Your All-In-One Guide for Buying Property in Australia as a Singaporean

From the very beginning, there’s a strong and vibrant relationship between Australia and Singapore. At present, Singapore is Australia's largest trade and investment partner in ASEAN and overall the 6^th largest trading partner.

Australia and Singapore elevated their relationship to a ‘Comprehensive Strategic Partnership (CSP)’ which encompasses all aspects of their relationship including trade, defense, science and innovation, education, and the arts.

There is also Singapore-Australia Free Trade Agreement (SAFTA) agreement to uphold their comprehensive relationship.

Why invest in Australian property

At present, Australia is the most lucrative investment destination for the Singaporeans as it has some of the most livable and safest cities in the world, also it has an AAA credit rating by the major credit rating agencies. Moreover, English is their first language.

Besides that, Australia has some prominent and world-famous universities plus proper rules to protect foreign investment, and last but not least - it is in close proximity to Singapore.

A Singaporean citizen may consider investing in Australian property for several reasons, such as:

• Affordability
• Steady growth & rental yield
• Availability of Insurance
• Around 70% of Australian households are homeowners so there is relatively little speculation.
• There’s been a consistent undersupply of housing in most capital cities.
• Australia has responsible lending legislation and prudent economic management via the Australian Prudential Regulation Authority (APRA), reducing the risk of asset price bubbles.
• Australia has never had prices fall more than 20% in one year.

Property investors are lining up to buy a slice of the Australian dream. Singaporean investors are being lured by a combination of new, prohibitive taxes on second homes in the island state, record low-interest rates, a strong currency, and promises of attractive returns from Australian developers.

Interested to invest in Australian properties? Click here to talk to our agents

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How Australians see Singapore buyers

According to the Australian foreign investment laws, non-residents can only buy newly built properties with approval from the Foreign Investment Review Board, but not established homes.

Most locals, especially first-time home buyers, buy established rather than new properties. Their average purchase price is A$328,000 which is far below the prices of properties marketed to Singaporeans.

The locals don’t mind ‘foreigners’ snapping up those new high-end properties as they are not competing with them. After all, foreign investment in new properties is benefiting their construction sector.

The only concern is if one day Singapore owners want to cash out, the buyer market will be rather small since these ‘pricey’ properties can only be sold to foreigners.

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Australia's stable real estate market and steady price

Australia is considered a stable real estate market because around 70% of Australian households are homeowners so there is relatively little speculation. There has also been a consistent undersupply of housing in most capital cities.

Furthermore, Australia has responsible lending legislation and prudent economic management via the Australian Prudential Regulation Authority (APRA), reducing the risk of asset price bubbles.

If you are not a resident of Australia and are planning to buy a piece of real estate in Australia, there are certain rules you have to comply with. Foreigners are only allowed to purchase new properties, rather than established ones.

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.

Singapore may now be the biggest foreign investor in Australian property, but the Australian banks have recently tightened their lending on housing loans.

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Example scenario of Investing in Australian property

For example, an AUD$1,250,000 property with an 80% loan of AUD$1,000,000 property that is rented out for AUD $1,000 a week will get you AUD $4,000 a month. (AUD $1,000 x 4 weeks = AUD $4,000/per month)

Interest rates at 4% per annum equal to $3,333 per month Interest.

As an investor, you have a monthly cash flow of: $4,000 – $3,333 = $667

Most banks in Australia can offer between 70% to 80% loans. Several can offer 85% to 90% loans.

Many banks are specifying “Interest only” loans for only “Owner-occupied” units. This reduces the risk of default for the banks as there is genuine demand for the houses as the owners are occupying the houses.

If the Interest rate goes up to 5% per annum, that equals to $4,166 per month interest: $4,000 – $4,166 = -$166

Interested to know other potential property investment prices? Click here to talk to our agents!

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Singapore’s Love Affair with Australia: Selective Bank Lending

Singaporeans love the space, nature, and 4 seasons of Australia. Many Singaporeans further their studies in Australia or consider Australia as their second home.

Borrowing in Australia is becoming more difficult. Only the best credit profiles can borrow in Australia providing that they have residency status. Lending to non-residents has become very rare.

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.

With Australian banks tightening lending, some defaults and hardships may start to appear. However, the problem is not yet severe as long as employment remains strong.

Did You Know? 🔍

While many countries have started to tighten lending, Singapore banks have already tightened lending since 2013 based on MAS’ restrictions. But perhaps Singapore may remain as a relative lending bright spot amidst tightening in Australia, Hong Kong, Malaysia, China.

A 2016 census showed that migrants now comprise up to 60 percent of residents in some Perth suburbs as the city continues to be transformed by new arrivals. Foreign-born concentrations led by people from India and Malaysia are growing in middle-class suburbs, while more Chinese are moving into wealthy suburbs closer to the CBD.

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Overview of Australia Property Purchase Application

As a Singaporean citizen, you cannot purchase any property in Australia without getting approval from the ‘Foreign Investment Review Board (FIRB)’.

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.

A chart of fees is furnished below for your better understanding:

(updated as of 25 July 2022)

You must notify FIRB when purchasing farmland worth $15 million or more as the fees can be substantial.

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. Do 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 stable employment history and income, a strong asset position and have saved up a large deposit, then it increases your chances of loan approval.

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Types of Australian properties Singaporeans can buy

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

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The step-by-step property buying process in Australia as a Singaporean

Before you begin, set an aim for your budget and then make your plan. It’s essential that you research, plan and budget your property purchase in Australia.

You may have selected a location in mind but it’s always helpful to consult with a real estate agent who can offer you some local advice that will help you select an affordable area with great returns.

Making sure that you can afford the property is also important. Australian banks won’t lend to you if you can’t prove that you can afford the debt so you need to have a realistic and affordable budget in place. You should move forward step by step to make it really happen.

Step #1 – Organize or hire your team of professionals that comprises:

• Conveyancer/Solicitor,
• Mortgage broker,
• Accountant (if required),
• Buyers agent (if required)

Step #2 – Get your loan pre-approved

Step #3 – Applying for a mortgage

Step #4 – Confirm you qualify with the Foreign Investment Review Board (FIRB)

Step #5 – Find a suitable property you wish to buy

Step #6 – Negotiate the purchase price

Step #7 – Obtain formal mortgage approval

Step #8 – Exchange contracts and pay your deposit

Step #9 – Seek FIRB approval

Step #10 – Final arrangements

Step #11 – 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.)

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Step by step expenditure for buying an Australian property:

As a general rule, you should allow roughly 5% of the purchase price for various expenses associated with purchasing a property.

• Legal fees: Often $800 to $2,000.
• Loan establishment fees: Usually $0 to $895 depending on the lender (for foreign citizens, this may be up to 4% of the loan amount.)
• Stamp duty: This is the largest expense. It’s a tax levied by your state government on all property purchases. You need to check the stamp duty calculator here.
• FIRB approval fees: Vary depending on the value of your property and if you are a temporary resident or foreign investor with no Australian visa.
• Property inspection fees: Costs can be upwards of $800 in total for a building, pest, and strata
• Buyers agents fee: The fee varies depending on the nature of the services provided but they’re generally up to 2% of the purchase price (a buyers agent is optional).
• Other minor costs: Building insurance, council rates, water rates, and adjustments can be up to 0.5% of the property value in total.

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The Australian government knows every year a large number of Singaporean investors seeks for the investment opportunity, so a dedicated Helpdesk has been established in FIRB to hear the questions or queries in this regard. The helpdesk can be accessed here.

OR you can leave it to our seasoned real estate agents to help you out!

Interested to invest in Australia? Whether you're a Singaporean or not, feel free to drop your details below! We'll reach out to you soon.