are more floors and unit types to choose from, and the developer will also give some good preferential policies.