The expat's guide to purchasing property in Australia

Starting a new life in Australia? Sure, who wouldn’t want a sunny retreat in the midst of the Pacific Ocean?

Whether you’ve moved there for work, study, or retirement, you’ll find yourself among a considerable expat community.

Some of these expats have made several property purchases in the country. If you’ve decided to follow in their footsteps, there’s no time like the present when it comes to doing your own research.

To make your purchase process simpler, here’s an overview of what it takes to buy property in Australia as an expat. Check out the costs of diverse properties in Australia, the legal requirements, Australian real estate portals, and the entire property purchase procedure.

Can you buy property in Australia as an expat?

Yes, you can. In fact, the Australian government offers a First Home Owner Grant (FHOG) to anyone holding a permanent residency visa under s30(1) of the Migration Act, 1958. You must also be aged 18 or more to be able to apply for the FHOG.

Basically, buying (or building) your first new home in Australia would make you eligible for a grant of $10,000 AUD (or approximately $7,738 USD).

No matter what type of property it is (an apartment, townhouse, or a house), it must not have been previously occupied as a home or sold as a residential place.

The property will qualify for the FHOG if it’s built on demolished premises or it’s substantially renovated, but it can’t be a holiday home or an investment property.

To lodge your FHOG application, you’ll need to produce copies of your valid passport and your permanent residency visa.

What are the costs of different properties in Australia?

The farther you move from the city center and the closer you get to the suburbs, the lower the purchase price.

To help you get a hang of the cheapest and the most expensive places to buy property in Australia as an expat, we’ve compared the median house prices in these places in Australian Dollars, with approximate US Dollar conversions for reference:

• Wellington: $208,000 AUD ($160,951 USD)

• Broken Hill, New South Wales: $150,000 AUD ($116,070 USD)

• Peterborough: $89,000 AUD ($68,868 USD)

• Sydney: $970,355 AUD ($750,865 USD)

• Brisbane: $503,265 AUD ($389,479 USD)

• Brewarrina, New South Wales: $35,000 AUD ($27,086 USD)

• Davoren Park, South Australia: $179,000 AUD ($138,530 USD)

How can I find a property in Australia?

It’s a great idea to visit Australia on a viewing trip, if you haven’t shifted there already. In other words, you’ll be looking straight up at properties on sale and saying yay or nay after examining the properties on your own. 

Before even going on a viewing trip to Australia, a good place to start would be real estate websites listing different properties for sale.

You could filter your search by the property type (apartment, house, townhouse, or villa), size, number of bedrooms and bathrooms, price, and features (like swimming pool, air conditioning, garage space, parking, balcony, and broadband connection).

Some well-known property websites in Australia include:

• Realestate.com.au

• Property.com.au

• Realestateview.com.au

• Domain.com.au

Are there any legal requirements for buying property as an expat in Australia?

For non-residents or temporary visa holders, it’s legally necessary to buy non-residential property in Australia after getting permission from the Foreign Investment Review Board (FIRB). However, you won’t need FIRB approval for that if you’re a New Zealand citizen or you hold a permanent residency visa in Australia.

The smartest way to go about a non-residential property purchase as an expat in Australia is to investigate the FIRB requirements, find a property that matches those requirements, and then apply for FIRB approval.

As for residential properties, you’d need to lodge your application with the Australian Taxation Office (ATO). This applies to new dwellings, off-the-plan sites, vacant residential land, and already established dwellings to move into.

Under the Foreign Acquisitions and Takeovers Regulation 2020, you’ll have to pay the correct fee amount at the time of lodging your application, so that the decision-making procedure of the ATO can start as soon as possible.

For acquisitions of $1 million AUD ($773,915 USD) or less (in case of residential land) and $2 million AUD ($1,547,830 USD) or less (in case of agricultural land), the minimum fee is $6,350 AUD ($4,914 USD).

If the value of the residential land or property you want to buy is between $1 million AUD and $2 million AUD, the fee would be $12,700 AUD ($9,829 USD). A value from $2 million AUD to $3 million AUD would incur a fee of $25,400 AUD ($19,659 USD).

So, the fee would keep increasing by $12,700 AUD for every $1 million AUD of value, until the fee reaches its maximum cap of $500,000 AUD (for residential land acquisitions of over $40 million AUD).

Would I need to hire any professionals?

• Mortgage broker
  A mortgage broker will be helping you to apply for a mortgage at an Australian bank or other lending institution.
  Try looking for a mortgage broker who’s had prior experience in dealing with expats in Australia.
  A professional broker would also be a member of the Mortgage and Finance Association of Australia (MFAA).

• Solicitor or conveyancer
  The job of a conveyancer or solicitor is to look after the legal work for you. They’ll be responsible for managing the transfer of ownership of the property, as well as reviewing the sale contract before you sign it.
  Make sure that the conveyancer you’ve appointed is in the same state in which your (would-be) property is located. If not, then the conveyancer must at least have a licence to operate in that state.

• Buyer’s agent (optional)
  If you haven’t made the move to Australia yet, and it’s not possible for you right now to physically inspect the property you’re buying in Australia, you can hire a buyer’s agent.
  They’ll negotiate a lot on your behalf with the real estate agents, who will be acting for the property seller.
  A buyer’s agent will also make sure that the property you’re going to buy represents a good opportunity for your investment.
  Apart from being licensed, they should be in the state in which you’re buying the property.

• Accountant (optional)
  You need to be aware of land tax, stamp duty, capital gains tax, and taxes for leaving your property unoccupied or unused.
  Accountants with expert knowledge of Australian tax laws can help you arrange your finances so that you can save money on tax.
  Unlike conveyancers, mortgage brokers, and buyer’s agents, an accountant doesn’t need to be in the same city or state you’re buying a property in. He/she/they can be located anywhere in Australia.

What are my financing options?

You can apply to a bank or a lending institution in Australia for a mortgage or loan to help you buy your dream property.

Some of the best Australian banks for expats, like Australia and New Zealand Banking Group (ANZ), Westpac, HSBC Bank Australia Limited, and Commonwealth Bank (CommBank) offer home loans.

However, most of these have tightened the reins on their lending requirements, so you’ll need to make a considerable amount of down payment.

A great way to start managing your money during the purchase is by opening a bank account in Australia.

And in case you need money from another account overseas, consider using an online international money transfer service like Xe.

For instance, if you’ve got a bank account in the US, and you want to use the money
in that account for your property purchase in Australia, Xe can help you send money to Australia from the US.

So, what’s the process of buying property in Australia as an expat?

1. Find out whether you’re eligible to apply for a home loan or mortgage at any Australian bank or lender.

2. Look up the requirements for FIRB or ATO approval.

3. Keeping those requirements in mind, start searching for a property in Australia at your preferred location.

4. Have your buyer’s agent negotiate the purchase price with the seller or his/her/their real estate agent.

5. Once both you and the seller have agreed to the purchase price, set up a sale contract (with the help of your solicitor or conveyancer) stating that the property would be sold only after obtaining the FIRB or the ATO approval.

6. Typically pay a 10% deposit to the seller, although the deposit amount varies from one state to another.

7. Seek approval from the FIRB or the ATO, depending on the type of property you want to buy.

8. Forward the sale contract to your mortgage broker in order to get formal approval for your loan or mortgage from the bank. Also, provide a copy of the ATO or FIRB approval to the bank or to your lender.

9. After the bank approves of your loan, they’ll send you the loan contract to look it over and sign the appropriate sections. When you’re done, return the loan documents to the bank.

10. On the day of the settlement (when the property is actually handed over to you), ask your buyer’s agent to do a final inspection of the property.

What kinds of costs would I have to pay?

• Legal fees: Anywhere between $800 AUD ($619 USD) and $1,200 AUD ($928 USD).

• Stamp duty: It varies from state to state in Australia, but keep aside at least 3% of the property purchase price.

• Property inspection fees: A building and pest inspection can cost over $800 AUD.

• Conveyancing costs: Often $700 AUD ($541 USD) to $2,500 AUD ($1,935 USD) plus reimbursements (fees paid by the conveyancer on your behalf).

• Lender application fees: Starting from $150 AUD ($116 USD).

• Agent fee: Usually up to 2% of the purchase price.

• Other costs: Water rates, building adjustments, and other minor costs can sum up to 0.5% of the purchase price.

Buying property in Australia: the bottom line

We know how exciting it must be for you to buy a property in Australia and start a new life. Don’t forget to do ample research about the practical, financial, and legal implications of your property purchase.

This would also include finding the most convenient ways to handle your finances during the purchase and after.

If you’d rather save time and money on your international payments to and from Australia while you sit back and relax, consider using Xe to send money overseas and make transfers between your international bank accounts.

You can check the free currency converter any time to see the current exchange rates. If you’re ready to send money, you can easily move straight through to the transfer process, and complete it online or in the app in just a few minutes. To get started, you can  sign up or log in now.

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All currency conversions mentioned are based on the AUD/USD mid-market rate from Xe on June 4th, 2021, at 12:00 PM PT.