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Melbourne is one of the best cities to invest in if you’re looking to buy an Australian property, with many affluent suburbs set to grow throughout 2023. If you’re interested in the Melbourne property market, read on to discover the best suburbs to pay attention to in 2023.

Key Takeaways:

• Melbourne’s property market will likely stagnate throughout 2023 because of climbing interest rates.
• The median house price for properties in Melbourne CBD is $901,000.
• Elsternwick, Bentleigh, and Hampton are some of the best suburbs in Melbourne to invest in.

What is the state of the Melbourne property market?

While other housing markets suffered because of the pandemic, the Melbourne property market rose by 25% from 2020 to 2021. However, with higher interest rates hitting in 2022, the previous momentum in the Melbourne market has decreased.

Since June 2022, housing prices have fallen by around 2%. They are expected to stay largely the same in 2023, thanks to an oversupply of property and climbing interest rates.

It’s unlikely that new housing will be built in and around Melbourne CBD in 2023 because of the number of properties on the market and a lack of demand for new housing.

What is the median house price in Melbourne CBD?

In the latest June 2022 quarter, the median house price for Melbourne homes increased by 0.1%, reaching $901,000. Within Melbourne CBD, prices increased by 5.4% for houses.

What is the average rental yield for a Melbourne property?

You can expect an attractive rental yield from Melbourne properties, with the average house achieving 3.6%. The median rent currently sits at $420 a week, a 19%-21% rise from 2021.

Rent in Melbourne and its surrounding areas is expected to rise further throughout 2023 as demand increases and house prices surge. You can expect an attractive rental yield if you’re looking to invest in a Melbourne property.

The nine best suburbs of 2023

So, if you’re keen to invest in property, you’ll need to know the most popular and profitable Melbourne suburbs. There are over 1,000 suburbs in and around Melbourne, each attracting steady buyer demand.

Here are the best suburbs to invest in, in Melbourne for 2023.

Elsternwick

Elsternwick is a desirable suburb for young families in Melbourne’s CBD with a beautiful beach, sought-after schools, and attractive shopping centres. There are a few remaining Melbourne locations with the same amenities as Elsternwick.

Elsternwick has seen massive growth over the past decade, with property growth of 13.66 per cent. The median house price is currently $2,200,000.

Bentleigh

Bentleigh is one of Melbourne’s most high-demand areas, with excellent transport links and links to major shopping centres such as Southland and Chadstone. Mainly housing young couples and families, there are plenty of schools in the area as well as parks and local shops.

The median house price for Bentleigh is $1,490,000, up by 1.5 per cent. The property market is likely to rise even further throughout 2023.

Hampton

Close to the popular (and expensive) suburb of Brighton, Hampton sits alongside the beach and has fantastic amenities, including bars, restaurants, and shops. Hampton is one of the more prestigious suburbs in South East Melbourne, with a booming property market.

The median price for a Hampton home is $2,555,000.

Melton

Melton is an outer North Western suburb of Melbourne and is one of the best options for property investors.

With a price growth of 68% in the last five years, Melton has seen significant property investment, with strong capital gains, a high rental yield, and low tenancy vacancies.

Although Melton previously had a questionable reputation, investment has seen the implementation of a train line to the city and many parks and amenities. With affordable apartments, Melton attracts a younger crowd.

The median sale price in Melton is currently $500,000, making it one of the best suburbs to invest in.

Ascot Vale

Located in North Melbourne, Ascot Vale is one of the main inner city suburbs. The property market in Ascot Vale is booming thanks to its easy access to the city, outdoor spaces and sprawling golf courses.

Ascot Vale is also one of the more affordable outer ring precincts available on the affluent North Melbourne market. The average house price is $1,300,000.

Box Hill

Just 20 kilometres from Melbourne’s city centre, Box Hill has become a sought-after location for first home buyers. It’s one of the best inner-city suburbs with a bustling centre, superb amenities and schools.

Box Hill is an up-and-coming area, with a median sale price of $1,725,900 and unit prices averaging $492,500.

Glen Waverly

Glen Waverley is home to thousands of young families and professional couples, boasting a low crime rate and access to prestigious schools. There are lots of career opportunities within Glen Waverly, including the Victoria police training academy, as well as the Woolworths distribution centre and major corporate parks within the area.

This is one of the best suburbs to invest in thanks to its attractive local amenities such as the Glen Waverley golf course, the Glen Waverley railway station and a major shopping centre (Glen shopping centre).

The median price of homes in Glen Waverley is around $1,600,000, increasing rapidly over the past decade.

Dallas

Dallas is one of the coolest suburbs in North Melbourne and could be an affordable and profitable location for your next investment property.

This Melbourne suburb has a thriving population with easy access to the city and many local shops, bars, and restaurants.

While Melbourne’s North quarter isn’t cheap, the Dallas suburb has a median property price of just $488,000, making it one of the most affordable in the area.

Epping

Epping is located just 20km from the city centre, is home to the Melbourne wholesale markets, and is known for its bushland and expansive orchards. This area is popular with expanding families looking for a quiet, peaceful suburb.

The median price of an Epping home is $675,000, having seen significant price growth over the past five years. Epping is, therefore, a fantastic place for property investment.

Consult a Lendstreet Mortgage Broker

At Lendstreet, we give you tailored advice on your next investment. Consult one of our professionals today if you want to sell your Melbourne property and take out an investment loan or discuss refinancing options.

You can also reach us through our Melbourne office contact details below.

Address: 10-20 Gwynne St, Cremorne VIC 3121, Australia
Phone: 1300 317 042
Email: support@lendstreet.com.au

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FAQs

How much does property cost in Melbourne?

The average house price in Melbourne is $901,000.

Will house prices drop in 2023 in Melbourne?

House prices are unlikely to drop in 2023, though prices will not see as much growth. Experts predict that prices will rise from 3% to 7%.

Is it a good time to buy property in Melbourne?

House prices are unlikely to increase throughout the year, so it’s a potentially good idea to buy property in Melbourne in 2023. However, the rental market is set to decline due to an increase in rental properties in the area.

The post Best Suburbs in Melbourne to Invest in 2023 appeared first on Lendstreet.

The post Property Investing Guide 2023 appeared first on Lendstreet.

• A recent house price surge could make this the best time to sell.
• Take advantage of the pricing boom and make a great profit when selling!
• Seek better investment opportunities to invest in.
• Remove poor investments from your portfolio.
• Capital gains tax discount of 50% on for property ownership over 12 months.

Home prices have increased by 24% across Australia in the last year! Selling your investment property with real estate agents now could be a clever manoeuvre, taking advantage of the crazy housing market!

Now may be the best time to sell your investment property on the local market. Although, this depends on your circumstances and the property in question.

So, when should YOU sell your investment property?

Why have you invested in property?

Have you invested in property to make a serious profit? Or, have you fallen into property investment due to unforeseen circumstances?

People invest in property for many diverse reasons. You may possess an extensive portfolio of properties and work as an investor as a full-time job. You could be a professional landlord with no intention of selling your investment properties.

Perhaps you are a fix and flip investor, renovating rundown properties and selling immediately for a profit? Or, maybe you own one or two investment properties through inheritance or need to relocate?

Your overall goals will dictate when you should sell your investment property.

Why should I sell my investment property?

Sell your investment property to make a generous profit! Investment real estate is a tangible asset whose value could increase by tens of thousands of dollars or more!

However, there are many complex reasons you may want to sell your investment property.

Investment Opportunities

You may want to sell your investment property to access the money held in the asset. Perhaps you have spotted a guaranteed investment opportunity on the horizon that you need to grab hold of?

You will need to draw together all available funds to finance this new venture. Consider the costs involved in selling an investment property such as capital gains tax. Capital gains tax may be payable if you have made a profit.

A property investor will also need to pay estate agent fees and legal costs when selling your investment real estate.

You must additionally consider the costs of purchasing your new investment venture. You will have to pay stamp duty and legal and conveyancing fees for a new investment property.

Negative Gearing

If your investment real estate is not making you any money or losing money from the rental income, it is a negatively geared property.

You may be comfortable with the situation in the short term if you believe the situation may change shortly. If the housing market booms, you may be able to charge a higher rent eventually for rental properties.

However, you may decide that it is time to sell the investment property and cut your losses. Selling your investment real estate will release you from a negatively geared investment, enabling you to channel your money elsewhere.

Negative gearing does hold some advantages for investors, with tax deductions featuring as a high benefit for investors. Professional investors see this as a positive feature to capitalise on in the short term.

Stagnant Housing Market

Following the trends of the local housing market is vital for sophisticated property investors. You must know the forecasted market changes and the predicted price increases and decreases.

If your real estate investment has no potential growth for the foreseeable future, selling could be a wise move.

Recent Price Rise

If there has been a recent lift in housing market prices, you could take advantage of the increase and cash in! Selling your property now may ensure you make a tidy profit to improve your bank balance.

Forecasted Market Fall

Oppositely, if a housing price crash is predicted, selling your real estate investment may provide you with an early escape route! A housing price crash may decrease the property’s value so you cannot sell for many years.

Investor Strategy

A prolific investor wants to keep expenses low to maximise their potential profits. You may purchase investment properties with interest-only home loans to minimise ongoing costs.

Once the market has picked up, you aim to make a profit from the price rise by selling the property. A successful investor will strategise their buying and selling of properties in this way for the highest profit.

Why should I hold on to my investment property?

If you are making money from your investment property, hold on to it for a while! Some investment properties can provide long-term benefits and make you a small fortune.

Recent Purchase

Was the purchase of your investment property a lengthy, expensive process? You may want to defer the thought of selling the property for a while to recover the costs incurred. There will be further costs to sell the property, particularly capital gains tax if a profit is made.

It is also possible to reduce the amount of capital gains tax payable. Capital gains tax is reduced to 50% of profits made if you have owned the property for over 12 months.

Positive Gearing

If you are making money from the rental income after expenses, why would you sell?

Positively geared investment properties are not that common, so you should value such an investment kindly. Investment properties in a great location and close to schools will always have tenants queuing up to sign!

Will I pay Capital Gains Tax on an investment property?

Capital gains tax is payable when you sell your investment property if you have made a profit. Although, if you have made a loss once you sell an investment property, you will not have to pay capital gains tax. You can offset the loss against a capital gain in the future.

You may be eligible for capital gains tax discounts to reduce the amount of money you pay. If you have owned the property for over 12 months, a 50% discount may be granted. This means you will only pay tax on 50% of the profits you make when you sell the property.

For this reason, many investors in Australia will wait a minimum of 12 months before selling their investment property.

Should I sell my investment property before retiring?

Selling your investment can release the money tied up in the asset, providing a very comfortable retirement! You may also be grateful to remove the hassle of selling the investment property in the future, once you have settled into retirement.

However, you may decide that a regular monthly amount from a rental property is a better option than a lump sum. Holding onto the investment property could provide you with regular security and a sum of money to rely on.

How can I sell my investment property?

To sell your investment property, first, contact a professional valuer and secure an official property value. You can request a free appraisal from an estate agent before the valuation, providing you with an estimated property value.

Once a formal valuation has been attained, your local real estate agent will list the property for you. You will then have to wait for the perfect buyer to buy your investment property!

How much does it cost to sell my investment property?

There are several costs to consider when selling your investment property, the main cost being capital gains tax.

Consider the following costs and fees when considering selling your investment property: .

What are the pros and cons of selling an investment property?

Selling an investment property can take some time and effort, with a great return at the end to look forward to!

Here are the pros and cons of selling your investment property: .

Pros

1. Release equity from the property.
2. Take advantage of a booming property market and capital growth!
3. Beat a predicted property price crash!
4. Secure 50% capital gains tax discount for property ownership over 12 months.
5. Eliminate negative gearing.
6. Remove an underperforming property from your portfolio.
7. Invest in better investment opportunities.

Cons

1. A recently bought property will not receive capital gains tax discount.
2. Positively geared investments should be kept hold of.
3. You may face losing money in the long term if the house price increases.
4. Real estate investment requires property management.

When should you let an investment property go?

The wisest time to sell investment property is after the pricing boom! The Australian property market has surged in prices, so capitalise and make a substantial profit. Improve your cash flow and take advantage of capital growth!

However, ensure you have owned the property for over 12 months to acquire a 50% discount on capital gains tax.

Contact Lendstreet for expert advice!

Lendstreet has a team of specialist brokers able to offer you tailored advice regarding your investment property.

Perhaps you want to sell your investment property and secure an investment loan for a new property? Or, do you want to keep your investment property but discuss refinance options with a Lendstreet professional? Receive a free property report today and see how much you could save when switching!

Whatever your circumstances, contact Lendstreet today for no-obligation professional advice! Remember, we secure our fee from the lender, not the borrower. Our expert service is completely free for you to use!

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FAQs

When to sell investment property?

Selling an investment property depends on your personal circumstances and regional markets. Has your area experienced a property boom, price growth, or a declining market?

Outside factors may be responsible for the price of the property stagnating for a long time. People sell a passive income when the time is right and when financial freedom is possible.

Do I have ongoing costs to pay on a rental property?

Property investors will have ongoing costs to consider on rental properties. Costs include, but are not exclusive to, council and water rates, landlord and building insurance, and land tax.

You will also have to pay property management fees if you hire a property manager. A property manager will ensure your tenants are reliable and pay the rent on time. You will still have to pay for any maintenance costs to the property, which may harm your cash flow.

Can I receive capital gains tax exemption?

No, there are no exemptions for capital gains tax. Any profit you make on an investment property is taxable income.

If you have owned the property for over 12 months, the assessable income will be reduced to 50%. This means if you have made a $100,000 profit from the sale process of a property, only $50,000 will be taxed.

Sophisticated investors seek professional advice and secure an interest-only mortgage with low-interest rates for investment properties. Future growth will be determined by the regional or city market and will represent actual capital growth. This reduces the profit made on the property and therefore reduces the capital gains tax.

Is it worth keeping investment property?

If you are making a profit after expenses every month from your rental property, then this is a better investment than some! If your vacancy rates are low and you have reliable tenants, then it may be worth keeping your investment property.

After a few years, most investors will witness an increase in growth of capital value and may decide to sell.

However, if you want to keep your investment property yet need extra money, seek professional advice from Lendstreet! Lendstreet’s expert brokers can present a range of refinancing options for you to consider.

Schedule a call to one of our expert mortgage broker

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The post When Should You Sell an Investment Property? appeared first on Lendstreet.

• Property investing is a low volatility market.
• Always research the area and rental potential of a property.
• There are many costs to consider when buying and selling an investment property.
• A mortgage broker can provide professional advice on property investing.
• Gain insight on investment property loan options.

Did you know over 2 million Australians own an investment property? Rising rental prices are enticing the average Aussie into investing in real estate, contributing to a secure future for their families.

What steps should you take when considering real estate investment? How easy is it to invest? Purchasing a property can be a daunting process, even for experienced investors!

Here is everything you need to know about buying an investment property.

Why should I invest in real estate?

Real estate is a market that will always be with us. After all, everyone needs a home today and in the future!

Despite property price booms and rare property price crashes, real estate is a reliable investment. It is not as volatile as other types of investment opportunities, although there is always a risk involved.

Renting the property to tenants will provide you with a regular income. You may be able to raise a high enough rental price to cover the mortgage repayments, minimising your regular costs.

Which investment property should I buy?

You should buy an investment property in a popular location, close to amenities, and where there is potential for growth. You want your property to be tenanted consistently and hopefully experience a rise in property price over time!

You must do your research! What are the current market trends in the area? Have you checked any local housing market indicators?

It is vital to remember that an investment property is precisely that: an investment! Buying a home you would like to live in is not a good strategy for real estate investors. You must be focused on achieving a positive monetary investment and maximising capital growth.

To discover your perfect real estate investment, consider:

1. the local area and market trends
2. recent property sales prices
3. locations close to universities, hospitals, and schools.
4. suburb demographics and local amenities
5. how quick the local properties sell

Still not sure which location to invest in? Read Lendstreet’s Suburb Reports for up-to-date insights into the best Aussie suburbs and their investment potential!

How can I invest in property?

If you have a good credit history and are ready to put down your deposit, you can invest in property! Follow these easy steps to secure your property investment:

1. Assess your financial stability

Can you really afford to purchase an investment property? Work out how much you could comfortably pay for a property and how much deposit you will have ready. Remember that buying any property is a risk.

Ideally, you will have a 20% deposit at your fingertips, opening up better interest rates and favourable deals. A 20% deposit will mean you do not have to purchase Lenders’ Mortgage Insurance to cover the lender’s interests.

As well as the investment loan repayments and the initial deposit, there are additional costs to remember. Have you considered stamp duty fees, conveyancing fees, and inspection fees? You should also prepare for any rising interest rates to protect your financial situation and cash flow.

Always include a healthy contingency budget to cover such costs and anything unexpected.

2. What are you hoping to achieve?

Be clear about what your plans are for this investment property.

Are you hoping to rent out the property long-term, with a buy and hold property? Or are you looking for a short-term investment, perhaps a fix and flip property to make a quick profit?

3. Visit a mortgage broker

Contacting an expert mortgage broker is an important step for any potential investor. You can secure the latest advice and guidance for property investors in your area.

You can also provisionally apply for an investment property loan and find out what your repayments are likely to reach. Your professional broker can explore interest only and principal and interest investment property loans. Discover the best deals for your circumstances!

You can secure a pre-approved investment loan with your mortgage broker. Cement your investment decision and know exactly what property price range to search for.

4. Find an accountant

Discuss with an accountant the tax implications involved in purchasing an investment property.

Make sure you are aware of any additional costs you may be liable to pay. This includes fees payable now and later if you decide to sell the investment property in the future. An accountant will provide you with the latest insights from your state or territory.

5. Talk to a conveyancer

A qualified conveyancer can inform you about any legal fees and requirements. Arranging an experienced conveyancer before agreeing to a property purchase means that all steps are in place.

The purchase of the property should be effortless, whilst you know exactly what to expect!

6. Find the perfect investment property

With all steps in place, you can now begin property hunting! Make sure to search for properties with your head and not your heart.

You need to choose a great property as a secure financial investment, not a home you would like to move into.

7. Manage your investment property

So, you have bought an investment property and have some great tenants due to move in! However, your obligations to the property do not end there. Investment properties are long-term commitments and require around-the-clock management.

You could hire the services of a property management company that would oversee the day-to-day running of the property. A periodic fee would be charged for this service, although you would be relieved of most of the management duties.

How much would it cost to buy an investment property?

The cost of your investment property will depend on the property price and the state or territory you reside in.

As standard, a sizeable deposit and a significant stamp duty fee will be payable when buying an investment property. You will also need to pay conveyancing and legal fees, along with search fees and pest and building control report costs.

You will need to consider the following costs when buying investment properties:

Will I have to pay ongoing costs for my investment property?

You will need to pay several ongoing costs for your investment property. Some costs may be included in the rental price, although this depends on your contractual agreement with the tenant.

A property management company may also include some ongoing costs in their fee.

You will have to ensure that the following costs are paid:

Will I pay tax on my rental income?

If your investment is positively geared, you will pay tax on the income your receive from rent.

A positively geared investment is when you have surplus rent after your expenses and interest have been paid. You will have to pay tax on the surplus rental income.

How much would it cost to sell an investment property?

You need to pay capital gains tax when selling an investment property, providing you have made a profit. This is in addition to the standard costs of real estate fees, legal costs, and advertising costs that are payable.

Capital gains tax is part of your income tax. Any profits you have made from selling an investment property will be taxed. However, Australians who own the investment asset for over 12 months only need to pay tax on 50% of the profit.

Consider these costs if you want to sell an investment property:

What are the pros and cons of buying an investment property?

Still not sure whether you want to buy an investment property? Here are the pros and cons of becoming a real estate investor in Australia.

Pros

1. If you want to invest money, property investment is a low-volatility market, perfect for a beginner!
2. Anyone can invest in property if they have the finances to do so. No special training or qualifications are required at all!
3. You can predict what to expect in the property market. Prices gradually rise, but every so often decline.
4. An investor can make a reasonable price rise in a short-term investment, or create a considerable nest egg with a long-term investment.
5. Over time, you may achieve capital growth, although this depends on the property market and local trends. If you retain an investment property for many years, you should experience a good capital growth increase.
6. Renting the property to a tenant may cover all costs, such as loan repayment and property management costs.
7. In higher geared investments, you may have surplus income from the rent after expenses have been paid.
8. You may be able to offset expenses for your rental property against the rent you receive, resulting in tax deductions. You could include repayment loan interest with these expenses.
9. You could give up your day job and become a full-time property investor! If you have the finances to do so and make the right decisions, there is nothing stopping you!
10. Investing in property leaves you with a tangible asset!

Cons

1. If you want to invest money, property investment is a low-volatility market, perfect for a beginner!
2. Anyone can invest in property if they have the finances to do so. No special training or qualifications are required at all!
3. You can predict what to expect in the property market. Prices gradually rise, but every so often decline.
4. An investor can make a reasonable price rise in a short-term investment, or create a considerable nest egg with a long-term investment.
5. Over time, you may achieve capital growth, although this depends on the property market and local trends. If you retain an investment property for many years, you should experience a good capital growth increase.
6. Renting the property to a tenant may cover all costs, such as loan repayment and property management costs.
7. In higher geared investments, you may have surplus income from the rent after expenses have been paid.
8. You may be able to offset expenses for your rental property against the rent you receive, resulting in tax deductions. You could include repayment loan interest with these expenses.
9. You could give up your day job and become a full-time property investor! If you have the finances to do so and make the right decisions, there is nothing stopping you!
10. Investing in property leaves you with a tangible asset!

Visit Lendstreet for professional investment property advice

Lendstreet’s expert mortgage brokers can guide you every step of the way on your investment property journey. Gain an insight into the best Aussie suburbs to invest your money in!

Lendstreet’s specialist brokers will find your perfect investment loan opportunities, taking the pressure away from you! Possessing an Australian Credit Licence, you can trust Lendstreet’s advice!

Contact Lendstreet today and become a successful property investor!

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FAQs

Do property investors achieve capital growth?

If the value of the property increases, the property investor will achieve capital growth. However, this is determined by the property market and is out of the property investor’s control.

You can try to buy an investment property once prices have crashed and declined from previous values. The property market will eventually experience a price rise once again, and you should see the value of your investment increase.

Is property a good investment?

Generally, property is an excellent area to invest in. However, outside factors such as the property market and interest rates affect this.

Research the property and the local area thoroughly to make the correct purchase. You should then be able to invest wisely and ensure that property investment is a good choice to make.

Do I need a property manager?

No, you don’t need a property manager for investment property buying. You can manage your investment property yourself if you have the time and the experience to do this successfully.

A good property manager will take care of the day-to-day operation of the investment property in return for property management fees. You will have less to do, and the managers will collect rental income for you. Although, you will still be liable for maintenance costs and other expenses.

Can I buy an investment property with a standard home loan?

No, if you are purchasing an investment property, you must apply for the correct financial product. Investment loans are perfect for property investment and work to benefit the investor.

Lendstreet’s expert mortgage brokers can tailor the best loan package for you and your financial situation. Their specialist service is free for you to use as Lendstreet receives its fee from the lender! Contact Lendstreet today for free advice!

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The post Everything You Need to Know About Buying an Investment Property appeared first on Lendstreet.

Read on to find out the typical costs involved when selling a house in New South Wales, so you don’t face any hidden costs.

What costs will you face when selling your house?

Buying and selling property involve far more expenses than simply transferring money between purchaser and vendor. What are the various costs you can expect to pay throughout the selling process?

1. Repairs and maintenance
2. Marketing costs
3. Real estate agent fees
4. Solicitor fees
5. Lender fees
6. Taxes, such as Capital Gains Tax
7. Mortgage discharge fees
8. Auction fees

Moreover, if you’re selling a house, you’re probably purchasing another property elsewhere. This means you’ll also get hit by stamp duty, land tax, home loan application fees, and moving costs. To lessen the expense of your new home, speak to a Sydney mortgage broker about your home loan options.

There’s no doubt that moving home is expensive. However, the overall expense is worth it if the result is living in your dream home.

Conveyancing Fees

A conveyancer is in charge of transferring legal ownership of the property from the seller to the buyer. There’s no escaping this cost. Licensed conveyancers or solicitors must complete this in every real estate purchase; it’s best to approach local conveyancing services. They’re more likely to understand local knowledge and recognise issues.

Conveyancers oversee all legal aspects of the home selling process. They can also help arrange inspections and land surveys.

There is no exact cost to conveyancer’s fees, and it’s hard to predict what you will pay. The individual circumstances of the buyer and seller and the property specifics impact legal fees. Even though your conveyancer might advertise a flat fee, you should expect to pay more for additional work.

Estimated Cost of Conveyancing

Vendors could expect to pay anywhere around $500 to $3000. The broad range accounts for more complex cases. Generally speaking, you may pay about $1,000 in New South Wales.

Marketing Costs

To sell your house, you need to organise a marketing campaign. While the real estate agent organises the home selling process, the vendor covers the marketing cost. Your real estate agent might recommend a marketing campaign, which includes a sign at the front of the house, online advertising, professional photography, floor plan, copywriting, and press advertising.

The amount you spend depends entirely on you. A DIY marketing campaign could cost relatively little. Creating your own sign and advertising in local papers could be pretty cheap. However, you could hire an experienced marketer to do the job, which would understandably cost more.

Estimated Cost of Marketing

Each property is unique. Marketing fees depend on the seller’s budget, the property, and the real estate agent. In Sydney, you might pay between $100 and $3,500. You can adjust the marketing fee to suit your budget. But remember, the better the advertising, the more likely you’ll make a good sale.

Real Estate Agent Fees

Real estate agent fees include a flat fee and a commission. The flat fee is an agreed fixed fee between the vendor and agent. The real estate agent’s commission is a percentage of the final sale price.

Furthermore, some real estate agents might use bonuses. Essentially, they agree to a percentage-based bonus if the property sells for an agreed amount. It could be 10% of the amount above the agreed reserve. For example, if a property value of $1 million sells for $1.1 million, the real estate agent pockets $10,000 as a bonus.

Estimated Cost of a Real Estate Agent

Real estate agents charge between 1% to 3% commission, depending on the property value and competition. Plus, a potential 10% bonus on an amount above the agreed reserve. With a property value of $1 million, this could equal $15,000 for the commission plus a bonus of $10,000.

You will also need to pay about $500 towards auction fees.

Lender Fees

If you have a home loan on your current property, you might need to pay your lender a mortgage discharge fee or early exit fee. The discharge process should take between two to three weeks. Fortunately, Australia banned exit fees in 2011. However, if you purchased your property before then, you might have to pay exit fees.

Moreover, even though exit fees are banned, lenders still charge for terminating your contract early. Some lenders also charge break costs. If you have a fixed-term loan, the lender might charge you for the money it would have earned if the loan runs to full term. You may want to speak to your lender about potential mortgage discharge fees.

Estimated Cost of Lender Fees

Mortgage discharge fees range between $150 and $1500 depending on your loan agreement and lender.

Renovation, Repairs, and Styling Costs

Most houses require renovations and repairs before selling. Unless you plan to sell a fixer-upper, you’ll need to complete some basic maintenance and minor repairs. It depends on the state of your home. It could range from a few hundred to tens of thousands of dollars.

Plus, more and more Australians are ‘staging’ their home. To ensure they get the best sale price, vendors are staging their homes to look attractive to potential buyers. You want to do all you can to encourage buyers to increase their offer.

This could include anything from a lick of paint to strategically placed flowers. It could make all the difference. You can hire professional home stagers or do it yourself.

Remember to consider the capital gain. For example, if you spend $20,000 ripping out your kitchen and installing a new shiny one, how much will this add to the overall selling price? If it only adds $20,000 to the property value, it’s not worth the effort.

Estimated Cost of Renovating and Styling

Pre-market repairs typical expenses could cost anywhere between $100 to $30,000 and up. Professional styling could cost between $2000 and $8000.

Capital Gains Tax

The Australian Tax Office charges Capital Gains Tax on the profits from a property sale. Capital gains are added to your overall taxable income and paid at the tax rate for your threshold. Remember to deduct all other property-related expenses from your capital gains to reduce your taxable income.

However, Australian residents are eligible for the CGT main residence exemption. You do not have to pay CGT if you sell your home after living in it for 12 months.

Estimated Cost of Capital Gains Tax

Most property capital gains will push you into the top tax bracket, meaning you’ll pay 45% capital gains tax.

Example Cost of Selling a House in Sydney

Let’s look at an example of all the real estate fees you might pay when selling a house.

Ellie sells investment property in Sydney for $1.8 million, making a capital gain of $500,000. She may expect the following costs

1. Legal fees: $1,000
2. Marketing costs: $1,000
3. Real estate agent’s fees: $27,000 commission plus $30,000 bonus.
4. Lender fees: $500
5. Repairs and renovations: $1,000
6. Home staging: $3,000
7. Capital gains tax: $195,667

Overall costs of selling: $259,167.

Of course, you could do it far more cheaply – or more expensively. Capital gains tax is the primary driver of expense in Ellie’s case. If she were to sell the same property as her principal residence, the total cost would be $63,500.

Bottom Line

Selling a property is almost as costly as buying one. However, you can reduce the overall expense by making smart decisions and opting to DIY a lot of the work, such as home staging, renovations, and marketing.

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FAQs

What are the steps to selling a house?

You’ll need to prepare your house for selling, completing repairs, and maintenance. Then, find the right agent and conveyancer to complete the sale process. Finally, determine the property value and asking price.

What costs are involved in selling a house?

When selling a house, vendors might expect to pay legal fees, real estate agent fees, marketing costs, lender fees, and home staging costs. You might also need to pay Capital Gains Tax.

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