1. Market Price: The Listing or Market Value

Definition:
The market price is what the house is worth on the open market. It reflects the latest sale prices for similar properties in the area.

Why It Matters:
This is the starting point for negotiations. It also indicates the general level of house prices in your target suburb or city.

Tips for Buyers:

• Use recent sales data from sources like CoreLogic or realestate.com.au.
• Consider current market conditions—are prices rising or falling?
• Get a professional property appraisal if needed.

Real-Life Example:
If similar homes nearby sold for between $800,000 and $850,000 in the last three months, that range is a good indicator of the market value.

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2. Purchase Price: The Actual Deal

Definition:
The purchase price is the amount you agree to pay when buying the house. It’s usually negotiated between buyer and seller.

Factors Influencing Purchase Price:

• Market demand
• Property condition
• Timing (e.g., auctions or private sales)
• Your ability to pay or finance the purchase

Important Considerations:

• In Australia, contracts are subject to conditions like finance approval and building inspections.
• The buyer typically pays a deposit—around 10%—upon signing the contract.

Overseas Buyer Tips:

• Currency fluctuations can affect your purchase price if paying in foreign currency.
• Ensure your funds are accessible locally, or plan for remittance timings.

Example:
After negotiations, you agree to buy a house valued at $820,000 for $800,000, perhaps due to quick settlement needs or seller motivation.

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3. Lender’s Price: What the Banks Will Provide

Definition:
The lender’s price, or the amount a bank or lender is willing to lend, often differs from your purchase price.

Understanding Loan-to-Value Ratio (LVR):

• Australian lenders typically lend up to 80% of the property's value for residents, or lower for some visa types.
• For example, if the house is valued at $820,000, an 80% LVR means the bank will lend up to $656,000.

Why It Matters:
Your borrowing capacity directly affects what you can afford and whether you need Lenders Mortgage Insurance (LMI).

LMI (Lenders' Mortgage Insurance):

• If your deposit is less than 20%, lenders will require LMI, which protects the bank, not you.
• LMI costs can range from $5,000 to over $20,000 depending on your loan size and deposit.

Your Role:

• Confirm your deposit source: savings, overseas funds, gift, or employer assistance.
• Understand how much you can borrow based on your income and financial situation.

Tip:
Applying for pre-approval can help you understand your borrowing limit before shopping.

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4. Ownership Price: The Ongoing Cost of Holding the Property

Definition:
Ownership price includes all costs associated with owning the property after purchase.

Major Components:

• Stamp Duty:
  One-time state government tax paid on settlement. For example, on a $800,000 house in NSW, expect around $30,000.

• Legal and Conveyancing Fees:
  About $2,000-$4,000 for legal services to transfer ownership.

• Council Rates:
  Annual charges for local services—roughly $1,000-$2,000.

• Strata Fees:
  If buying an apartment, these cover building maintenance—typically $4,000-$8,000 annually.

• Land Tax:
  Paid annually if the property is an investment, depending on your state thresholds.

Why It Matters:
These ongoing costs impact your monthly budget and long-term affordability.

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5. Long-Term Price: The True Cost Over Time

Definition:
The long-term price considers factors like interest, inflation, and property appreciation.

Interest Costs:

• YOUR mortgage repayments depend on loan amount, interest rate, and term.
• For instance, a $650,000 loan at 5% fixed over 30 years results in approximately $3,500 monthly payments.

Property Appreciation:

• Historically, Australian properties have appreciated 3-5% annually.
• Over 10 years, this can significantly increase your property's value.

Inflation Impact:

• Money loses value over time; inflation can erode purchasing power.

Scenario:
Suppose you buy a house for $820,000 with a 20-year mortgage. Over time, your total paid interest could add up to over $350,000, depending on rates.

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Cross-Cultural Perspectives and Practical Tips

Many international buyers face unique challenges, such as converting overseas savings into AUD or understanding local mortgage rules.

Document Requirements:

• Proof of income (pay slips, tax returns)
• Identification (passport, visa)
• Proof of deposit source (bank statements, gift letters)

Deposit Sources:

• Australian lenders prefer funds to be from local or clearly documented overseas accounts.
• Be prepared to explain how your foreign deposit was accumulated or remitted.

Visa and Eligibility Considerations:

• Some lenders require you to hold a certain visa type.
• The Foreign Investment Review Board (FIRB) approval is necessary for non-residents and some temporary residents.

Real-World Advice:

• Convert your savings early to avoid currency fluctuations.
• Seek lenders experienced with international clients.

Quote to Remember:
"Knowledge of all five prices helps you see the full picture, ensuring smarter investments and fewer surprises."

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Final Thoughts

Understanding the five prices of one house—market, purchase, lender’s, ownership, and long-term—gives you clarity and confidence. From evaluating market conditions to managing ongoing costs and long-term financial planning, each price plays a vital role in your property journey.

Whether you're buying your first home, upgrading, or investing abroad, remember: informed decisions lead to successful property ownership. And with over 20 years of experience helping migrants and international clients, I can assure you that clarity and preparation are your best allies.

Start with knowledge, and let your property journey be a successful one!