Sydney has evolved into one of the most liveable cities down under. With almost year-round sunshine, the city is home to spectacular beaches and stunning harbours. The city also has one of the highest percentages of living spaces built close to parks and community centres. So if you’re planning on moving to Aussie, then Sydney is a very good place to live.
The report released by RMIT University's Centre for Urban Research Creating Liveable Cities in Australia says Sydney is one of the easiest cities to live in the world. A large part of the population use active transport such as cycling or walking to work which reduces the carbon footprint of its residents, and helps keep pollution levels under control. If you are a Kiwi and thinking of settling down in Sydney, then the process is relatively simple and the lifestyle is similar.
A few things to keep in mind
If you hold a New Zealand passport, then you can just waltz into Sydney and purchase a property. This is mainly because you don’t need to get Foreign Investment Review Board (FIRB) approval and this smooths the entire process with minimal paperwork. However, once you have decided on the move, there a few things which you must decide upon before jumping in. These decisions mainly revolve around which property to buy, neighbourhoods, payable taxes, schemes and whether you will need a buyer advocate. Buyer advocates are professionals who leverage their knowledge of the local area to get you the best property at the best price. They definitely make the process a whole lot easier than it already is.
The real estate market in Sydney
After uninterrupted growth over the past few years, the real estate market in Sydney is slowing down. If you are someone looking to invest in a home, now is a great time to do it. However, you do need to consider the interest rate hikes of last year which have to be factored into your calculations. CoreLogic, a leading property analyst has reported that the median property price has fallen by 0.5% in October, to NZ$1.3 million. The fact that the market has slowed down can also be seen from the reports released by SQM Research, which talks of falling auction clearance rates. However, this hasn’t impacted on Sydney’s tag of being one of the most expensive capital cities in Australia, mainly due to the high demand for quality dwellings. From a financial perspective, if you are planning to make the move to the city, then the current market situation is just right for you to take the leap.
Should you buy or rent?
Once you have decided to move, the next decision should be whether you want to rent or buy a single unit/apartment or a house. This is dependent on a number of factors like the size of your family, investment appetite and future plans. The past few years have shown individual houses to outperform apartments, although the former is a tad bit more expensive. The median cost of a house in Sydney is $1.2 million as compared to $770,000 for apartments. However, some of western Sydney’s more affordable neighbourhoods have house prices below $500,000.
If you aren’t sure about your plans just yet, then you can go ahead and rent a single unit or house in the interim. The median rental cost is around $600 for both houses and apartments which makes the rental situation a bit more attractive. From a return on investment perspective which is basically the percentage of income return over the cost of a property, rental yields are one of the lowest in Sydney. So, if you are looking to move permanently with family, purchasing a property would be a better option as compared to renting one.
Choosing a good suburb or neighbourhood in Sydney
Sydney has some beautiful suburbs and neighbourhoods where you can settle. Here, we’ve developed a useful guide if you are looking to purchase property in the city.
The best way to find your neighbourhood is to decide where are most likely to work and then identify the public transport network in the area. If you have kids, then take the location of schools into consideration and try looking for homes in close proximity to them.
Location is also dependent on what you’re interested in – for instance, if you are interested in restaurants and going out, then Balmain is a strong contender. The neighbourhood is an affluent one, located to the west of Sydney with a trendy restaurant scene, pubs and cafes. Beautiful Victorian houses adorn the streets alongside artisan bakeries, boutique stores and eateries. If you like organic crafts, food and fashion then the Saturday market in Balmain will be right up your alley. Most families who live here have a median weekly income of $2500+ making Balmain aan affluent neighbourhood to move to.
If you have a smaller budget, then Kensington would be a good option to consider. It is located in south-east Sydney in the city of Randwick. With Moore Park to the south and Randwick Racecourse to the west, Kensington is a brilliant accessible place to relocate to. It also makes for a good investment as the neighbourhood will benefit from the upcoming south-east light rail project. The median household income for families living here is around $1400, which makes it more affordable than Balmain. Also, your investment is bound to double in value in less than eight years.
Another residential suburb which might attract your attention is Summer Hill. It’s a residential area which is located to the west of Sydney and has a rich cultural heritage. More than a hundred properties listed here fall under the heritage category making it a wonderful place to settle down if you like character homes. With a population of barely 6000, Summer Hill has a lot of character with a calm and laid-back atmosphere.
These are just a few neighbourhoods you can consider for renting, but purchasing a property here might be a better decision from an investment perspective.
Buying property in Sydney
To qualify for a home loan, you need your Special Category Visa (SCV) which allows you to purchase property in Australia. After arriving, the process to obtain a mortgage in Sydney is very similar to New Zealand. You will be asked to furnish your proof of income which can be tax return documents or pay slips issued by your employer. There will be a ten percent deposit minimum, but the amount might change depending on your financial position and the policies of the bank you are borrowing from.
If this is your first time buying a home, then it is a good idea to check whether you can use your KiwiSaver deposit, as you may be able to despite being in Australia. If you qualify under the First Home Owners Scheme, then this deposit can go a long way towards financing your home.
You can also use buyer advocates who can simplify the entire process for you even further. They are local professionals who can help you get the best property at the best prices. Usually their fee is 1.5% of the property price but you can negotiate on it beforehand. It is always worth it, as they can help you save a whole lot of trouble and money. Speaking to a lawyer is always a good idea as they will help ensure that you are not in for any nasty surprises.
Just like New Zealand, you will also be asked to produce your credit rating. Financial institutions in Sydney will look into this before approving a mortgage. If you do not know your credit rating then you can get a free copy from Equifax, which was formerly known as Veda Advantage. Your credit rating in NZ will affect your ability to get a mortgage in Australia, so don’t leave debt behind.
Taxes and other payables
There are certain taxes and other payables which you may be required to pay if you buy and sell property in Sydney. The most important one is Stamp Duty Tax which is added to the purchase cost. Read the fine print carefully before putting your signature on any document as these will be important while filing your tax returns. The best way is to hire a competent accountant before signing on the dotted line for these duty payments. You may not be required to pay this, so seek professional advice beforehand.
There is an additional Capital Gains Tax which is applied only if you sell property in New Zealand while living in Australia. However, if you have sold that property before you moved over the ditch, then this tax doesn’t apply to you. Additionally, if you hold an SCV, then you may be exempt from paying certain taxes. Hiring an accountant is a good idea as they will be able to guide you through the process and get you the best price possible.
Renting property in Sydney
The rental market in Australia is very competitive and Sydney is no exception. Almost all rental properties in the city will ask you to submit a tenancy application, along with multiple supporting documents. A few things which you will need to keep handy –
- A written reference from your previous landlord
- Contact information of your previous landlord
- Bank statements for the last three months
- If you have received a bond back, then proof that it was paid in full.
The identification check to rent property in Sydney is based on a points system. Your various proofs of identity are allocated points, and you add them up to 100 in order for them to be accepted. Your passport and birth certificate are worth 70 points while your driver’s licence is 40.
Due to the highly competitive rental scene, you should begin searching a few weeks prior to your arrival. Then, when you’ve found your dream rental, you have all the information you need to make a quick application before anyone else does.
When you are ready, it’s best to search online for rental properties. Houses and apartments come furnished or unfurnished, and this depends on what you want—are you moving your furniture to Australia? The lease will likely have a minimum timeframe of six months to a year. Below are some rental websites in Australia that have a good selection of Sydney properties.
Make the choice that suits you best for now
Whether you choose to buy a property or rent one, it is imperative that you do your homework. Speak to people who have already made the move, so you have a better idea of what to expect. This will also give you an inkling to current market prices and prevent you from being taken for a ride.
Sydney as a city is a spectacular place to live in, and you might not find a home immediately. Find a temporary places to stay, like a short term motel or an Airbnb while you search. Going by the fact that you will have to live with the end result (quite literally!), it makes a lot of sense to give your search the time and energy it deserves. If you feel that consulting accountants, lawyers, and buyer advocates might prove to be expensive, always remember these one-time expenses will save you a lot of money in the long run.
So, go ahead and begin your research and enjoy the jump over the ditch.
