Housing 1.01 For the Lost Oz Migrant

I wrote The Broken Dream some time ago to warn future Singaporeans against diving blindly into the housing market with the old rules in mind. It was not to be mistaken for my disappointment about the housing situation in Perth. They are two different matter altogether. Besides, you would not imagine I needed 3 years in Perth to know what is going on here. I may not be the smartest guy around but I'm not dense. In fact, I wrote that for those dear countrymen whom appeared to be so. I sure hope I was wrong and my remainders weren't necessary.

If we put housing stuff in Perth aside and just focus our Singapore housing market, the public housing sector in particular, I believe a vast majority of the population still believe in the old "Housing price will always go up," mantra. Or at least, in the "long run." Sure, if your "long run" refers to a span of 2 decades, where housing demand will be heavily boosted by our liberal migration policies to fulfill the goal of increasing our current population to a ballpark figure of 6.9 million or even 10 million, if murmurs were to be believed. Perhaps in such a situation, housing prices will really continue to increase steadily. However to expect the value of a HDB flat to triple like some of our parents' flats is foolish because such a phenomenon will never happen again in my lifetime. In fact, we should be happy if we could get back all the interests we paid to HDB or the bank when we sell. Any real profit is a bonus.

I'll reiterate what I mentioned in The Broken Dream. Yes, of course a house will make a good investment if you sink an entire shipload of cash into it. Your house will give decent returns either by capital appreciation or income yields over the years even on a weak housing market. It is a totally different story if you take a huge loan to finance the house, based on cut throat interests incurred due to how much longer it takes for our generation to repay the debt in full as compared to our parents' generation.

As most of us know the power of compounding by now, we will be well aware how dangerous it will be to have that working against us. So thread carefully my friends. I'll leave you with some professional writings about housing basics from a Singaporean, an ex-teacher, who moved to Perth in 2010 and had been working as a business banker since. Hope you will find it as useful as I did.

21 September 2014

Hi, I’m Jay and I got in contact with Nix as I wanted to contribute articles about property purchase and ownership in Australia. I often get asked by Singaporeans and our Asian neighbours about getting a loan, when to buy, what’s required and a whole lot more, so I am using Nix’s blog to help share what I know as I felt it tied in with many of his articles.

The information presented here are of my own personal views and experiences. Please do not take it as Gospel.

Buying vs Renting

One of the first things a migrant needs when they first arrive is accommodation. If you do not have the luxury of staying with family or friends, then finding a rental is the next best option. Some lucky migrants who can afford it, may look to purchasing a property when or even before they arrive. However, not all of us are that lucky and we have to take the steps to home ownership in Australia apart from learning to settle here.

In Australia, there are numerous rental properties that come on the market every week. Depending on which state you are in and suburb location, the rental rates can also vary significantly.
In Perth itself, the rental rates can range from $300/week to $600/week for a decent 2 to 4 bedroom house. If you have the dough and want to be close to the city or beach or both, then rents would be above $1000 a week at least. Though  you may be able to get studios and 1 bedroom apartments for $400-$500/week. I can’t say much for the other states, but go on www.realestate.com.au and you can do your own research.

Many Australians themselves rent for many years before buying. Most young couples would not have the savings for a 5% deposit required by most lenders to buy a house. With the median house prices in the Perth metropolitan area at $550,000 (www.landgate.wa.au) , that’s a $27,500 minimum savings a first home buyer must show in their account for  3 months, and their income must be able to service the loan about on top of their existing liabilities.

Similar to rental rates, the cost of a house here depends on several factors. So if you are not fussy and willing to live about 30-45 minutes from the City Centre, there are many beautiful 4bedroom homes for sale from $450,000 to $600,000 on a 400-550sqm block. If you want something cheaper and a little smaller, then an hour away, you can also get 3bedroom homes for between $350,000 to $450,000.
However, if you want to buy close to a premium public school or within 15 minutes from the city, then you would be lucky to find anything under $750,000. Or if you have the financial capacity to do so and can wait, buying a block of land and building is also a good option.

·         Fixed payment (at least for the term of the rent or until the landlord increases it)
·         In most cases, the landlord is responsible for maintenance (unless stated). Example : water heater running cold, cracks on wall, etc.
·         No council rates to pay (Similar to HDB conservancy or condo rates) which averages from $1500 /year
·         Getting a house close in a desired location otherwise unattainable via a purchase. Example : close to a good school, close to city

·         Regular inspections if the property is managed by a property manager – usually every 3 months
·         Payment of bond (1-2 months worth) – when the lease has ended, if there are maintenance issues which are your responsibility,
·         Restrictions on what you can do to the property – put nails up for pictures, etc (depends on lease contract)
·         The main thing is the ‘loss of income’ – as most people say that Rent money is dead money – In other words, you will not see that money again.

If you are new to the country, it will not be easy getting loan from the banks for a new home purchase as you will need to show savings, sufficient income and stable employment. (More on this later.)
So renting when you first get here is the best option to get a feel for the area you are in, get to know your suburbs, places to go, work and school locations , etc, before deciding on where you may want to buy or build.

·         It is likely you own your own flat, condo in Singapore, so I will not go too much into home ownership benefits.
·         The property is yours – what you pay to the mortgage is for your own home
·         The usual benefits of building equity, having an asset, and potential growth over time

·         If the loan is on a variable rate, your mortgage repayments can change when interest rates change.
·         Other fees to pay : council rates, building insurance, etc
·         Obviously you are responsible for the maintenance and upkeep of your property


I am a PR, been working in Australia for 6 months or more, have savings and buying my first home in Australia.

You can borrow up to 95% of the purchase price through the main banks or 98% through a government linked lender call Keystart.
Generally I would recommend a minimum 10% deposit as it gives you more lender options.

You need to show:
·         A minimum of 5% of the purchase price of a house saved/held in a bank account for a minimum of 3 months.
·         PR Visa – for application for First home owners grant (for stamp duty waiver and grant of $3,000 or $10,000)
·         Full time or part time employment.
·         And ability to service the proposed loan based on lender policies.

You can :
·         Buy established
·         Build
·         Buy off the plan

Important to note:
If putting a deposit less than 20% of the purchase price, all banks, except Keystart charge a Lender’s mortgage insurance (LMI) on top of you base loan required. LMI basically a cover the lender takes to protect the LENDER against a loss should you default on your repayments and to cover the risks for lending your more than the standard 80%. DO NOT confuse this with mortgage protection insurance.
LMI costs vary between banks and insurers and also dependent on the loan amount and purchase.

First home owners grant:
·         Stamp duty waived for established properties up to $430,000
·         $3,000 grant for established properties
·         $10,000 grant for construction

I am a Australia PR, but still live and work in Singapore (but intend to move over soon)
You can still purchase a property here, but the income assessment would be different.
Some lenders would also require a full 20% deposit.

The other points are similar to the above scenario.

If you are unable to prove that you are returning/arriving to live in the property, then it is unlikely you will be eligible for a grant. Which means you need to come up with the stamp duty.

I am a Singaporean, No PR and want to get a loan from Australia to buy a house for investment
You will need :
·         Payslips and IRAS tax returns proving income – banks here like Singapore Income, but they do not take it at 100% as exchange rates must be taken into account.
·         Proof of 20% deposit + stamp duty (non-residents will not be able to get above 80% loans)

You can purchase
·         Newly built houses (not lived in)
·         Buy a house and land package (liaise with a builder who get a block of land for you and you can decide on the house you want)
·         Or an Off the plan home (full turnkey house where everything is provided)

You cannot purchase
·         Established properties – Unless you have FIRB approval www.firb.gov.au

The final decision is obviously with you. Everyone has their own preferences and maybe renting for the next 5 years is better for you. Or maybe your have sold your property in Singapore and want to put a large deposit down for a new place here right now. In any finance decision, the best person to know what works is yourself.

I hope this gives you a rough idea. Other articles to come
·         Building vs buying established
·         Variable or fixed rates?


  1. Hi Jay, thanks for the info. Can I have your email address pls? I have some questions. Thanks a lot!

    1. Hi Laurence. Email me sanjay@pembertown.com

  2. [quote]You can borrow up to 95% of the purchase price through the main banks [/quote]

    i have to say this piece of info is off the line as this is ONLY applicable to certian scenarios:
    1) investment only ppty
    2)2nd or 3rd ppty

    if this is meant for first home, nope, there is no banks willing to loan to u. It is already at such when this article was written. I know cos i was shopping for a loan since then

  3. for oz pr but live & work in SG, U only can get loan from limited banks. some will require u for 30% dwnpaymt. once u secure your own, then u can quite ur job n move to australia