There are some restrictions for foreigners wanting to buy property in Australia, depending on your visa and residence status.
Find below some advice on how you can buy your dream home in OZ and some smart tips to avoid paying more than you need to in fees and charges.
What you will read on this page:
Yes you can, but there are some restrictions. Non-residents have to get approval from the Foreign Investment Review Board (FIRB) before they can buy a property. However, the house must be for yourself as a home and be your primary residence.
If you don’t intend to live there full time, or if you’re buying several properties in Australia as an investment, they must be new-build properties. These laws are designed to ensure that there is a sufficient supply of new housing stock across the country.
If you’ve seen any news lately, you would have read that the Australian housing market is weak, broken and prices are falling. Analysts believe soft property markets, particularly in Sydney and Melbourne, may bottom out next year, amid the banking regulator loosening a constraint on mortgage credit and an expected official cash-rate cut.
|Capital City||March 2019|
Source: Domain House Price Report.
|Capital City||March 2019|
Source: Domain House Price Report.
|Bay of Plenty||$600,000|
|NZ excl. Auckland||$495,000|
Source: REINZ Statistics Table.
When you are buying a home it’s important to do your research. In terms of getting comprehensive comparative sales information, it’s hard to go past the Home Price Guide, available from Australian Property Monitors (APM), a joint venture between HWW Limited, the publishers of Your Mortgage Magazine, and John Fairfax & Sons.
The Home Price Guide list sales details of individual residential properties. Each standard guide lists monitored sales in the previous 12 months in the postcode of your choice. If the property you are purchasing is in the database, you can see how much the current owners paid for it, whether it has been put to auction since it was purchased, and in some cases what the highest bid at an auction was.
The First Home Owners Grant (FHOG) in Australia is designed to encourage and assist home ownership across the country, and for eligible borrowers it’s a great start to life as a property owner.
The grant differs in each state and territory and in most places it applies to new homes only and is valued between $7,000-$26,000.
The Australian government’s First Home Owners Grant (FHOG) and other benefits are available to permanent residents, as if they are citizens of Australia. Because NZ citizens are considered to be permanent residents of Australia they are eligible for the grant.
Getting a mortgage in Australia is pretty similar to New Zealand. You will need to figure out how much you can borrow based on your income and expenses. You will need a deposit, which is usually a minimum 10 per cent of the value of the property. You also need to pay for stamp duty on the property, which will cost several thousands of dollars, depending on which state you live in.
Like NZ, different borrowers in the market off different deals, so make sure you do your research. Be proactive and contact lenders directly about deals on offer. Whether it’s a lower interest rate, zero establishment fees, frequent flyer points or other value-adds, the more you know about the current home-loan market, the better your negotiation skills when it comes to asking your lender for more product features or a lower interest rate.
Financial institutions in Australia will usually check your credit rating in New Zealand. If you are not sure where you stand, you can get a free copy of your credit file from Equifax: https://www.equifax.co.nz/personal.
Stamp duty is a tax on a property transaction that is charged by each state and territory, the amounts can and do vary. The stamp duty rate will depend on factors such as the value of the property, if it is your primary residence and your residency status.
You can calculate the stamp duty you may have to pay on your property using this stamp Duty Calculator: https://www.realestate.com.au/home-loans/stamp-duty-calculator.
If you own an asset overseas, you may have to pay Australian tax when you sell the asset. You need to keep appropriate records.
If you acquired an overseas asset before you became an Australian resident, you are taken to have acquired the asset at the time you became a resident.
Similarly, if you stop being an Australian resident while holding an overseas asset, you are deemed to have disposed of that asset at the time you stop being a resident.
To accurately calculate the capital gain or loss, ensure you keep a record of the value of your asset at these times. This is a complex area of tax law and exemptions may apply.
Therefore, if you plan on renting your home while you settle in Australia, you will have to pay CGT when you sell it. If you sold it before you left you wouldn’t.
However, your accountant can make you a temporary resident for tax purposes, which would make you exempt from tax on their overseas income. Read more here: https://www.beyondaccountancy.com.au/something-every-kiwi-in-australia-needs-to-know/.
If you already own a home in New Zealand and are planning on selling it and buying in Australia, then educating yourself on foreign exchange is a must. Same goes if you are transferring any money from NZ to Australia. Why throw away your hard earned cash.
To give you an idea of how much you could save, XE have done a recent comparison with three New Zealand major banks for a $1,200,000 NZD / AUD transfer. Depending on which bank you use, XE would have saved you between $9,070 and $25,870.
**This comparison was made on 21.08.17, by speaking to the foreign exchange teams at 3 of the leading banks.
You will save a lot of money by using an online foreign exchange company, e.g. OFX or XE, to exchange your NZ Dollars into Australian Dollars, then deposit them in your Australian bank account. Banks will charge you a great deal to convert and transfer your money.
Of course you can start looking for your new home from NZ. The below websites are the top real estate sites in Australia:
Ask them below in the ‘reply’ section and I will get back to you asap. You might also find the answers in the questions other visitors have asked.