DIFFICULTY LEVEL: MEDIUM
The simple answer is YES. Singaporean citizens can buy property in Australia however the following points must be considered before you are ready to enter the Australian property market.
Why should you buy in Australia as a Singaporean?
The Australian property market has a lot to offer Singaporean investors. As an english-speaking city close to home, many Singaporeans have an affinity with the Australian lifestyle, having either studied, worked or visited the country. A Singaporean citizen may consider investing in Australian property for several reasons, such as:
- Lifestyle considerations
- Steady growth & rental yield
- Availability of Insurance
- Via the Australian Prudential Regulation Authority (APRA), Australia has responsible lending legislation and prudent economic management, this reduces the risk of asset price bubbles
- Australia has never had prices fall more than 20% in one year
Be prepared to front the cash on Newly Built Properties when buying in Australia
The Australian foreign investment laws dictate that non-residents can only buy newly built properties, with approval from the Foreign Investment Review Board. Many Australians, especially first-home buyers, buy established homes rather than new properties, making their average purchase price between A$500-$600K (2020) which is far below the prices of properties marketed to Singaporeans.
Foreign investors snapping up new developments benefits the Australian construction sector and as there is limited competition for those high-end properties, local buyers aren’t overly fussed with international buyer interest.
Here is our Step by Step Guide to Buying Property in Australia as a Citizen of Singapore
Step 1. Organize or hire your team of professionals that includes
- Conveyancer/Solicitor → to take care of all the legal work for you
- Mortgage broker → ideally with experience working with non-resident buyers. We recommend BC Invest.
- Accountant (if required) → to assist you with structuring your financials and saving on tax as they are the experts
- Buyers agent (if required) → to source the listings and negotiate the price on your behalf, this is also where Home Live comes in!
Step 2. Get your loan pre-approved
With great properties on the Australian market being snapped up so quickly, having a loan pre-approved will ensure you’re in with the best chance. Loan pre-approval will also determine that you are eligible for a loan and how much you can borrow.
Step 3. Applying for a mortgage
Many banks in Australia have begun tightening their lending criteria for all home loans, specifying ‘Interest only’ loans for ‘Owner-occupied’ units in order to decrease the risk of default as there is genuine demand for the houses being occupied. However, Australian banks and lenders tend to favour Singaporean investors due to the strength of the Singaporean Dollar (SDG) and the stability of the SNG economy.
While Australia has started to tighten its lending, Singapore banks are still selectively lending to Australian property purchases for Singaporeans or permanent residents who are tax residents in Singapore.
Step 4. Confirm you qualify with the Foreign Investment Review Board (FIRB)
Prior to the purchase, you must be able to secure approval from the Foreign Investment Review Board (FIRB), which is responsible for ensuring that foreign investments are beneficial to Australia’s economy. This explains the logic behind forcing foreigners to purchase new dwellings, as this adds to the current housing stock.
Step 5. Find a suitable property you wish to buy (Home.com.au)
Non-residents or foreigners including Singaporeans – cannot buy established dwellings in Australia. There are strict rules about what types of residential investment property foreigners can purchase in Australia, which is limited to:
- Under-construction or new buildings;
- Vacant land for construction, if construction begins within 24 months; and
- Established dwellings to be demolished and replaced with a greater number of dwellings
Step 6. Negotiate the purchase price
Many buyers prefer to make use of a professional for this, for example a good buyer’s agent.
Step 7. Obtain formal mortgage approval
You cannot commit yourself to buying a property until your mortgage has been formally approved. Send your mortgage broker your contract of sale when you’ve found a property to buy to start the formal approval process.
Step 8. Exchange contracts and pay your deposit
Once your mortgage is approved and your solicitor/conveyancer has given you the go-ahead you can sign your contract. Normally, Australian property purchases require a 10% deposit to be paid upfront however this amount varies depending on states and can also be negotiated.
Step 9. Seek FIRB approval
So, if you find any property you wish to purchase:
(1) You have to apply to FIRB
(2) You will need to fill in a foreign investment application form from the Australian Tax Office (ATO) website.
Application fees start from $5,800 for properties worth $1 million or less, and the fees increase as the property price bracket increases. The approval process from FIRB may take a minimum of 30 days.
Foreigners who reside in Australia (such as international students or those working in Australia) are considered resident buyers and allowed to purchase existing properties on the market. They need not seek FIRB’s approval. However, they are subject to other restrictions when selling the property when they leave Australia.
Ensure you check the various state requirements if you belong to this category of foreign buyers, and ensure you can get the following documents:
- IDs (Passport and an additional ID required by the bank)
- Notice of Assessment
- Between 3 to 6 months worth of bank statements
- Employment letter or contract
- 3 to 6 months statement of debt and liabilities
- Singapore credit file
For Self-employed Singaporean citizens below mentioned documents will be required-
- A minimum of 2 to 3 years of trading history.
- A minimum of 2 years of income tax and company financials.
- At least 6 to 12 months of bank statements for the company and the individual.
- If you have a stable employment history and income, a strong asset position and have saved up a large deposit, then it increases your chances of loan approval.
Step 10. Final arrangements
If you are living overseas you may need to visit the Australian embassy or consulate to get identified or to have your loan contract witnessed. If you have a trusted friend or relative living in Australia then you can appoint them as a Power of Attorney (POA) and they can sign the loan contract for you.
Settlement (when the property actually changes hands and your loan is advanced – this will be handled by your Conveyancer/Solicitor in conjunction with your bank and mortgage broker so you don’t need to be there for this to happen. And you are good to go!
Welcome to the wild Australian property market!
Have any questions, ideas or feedback? Let us know at firstname.lastname@example.org