What to Know About Buying Property Interstate

Thinking of buying property interstate? Whether you’re purchasing a home to live in or looking for a new investment property interstate, our guide will provide you with research, information on getting finance, state-specific costs, and the importance of protecting your property financially. Buying a new home can be an overwhelming process, especially when you’re buying interstate. That’s why understanding the costs involved and the necessary due diligence, which can vary state by state, is crucial for a smooth home-buying journey.

Interstate property buying is currently on the rise. With the widespread adoption of flexible work arrangements, a growing number of Australians are choosing to relocate for a fresh start.^[1]

In 2023, 23% of property purchase enquiries on realestate.com.au came from buyers searching outside their home state, up from 17% the year before and more than double during the pandemic low of 11% in 2020.^[2]

But buying interstate can come with some challenges you’ll need to consider. To be best prepared, you need to factor in state-based taxes and fees, property management costs, legal requirements and ongoing expenses. Before you sign on the dotted line, it’s also worth weighing up whether the investment will be financially beneficial for your future.

This guide provides general information only. You should consider your own circumstances and seek independent financial, legal or tax advice before making a property purchase.

Considerations When Buying a Property Interstate

Affordability, rental returns and new opportunities are some of the reasons more Australians are buying interstate.

If it aligns with your overall plans, buying property in another state can support your long-term goals and help you access growth beyond your local area.

Keep in mind that while there are benefits to buying interstate, there are also state-based costs you should consider. Land tax is calculated on the total value of land you own in a particular state, so owning multiple properties in the same state can increase what you pay.

While stamp duty is another key expense. An investor buying a $600,000 established property in Victoria would pay around $31,070 in government fees, compared to about $22,000 for the same purchase price in Queensland. Land tax thresholds, levies, building inspections and other charges also vary by state, so it’s important to factor these into your budget so you aren’t financially stretched.^[1]

Keep this top of mind during your home-buying journey: buying interstate isn’t the same as buying locally.

If the property is in another state, you’ll need to rely on thorough research rather than your local knowledge.

How to Research Local Markets and House Prices

Before you start scrolling through listings, there are a few things that will be helpful for you to understand. While buying interstate may offer financial benefits, it can also come with additional risks.

What drives property prices in your local area won’t necessarily apply elsewhere. That’s why research matters. Take the time to understand the market you’re buying into to avoid making a rash decision. Consider looking into the historical house prices and population growth to understand the area’s value and growth potential. ^[3]

Property data platforms such as CoreLogic, PropTrack, Domain and realestate.com.au provide suburb-level information, including median prices, historical growth rates, days on market and rental yield estimates.

When buying interstate, it pays to look beyond the property itself. Research the immediate surrounds; the quality and proximity of schools, access to public transport, and what the neighbouring streets are actually like. Online listings only show so much, and without local knowledge, you may not discover until after settlement that the next street has high antisocial activity, that the nearest school is poorly rated, or that buses only run twice a day. Where possible, visit in person or speak to a local property manager or buyer’s agent who knows the area.

For investors, rental yield and vacancy rates are key indicators. Higher yields combined with low vacancy rates can suggest strong rental demand, but they should be considered alongside other factors.

It’s also worth reviewing local infrastructure and development plans through state government and council websites. New transport links, hospitals, schools or rezoning can also influence future growth and bring more value to your asset. On the other hand, nearby industrial developments or major roads may affect liveability and value, and lower the value of the home. This is why it’s strongly suggested to research the area so you understand what you’re financially committing to.

Using a Buyer’s Agent When Investing Interstate

Once you have done your initial research, engaging the services of a buyers agent to represent you can be a good idea as they know the local market. A buyer’s agent is your eyes and ears on the ground and is essential when buying interstate. They can assist with tasks such as: ^[1]

• Provide you with expert knowledge
• Give you area insights
• Provide access to off-the-market and unlisted properties
• Negotiate with agents to purchase a property on your behalf

Unsure of what to look for in a buyer’s agent? If you’re considering this option, look for a professional with:

• A current real estate license in the relevant state
• Experience in your chosen suburb or market
• A clear and transparent fee structure (flat fee or percentage)
• Open and consistent communication
• Verifiable client references

You may also want to ask how many properties they purchase each year in your target area and whether they search the full market or work closely with specific developers.

Getting a Home Loan for an Interstate Purchase

Financing a property interstate is generally similar to buying in your home state, as most major lenders operate nationally, so the core requirements, such as income, credit history, deposit and existing debts, are largely the same.

But it’s worth checking whether your lender applies any specific restrictions to your purchase. Some common ones to be aware of include:

• Postcode restrictions — some lenders apply lower loan-to-value ratios (LVRs) or may not lend in certain regional or remote areas
• Property size restrictions — some lenders apply a lower LVR or require a larger deposit for smaller apartments, particularly those under a certain size threshold
• Property type restrictions — studios, serviced apartments, or high-density developments may be assessed differently to standard residential properties

Getting your pre-approval in place early can give you a clearer idea of your borrowing capacity and help you act quickly if you find the right property.

When comparing home loans, it’s important to look beyond the headline interest rate. Features to consider include:

• Offset accounts and redraw facilities
• The ability to make extra repayments
• Split loan options
• Portability if your circumstances change
• Loan fees, such as establishment, ongoing and exit fees

Interest rate type is another consideration. Variable rates can offer flexibility, while fixed rates provide certainty for a set period. Some borrowers also choose to split their loan between fixed and variable options. Online comparison tools can also help you review different lenders, so you can make a choice that is most suitable for you and your circumstances. ^[4]

A Note for First Home Buyers

For first-time buyers, purchasing a property in another state can be a financially strategic way to enter the property market, especially if prices are lower.

There are also several government schemes that can help you. Current Commonwealth programs include the Australian Government 5% Deposit Scheme, the First Home Super Saver Scheme and the Help to Buy Scheme, which are designed to help you get your foot in the door. ^[5] Most states and territories offer their own programs, so it’s worth checking eligibility rules for the area you’re interested in.

Costs and Taxes When Buying Interstate

A common mistake when buying interstate is underestimating the full costs. Stamp duty can often be the biggest expense.

Other costs can include:

• Conveyancing and legal fees
• Building and pest inspections
• Lender establishment and mortgage registration fees
• Buyer’s agent fees (if applicable)
• State-specific charges, such as land tax or additional government fees
• Moving costs

Settlement costs also vary by state, so it’s best to factor this in when comparing different properties.

Ongoing costs include council and water rates, property management fees at 7–12% of the weekly rent if you’re purchasing an investment property, routine maintenance, land tax and insurance costs

It’s also smart to maintain a 1–2% contingency buffer for hidden costs, such as for urgent emergencies, strata levies, repairs or vacancies if you have tenants. ^[6] This can help you cover any costs should something unexpected happen.

Stamp Duty and Land Tax

Stamp duty varies between states, so it’s important to know what you’ll pay for your property.

Land tax, on the other hand, is based on the total value of all properties you own in a state. Owning multiple properties in one state can push you over thresholds and increase your tax, but spreading your portfolio across different states may help manage this expense. Understanding the tax rules in each state and territory can help you decide and plan for the long term.

Before you make any offers on a property, using the official stamp duty calculator for the state you’re buying in can help give you an idea of how much you will owe on top of the property price.

It’s also worth noting that our Home and Contents Insurance is not available in the Northern Territory, North Queensland, and Northern Western Australia.

Protecting Your Asset with Home and Contents Insurance

It’s essential to take measures to safeguard your new home. Having Home and Contents Insurance can provide financial security against unexpected events, such as a fire or storm, ensuring you’re not left out of pocket if your home is damaged.

As responsibility for the property can begin as soon as contracts are signed, we suggest arranging your cover before the settlement date to ensure your belongings and new home are covered from the moment you move in, with no gaps in your cover.

Protect your new property with Home and Contents Insurance

Having Home and Contents Insurance from day one can offer protection for your new home.

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Protecting Your Asset with Landlord Insurance

If your plan is to rent out your new property there is always a risk of your tenant maliciously damaging your property or of them not paying their rent. If you don’t have a large contingency buffer to cover this. To be more comprehensively covered, it may be worth adding on optional extras to your Landlord Insurance to cover tenant theft and malicious damage or tenant default.

Quote first with Budget Direct’s Landlord Insurance

Buying a new rental property? Get Landlord insurance to cover theft, loss of rent and property damage.

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How to Manage an Interstate Property

If you’re new to buying investment properties, it’s important that you build a reliable support network to help you manage the property. And this starts with a good property manager.

A property manager will manage the property on your behalf — finding tenants, handling complaints, collecting rent and dealing with any problems. These professionals will help you through thick and thin.

Before a tenant moves in, make sure you set up clear expectations from day one. This is your time to ask any questions that may be unclear. You may consider asking:

• How often will you receive inspection reports?
• What’s the maintenance threshold below which they can act without checking in with you?
• How will urgent after-hours issues be handled?

This way, everyone will be on the same page, which is reassuring, especially for first-time property investors.

For a broader checklist on renting out a property, check our Tips for Renting Out Your Property.

Next Steps for Your Interstate Purchase

Buying interstate can seem complicated, but once you understand the moving parts, it’s very manageable. The key is to stay organised by sorting your finances early, getting expert help and making decisions based on your research. Getting independent financial and legal advice from a professional can help you make a well-informed purchasing decision.

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