A Guide to Buying Australian Property as a New Zealander

Are you a New Zealander thinking about buying property across the ditch? Whether you’re investing in Australian property from New Zealand or buying a new home to move to Australia, both are possible. In fact, New Zealanders are essentially treated as Australian citizens when buying property within Australia. Those with permanent resident status may even be eligible for stamp duty exemptions or first home owner grants.

Why Buy Australian Property?

With a median house price of AUD 720,000 and a more diverse property market compared to New Zealand, where the median house value sits at AUD 856,000, Australian property can be an attractive purchase for Kiwis. However, there are some key considerations like borrowing power, stamp duty, and foreign investor duty to keep in mind. Here is everything you need to know about buying Australian property as a New Zealand citizen.

New Zealand Citizens Buying Property Within Australia

New Zealand Citizens are effectively treated as Australian Citizens when buying property within Australia and may even be eligible for the First Home Owner Grant (FHOG). All New Zealanders who have been granted Permanent Resident status (i.e., through a Special Category subclass 444 visa) can purchase property within Australia.

How Much Deposit Do I Need? What About My Interest Rate?

When it comes to deposits in Australia, there is no magic number, but most lenders require you to show savings for at least 10% of a property’s value. Some lenders only require 5%. This means you’ll need a deposit between $40,000 and $80,000 to buy a house worth $800,000.

In addition to the deposit, there may be additional costs such as stamp duty, lender’s mortgage insurance, and conveyancing fees. It’s important to factor these into your budget. You can compare mortgage rates from over 20 lenders with the help of UNO to find the best interest rate.

Stamp Duty

Stamp duty is a tax on property charged by Australian state governments. It is generally around 3% but varies by each state. For example, the stamp duty on an established home to live in as a first home buyer worth $650,000 is $22,251 in Queensland or $29,148 in New South Wales, according to the UNO Home Loan stamp duty calculator. These figures change often and are subject to applicants’ circumstances.

First-time buyers in Australia qualify for concessions on stamp duty in some states pending certain criteria. Typically there are house value thresholds for exemptions and the home needs to be owner-occupied for at least twelve months. New Zealanders purchasing their first home in Australia usually qualify for these concessions as well, but there are specific rules for each state.

First Home Owner Grant

NZ citizens are considered permanent residents and are therefore eligible for the Australian Government’s First Home Owner Grant (FHOG). The grant varies in each state and territory, ranging from $10,000 in Victoria and New South Wales to $30,000 in Tasmania, and is paid as a once-off grant to eligible first-home buyers. Criteria varies by each state, but generally, the house will need to be new, under a value of $750,000, and occupied by the purchaser for at least 12 months after purchase.

A Step-by-Step Guide to Buying Property to Live in Within Australia

Although buying a property is no small decision, the process can be easier and quicker than you think. Here is a step-by-step guide to buying property in Australia as a New Zealander:

1. Land a job: The first step is to start your new job in Australia and receive your first payslip.
2. Estimate your borrowing power: Use the UNO Borrowing Power Calculator to estimate how much you can borrow based on your income, expenses, and credit card limits. This will give you a budget for your property.
3. Find the best deal: Once you know how much you can borrow, a UNO broker can help you compare rates from over 20 lenders to find the best deal on your home loan.
4. Submit payslips and seek pre-approval: Submit your first payslip and seek pre-approval from lenders. You don’t need to wait 3-6 months; lenders can oversee a gap between employers provided your jobs are within the same industry.
5. Make an offer on your property and settle within 45 days.

Can I Use My KiwiSaver to Buy a House in Australia?

Before 2015, those who held a KiwiSaver for at least three years could withdraw contributions for a house deposit provided $1,000 remained in their accounts. However, since the 2015 ‘HomeStart’ amendment to KiwiSaver, New Zealand residents cannot use their KiwiSaver funds to buy Australian property.

There is some good news for NZ citizens buying property within Australia, though. New Zealanders can transfer their KiwiSaver balances to an Australian Superannuation fund and access any voluntary contributions towards a house deposit. The Australian Government’s First Home Super Saver (FHSS) allows access to voluntary superannuation funds towards a house deposit.

Buying in Australia from New Zealand

For New Zealanders seeking to purchase Australian property from outside Australia, both as an investment or ahead of moving to Australia, it is possible. However, as an investor, you will need to pay stamp duty and additional foreign duty. Australian lenders often won’t consider New Zealanders for investment loans, but UNO has lenders who specialize in mortgages for kiwi investors buying property in Australia.

Foreign Transfer Duty

New Zealanders buying property from outside of Australia need to pay an additional Foreign Transfer Duty of 7-8% depending on which state the purchase is made in. Foreign duty varies by each state, and there is no foreign duty in the Northern Territory.

Other Taxes

Other taxes, including Capital Gains Tax and Non-Resident Withholding Tax, may be payable on property held by a foreign investor. Capital Gains tax is a tax on the profits acquired from the sale of an asset, including real estate, and the rate is dependent on your income. Foreign resident capital gains withholding (FRCGW) is payable on the sale of a property valued over $750,000, and the tax rate is 12.5%. An accountant or tax agent can help you navigate any additional property taxes.

Buying property in Australia as a New Zealander can be a rewarding investment or a new home for you and your family. By understanding the process, eligibility for grants, and the associated costs, you can make an informed decision and navigate the Australian property market with confidence. For personalized assistance and expert advice, reach out to a UNO broker today.