In 2023, an unprecedented wave of studying abroad will sweep across Australia again. As Australia fully opens its borders, the demand for studying abroad, which has been suppressed by the epidemic for three years, has finally exploded. In fact, not only international students are flocking to Australia, but many new immigrants are also rushing to Australia.
Against this background, the issue of accommodation for international students in Australia has become a top priority. Especially now, the rental market in major cities in Australia is extremely hot, and the Australian media even described it as a "rental crisis."
Since the beginning of 2023, thousands of international students have been rushing around the process of looking at houses and selecting houses every day to solve their accommodation problems. Many international students are unable to successfully rent a house even after viewing more than a dozen houses, and are even worried that they may fall into a "homeless" dilemma.
Because of this, the term "housing to support education" has begun to appear frequently in the minds of international students in Australia. Many international students and their parents choose to buy houses directly in Australia, and the benefits of doing so exceed expectations.
1. What are the advantages of “housing to support education” in Australia?
Today, as globalization deepens, each of us can choose to study and live in his or her ideal country, and immigration has gradually become a norm.
However, not every country has the same multiple attractions as Australia.
There are many benefits of studying in Australia, especially "supporting your studies with housing". Although many countries, such as the United States, Canada and Western Europe, are also popular study abroad destinations, the threshold for home ownership is high. Taking the United States as an example, every state levies property tax every year, and the tax rate is generally between 1% and 3%. Taking a property with a market value of HK$3 million as an example, a property tax of at least HK$30,000 must be paid every year. In addition, the cost of owning real estate is high, and it is relatively difficult to rent and resell it, making it difficult to create a potential market for “householding”.
Australia has a completely different situation. First of all, Australia's real estate market is very active, with high rental returns and a vacancy rate that has remained below 2% for a long time. Due to the booming Australian immigration and study abroad market in 2023, the vacancy rate will further drop below 1%. It can be said that Australia’s rental market has been in short supply for a long time, which has also contributed to its steady growth in rental returns.
Secondly, Australian real estate has many advantages, such as low down payment, permanent property rights, no inheritance tax, mortgage after handover, rent that can be used as collateral for house payment, sound real estate transactions and investment laws, etc. In addition, buying a house in Australia can also obtain permanent land rights and property rights, which means owning an asset that is completely your own. If you want to start a business in Australia in the future, you can also use your property as a mortgage loan.
2. Can international students buy real estate in Australia?
One of the great advantages of studying in Australia is that international students are eligible to buy houses in Australia. However, if a loan is required, proof of income is required. Although international students' own income is limited, they can use their parents as guarantors and use the guarantor's income as loan guarantee. Of course, the ownership of the property is still registered in the name of the parents.
What options do international students in Australia have when buying a house?
Regardless of whether international students hold a temporary visa that allows them to stay in Australia for more than 12 months, they can apply for approval from the Australian Foreign Investment Review Board (FIRB) to purchase vacant land to build a house, purchase a new house or an off-the-plan property. Whether it is for self-occupation or investment, you can achieve your home buying goals.
Unless the developer has obtained a "New Residential Exemption Certificate" from FIRB, international students need to apply separately for FIRB approval whether they are purchasing a new home or a second-hand home.
What is the cost of accommodation when studying in Australia?
Taking the accommodation fee of studying in Australia for four years as an example, one option is to buy Australian real estate before entering university, and the other option is to rent a house all the time. Many parents may initially think that there is not much difference between the two, but as time goes by, the gap will become more and more obvious.
Although choosing "housing to support education" requires initial expenses such as a down payment and stamp duty, the rental income and property appreciation in four or five years will ultimately benefit the home buyer a lot. Because after studying in Australia and buying a house, you can not only live in it yourself, but also rent out the extra rooms to earn rent. Most importantly, you can allocate overseas assets in advance and enjoy the dividends of market growth. In particular, the ultimate goal of many parents sending their children to study in Australia is to immigrate. In this way, the sooner they buy a house in Australia, the better. Otherwise, housing prices will only get higher and higher, and several years of rent will be wasted.
Take, for example, a calculation I recently made for one of my clients, Mr. Wang. Mr. Wang’s daughter will enroll at Monash University in Melbourne in February 2023. She currently rents a two-bedroom apartment with her classmates. The rent per person is 360 Australian dollars per week, and the total annual rent is 18,720 Australian dollars. Even if rents remain the same over the next few years, the cost of accommodation over four years would be $74,880.
However, if Mr. Wang chooses to buy a two-bedroom property in Melbourne worth about 700,000 Australian dollars (about 3.8 million Hong Kong dollars), his daughter can live in one bedroom and save four years of accommodation costs, while renting out the other room. Rental income over four years can partially offset the loan.
3. Is it possible to study abroad at zero cost by "supporting education with housing" in Australia?
When international students buy a house in the early stages of studying abroad, the value of the property has usually increased a lot after they graduate. If you can choose a high-quality property, the increase in value can even cover the tuition fees for studying in Australia.
In addition, for families with sufficient financial resources, if they purchase a house in full while studying abroad, the rental income will be a considerable "cash flow" for their children, enough to pay for their living expenses and part of their tuition fees in Australia.
Therefore, it is not unreasonable to study abroad at zero cost by buying a house in Australia. But not everyone can achieve this, and the specific operations vary from person to person. The key is to find professionals who are familiar with Australian real estate rules and real estate information, and choose high-quality properties. Buying a house is not just a matter of buying casually, as this can easily lead to risks.
4. Can Hong Kong assets be used as collateral for purchasing a house in Australia?
When buying a house in Australia, the property you purchase is itself the mortgage, and no additional collateral is required. In addition, if you have assets in Hong Kong, this will make your mortgage application more convincing, but it is not a requirement. In fact, as long as a home buyer can pay more than 30% of the down payment, Australian financial institutions will have full confidence in your financial ability.
5. Can international students buy second-hand houses in Australia?
According to FIRB regulations, international students holding a 500 study visa are considered temporary residents of Australia, and therefore can purchase a second-hand house for self-occupation. However, please note the following points:
a. The property needs to be sold within three months of visa expiration or departure from the country. Unless one becomes an Australian citizen or permanent resident, he or she is not allowed to continue to hold the property.
b. When purchasing a property, you need to apply for FIRB approval. The application fee depends on the housing price.
c. The property cannot be rented or sub-let, otherwise it will be regarded as violating FIRB regulations, that is, the property must be empty and unoccupied when the transaction is completed.
If an international student illegally holds a second-hand house after his visa expires, he will face a fine of tens of thousands of Australian dollars or three years in prison.
In fact, I do not recommend that international students buy second-hand houses while studying in Australia, because in addition to not being able to rent out and earn rent, if there are problems with the visa in the future, or PR cannot be obtained before the visa expires, the second-hand houses need to be sold quickly, and it is difficult to earn money. Value-added income in the Australian housing market.
Nowadays, more and more international students choose to buy houses in Australia to achieve the goal of "supporting their studies with houses" and allocate overseas assets in advance. Driven by this trend, the Australian property market is beginning to show signs of rebound, and new properties are very popular. If you carefully calculate your future renting costs, buying a house is undoubtedly a wise move if you have sufficient funds, and the sooner the better.
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