Can Singapore Citizens Buy Property in Australia?

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:

  1. Under-construction or new buildings;
  2. Vacant land for construction, if construction begins within 24 months; and
  3. 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)
  • Payslips
  • 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!

Team Home

Have any questions, ideas or feedback? Let us know at support@home.com.au

What Exactly Does An Agent Do And Do I Need One?

In today’s world of technology, there are many options for selling a home – some including the use of a real estate agent and some eliminating the agent entirely for example by using Purple Bricks. However few actually know exactly what goes into the process of selling a home, or what the benefits of having an agent is. We thought we might shed some light on this and take you through the entire process so you can decide whether an agent is right for you.

Why Use A Real Estate Agent

 Renowned for their shiny new suits and unwavering gift of the gab, agents are often the subject of humorous scrutiny amongst the community. However there are many great agents out there who offer a lot of benefits with the top three being client knowledge, market knowledge and finely tuned negotiation skills.

Sydney buyers’ agent Tracey Chandler says that a good agent knows how to turn a negative into a positive. If a potential buyer complains: ‘I don’t like the way [the property] faces,’ the agent would say, ‘but if it was the other way around you’d be looking at a wall’,” she explains. “It’s up to the agent to bring them back into the picture, and they do this with absolutely no emotional attachment, which is what you want.”

The agent also acts an arbitrator that filters information between the buyer and seller, a major asset they often don’t get credit for according to Tony Williamson, Principle RE/MAX Australia.

Knowing The Market

 As for market knowledge, an agents’ access to a database of interested buyers is crucial. With the property market being as competitive as it is currently, local agents will be able to target individuals who may have recently missed out on a similar property in your area. The element of client knowledge requires a bespoke approach from agents.

Choosing the right sales method

According to Domain, an Agents’ marketing plan runs the gamut from an off-market strategy, where promotion is minimal and agents proactively target their extensive personal database of buyers, to a fully loaded campaign of online real estate portals, print advertising, flyers, signboards and open homes, the latter deemed one of the most powerful ways to attract interest.

However, regardless of selected method, agents encourage vendors to invest in the presentation of their property. A small investment of a few thousand dollars could potentially at an extra $20k to sale price.

Photography is also a major component, with great photographs resulting in higher numbers of groups through at the first and subsequent open-for-inspections.

Method of sale can also be customised, with vendors often preferring to sell via private treaty rather than auction, and is particularly suitable for homes where there might be lower levels of buyer demand.

On the other hand, if the vendor wants a quick sale for market price and they live in a seller’s market, an auction is highly recommended.

Properties can often sell before the auction date if a buyer is keen enough.

The benefit of auctions is the process allows vendors to control the terms under which the property is offered and ensure the creation of an unconditional sale, with the added benefit of a deadline for the buyers to act – increasing the competition.

How Do I Pick One?

Word of mouth and referrals are common, and people do talk about property results both positive and negative. However it is also a good idea to do a bit of research and go to some other local auctions for similar properties in your area as well to see what is achieved, note the active bidders present, and meet the agents.

 

 

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