How can you buy property in Australia as an overseas investor?

March 31, 2021

Investors in Southeast Asia often seek property investment opportunities in overseas or foreign countries. Previously these markets have included North America (USA and Canada) and the E.U. (UK pre-Brexit and eastern Europe).

But with the Covid-19 pandemic still raging in these regions, the resulting economic malaise is dramatically reducing the practicality and the financial sense of buying property in these markets. However, the opposite is true in Australia, where the pandemic is largely under control and economic conditions are returning to more prosperous times – even booming in some sectors.

Investors looking south

This has led to investors now focusing their attention on the Australian property market as both a ‘safe haven’ and more importantly, a country offering exceptional cashflow and capital gains potential over the next few years. This renewed focus on the Australian property market brings with it the question of how easy is it for overseas investors to purchase property in Australia?

To answer this question, Resimax Group invited mortgage finance specialist, Raveen Chandra of Yarra Capital, to discuss the options at a recent Resimax webinar. Yarra Capital is the only fully licenced mortgage/finance professional service provider in Malaysia, with operations in Malaysia, Singapore and Australia. This makes Raveen ideally placed to assist investors in these countries obtain finance on attractive terms to purchase investment property in Australia’s booming cities of Melbourne, Sydney and Brisbane.

Raveen advises that, although the ‘non-resident’ investor is paying slightly higher interest rates on an investment property of around 4%, compared to an Australian resident investor at 3.5%, this is still an exceptionally good rate in the current economic climate.

Things you need to know

Other questions that often come up relate to the types of loans available and the standard conditions surrounding these loans. These are best summarised as follows:

  • All loans are for a standard 30-year term. Note, although there is an upper age limit for borrowers in Australia, Yarra Capital has even been able to obtain loans for clients as old as 72 years, through their relationships with lenders.
  • Loan types may be fixed or variable. With interest rates currently at an all-time low, many borrowers are choosing the security of a fixed rate loan.
  • Repayment options include interest only and principal and interest, plus the ability to have an offset account with either of these repayment methods. Choosing the right one depends on the borrower’s personal circumstances.

Serviceability of the loan is, of course, critical and as an example, a Singaporean borrower will need to prove a clear (after expenses and tax) monthly income of S$5,000 (S$60,000 per annum net). This will allow the investor to borrow 70% (AU$350,000) for a new property valued at AU$500,000, a typical Australian property.

Other borrowing criteria include a good credit history, whether employed, self-employed or in business, and particulars of the type and size of the property being purchased. There are some additional costs applicable to non-residents purchasing Australian property, such as FIRB approval that need to be factored into the pre-application funding calculations.

Safe, proven, rising and profitable

In summary, Australia is very open to overseas investors, the property market is safe, prices are rising, and the finance options and processes are tried and proven. If you are considering an investment outside your home country, now is the time to turn your attention away from the traditional markets in the northern hemisphere and look instead ‘down under’.

To discuss your financing options for purchasing an Australian investment property, contact Yarra Capital, or Resimax Group Investor, and make 2021 the start of your new financial prosperity.