Recently, I came across a news article online discussing the housing difficulties faced by two Hong Kong immigrant families in Australia. The article highlighted the challenge of finding rental accommodations, as their status as foreign nationals became an obstacle in securing housing. Ultimately, these families opted to purchase properties instead, shifting from renting to buying in order to find their ideal homes.

Understanding the Australian Real Estate Market: The Rental Process

Readers might wonder if renting in Australia is really that troublesome. First, it’s essential to understand the rental process. Tenants can search for properties online or engage a real estate agent. After selecting a suitable property, they can schedule a viewing. If they find the property suitable, they submit a rental application along with the required documents, which may also involve a small application fee.

Landlords Conduct Background Checks on Applicants

Landlords select tenants from the pool of applicants, and if no agreement is reached within 14 days, the deposit is refunded. If the landlord shows further interest, they will conduct a background check, which includes verifying the applicant’s rental credit status and employment background. They may also contact referees for additional inquiries.

Low Vacancy Rates and High Rental Competition

The families mentioned in the news story faced difficulties at this stage. Due to fierce competition in the rental market, data from local real estate agents show that Australia’s residential vacancy rate was only 1.2% in April 2023. At its peak, a single rental property could attract around 20 competing tenants, illustrating the severity of the situation.

Strict Documentation Requirements from Landlords

Landlords’ scrutiny is rigorous, requiring the following documents:

• Rental application letter
• Proof of identity (passport)
• Residency permit (visa)
• Income statement or current payslip
• Previous rental payment records (tenant ledgers) and referees, such as current employers or previous landlords

For families newly arriving in Australia, providing these documents can be quite challenging. In comparison, if they already have a desired location and budget in mind, buying a property directly may seem simpler and more straightforward.

Buying a Property is Easier Than Renting

Since foreign buyers are not allowed to purchase second-hand properties, most buyers choose to purchase directly from developers, which can reduce a lot of hassle. However, foreign buyers still need to undergo a review process. Before buying, they must obtain approval from the Foreign Investment Review Board (FIRB).

Approval Process Typically Takes 30 Days

Buyers must submit an application through the FIRB website and pay an application fee, which varies depending on the type and price of the property. The review process typically takes about 30 days. Some developers may have already obtained FIRB exemption certificates for entire projects, and others might offer to cover the application fee as a buyer incentive.

Rents Have Risen by 11.1% Over the Past Year

Of course, I am not advising everyone who intends to immigrate to buy property outright. However, according to a rental report from local agents for the first quarter of 2023, the median rent has increased by 11.1% over the past year, with Melbourne seeing a 9.52% rise. On the other hand, property prices are still at a low and awaiting a rebound. The daily property index shows that Sydney’s prices rebounded by around 2% in the first week of February, while Melbourne’s prices bottomed out in early March, rising by 0.7% after a cumulative drop of 9.8% from the peak.

Housing Supply in Australia Still Falls Short of Demand

Some readers may worry about the possibility of further price declines. I believe that housing supply in Australia still falls far short of demand, and with the ongoing immigration wave, property prices are likely to gradually recover. The overall outlook for the market remains optimistic.