buy property in Australia?

[austrabuyer]

I am considering purchasing property in Australia - I want to arbitrarge the SG/AU interest rates. I have saved up 500k SGD cash + working in a bank I am able to access some SGD personal loan at 3-4% rate. The rest I will borrow in AUD on my existing (paid off unit) in Sydney. I am looking to buy something in Sydney for about 1.5m SGD.

Any thoughts about the direction of property in Australia - how is my timing?

[depends on Suburb]

Sydney as a total market has drifted down by 20-30% since 2003/4 which is when its housing bubble popped ( like Singapore now). You will find good value in the north shore with that kind of money. It is still a good buyers market as rates are 9.5% and it has killed demand. It is pretty much the bottom of this cycle. Once rates start to come down end 09 then the market will boom again.

Massive rental crisis as national vacancy rate at 1.8%. Rents increasing at 15- 20 % pa.

[Malaysian Expat]

I am considering purchasing property in Australia - I want to arbitrarge the SG/AU interest rates. I have saved up 500k SGD cash + working in a bank I am able to access some SGD personal loan at 3-4% rate. The rest I will borrow in AUD on my existing (paid off unit) in Sydney. I am looking to buy something in Sydney for about 1.5m SGD.

Any thoughts about the direction of property in Australia - how is my timing?

You can probably get a nice two bedroom apartment overlooking the Harbourbridge and Opera House at Milson Point or Lavender Bay.

I am thinking of doing the same, but will wait a little bit longer.

You can only buy new development off a Developer, and subjected to approval by some government agency. It's a lot stricter there for foreigner to speculate on properties. If only they relax the rules.......

You can buy as a PR.

[Tax]

Is there capital gain tax on Australian property ?  What is the rate like ?

What are other tax foreigners likely to be taxed on ? Rental income at higher tax rate ?

Anyone having property investment over in Australia care to share ?

Tks.
 

I am considering purchasing property in Australia - I want to arbitrarge the SG/AU interest rates. I have saved up 500k SGD cash + working in a bank I am able to access some SGD personal loan at 3-4% rate. The rest I will borrow in AUD on my existing (paid off unit) in Sydney. I am looking to buy something in Sydney for about 1.5m SGD.

Any thoughts about the direction of property in Australia - how is my timing?

You can probably get a nice two bedroom apartment overlooking the Harbourbridge and Opera House at Milson Point or Lavender Bay.

I am thinking of doing the same, but will wait a little bit longer.

You can only buy new development off a Developer, and subjected to approval by some government agency. It's a lot stricter there for foreigner to speculate on properties. If only they relax the rules.......

You can buy as a PR.

[Tax]

What I do know is :-

If a new development ( be it landed or condo ) where developers have obtained prior approval for sale to foreigners from government agency, we foreigners are allowed to buy them.

[cmdsea]

Foreign ownership comes under the FIRB rules.. (Foreign investment review board) you can google the website but basically you have to either buy a brand new property (never lived in or rented out) or buy land and build your own house.

Aussie taxes are quite punitive for non residents. Its best not to buy using too much cash and get a suitable loan with interest payments to offset the majority of the rental income, but better in Sg rather A$ due to the realitve interest rates as long as you have SG$ income. Yes, there is also CGT and this is also quite punitive but complicated to work out. You really need an Australian accountant to do the sums if you want a precise figure so its hard to give a ballpark figure but generally its ok to buy for the long term. say 10-15 years at least

[Kubes.SG]

The big watchout at all property levels in Australia now, especially Sydney, are the very low affordability levels.  Affordability is now at the lowest levels for a few generations, even worse than when mortgage rates hit 17% in 1989-90 period, so it is unlikely Australia will see property prices to grow much faster than income growth, which the AU Govt is predicting will be controlled by the slowing economy.   So nett, not too much capital as the economy slows and global uncertainty continues.

The positive is the increasing rental returns as demand exceeds supply. But watchout for the impact income tax.

Personally, I have got out of the Sydney market and will be waiting to at least until the end of this year before considering to buy again.    Do people "snap up" properties there?

[Malaysian Expat]

[/quote]

Australian property be any good. The population is not growing as fast as Singapore and the land size is tens of thousands of times larger than Singapore's. Buy Singapore.
[/quote]


That's exactly one of the reasons that I am thinking of owning a unit there.

Don't you find the living quality in Singapore is getting worse despite the increased wealth with the increased congestions, noise pollution etc? I can't imagine how it would be when it reaches 6.5 millions, and somehow people see it as a good thing.

[Malaysian Expat]

no foreigeners in their right mind should buy any properties in OZ.The yield is pathetic,a 1 mil house could only let out for about 4000 a month you get better returns dumping that amt of money in an Oz bank. you can only hope for capital gains which may take a long time to realise amidst the global property slump.the property values are going to crash further as affordability has gone haywire.

I kind of agree and that's why I am still waiting.

The comment on Aussie market, doesn't that sound like Singapore property market right now? At least 1 million can still get me a 2 bedroom flat at a very nice part of Sydney like Darling Harbour. In Singapore, you have to look at Jurong areas.

[cmdsea]

Both the yield and potential for capital appreciation would be much better to use your $1M to buy 4 average 1 or 2 bed units in say Cairns or Darwin for $250K each rather than a single "trophy" apartment which is unaffordable to rent for the vast majority of the population..

Its a common mistake to buy the place that you would choose to live in yourself, rather than the place(s)that have the best investment potential.!

[marx]

to OP & others
now this could be really silly....but i was thinking  about OP'S view

would it not be more liquid a portfolio if he were to
1. open an online FX Trdg a/c & sell SGD/ buy AUD
2. open AUD brok a/c & buy a residential REIT - (assuming they have 'em there )
this way, when you smell trouble you can unwind it all in a few clicks ....

so what am i missing?

[EatTheRich]

leverage.

[EatTheRich]

..and a rental income to pay the funding cost. Would REITs pay enough dividents to do that?

[otherguy]

I agree with cmdsea. With that much money you could even build 4 houses in urban outskirts of Victoria and make loads of money renting them then selling them in 5 to 10 years before too many bogan children grow up. :-)

Buy four cheaper units in Queensland or Victoria, make loads then buy your dreams in Sydney instead.

Not sure how CGT affects foreign investors as I am aussie - but I just got hit with CGT tax bill sellingan Oz property and it really hits hard. Tax bills in AUD really hurt with the strong aussie dollar if you are earning in SGD. Still you cannot term your nose up on capital appreciation even if the govt demands its hefty share.

Hedging with regular rental (increasing rapidly too) in AUD is really nice though. Basically you may as well borrow as much and buy as much as you can I reckon!