Tips and pitfalls for Kiwis wanting to buy a home in Australia

Kiwis crossing the ditch often have to decide whether to sell their New Zealand home to be able to afford to buy in Australia. Image / Paul Slater

Kiwis have been jumping the ditch in droves recently – with many keen to buy a home once they get there.

So what do Kiwis need to know about buying in Australia?

Paul Davey is a Kiwi now making a living advising other Kiwis about how to get on the property ladder across the ditch.

He’s a mortgage adviser with UNO Brokers, having moved to Queensland’s Sunshine Coast in 2022 where he’s bought his own home.

He’s also set up the Kiwi Home Buyers in Australia Facebook page, and talks to “several” new Kiwi arrivals each day.

Here’s his tips for new arrivals:

Home loans: Do you already own a house in NZ?

One of the first questions Kiwis typically ask is whether it’s hard to secure an Aussie home loan, Davey said.

The good news is NZ citizens living in Australia are effectively treated like Australian citizens when applying for loans and buying homes, he said.

That means some Kiwis can get homes loans with deposits as low as 5%, although most will typically need to put up a deposit of at least 10%.

Securing a loan can get trickier, if you already have a mortgage in NZ.

That’s because Australian banks cannot lend against overseas properties.

Queensland and the Gold Coast are one of the most popular destinations for Kiwis moving across the ditch, with some Kiwis even being able to access first home buyer grants up to $30,000. Photo / Shannonstent

So Kiwis wanting to use equity in their NZ home would first need to take that out as cash via a loan with a NZ bank, before wiring the money to Australia.

However, Australian banks would then assess that NZ mortgage as part of their own income tests when deciding whether to grant an Australian loan.

So if the NZ mortgage was being repaid on 7% interest rates, for instance, an Australian bank might then test whether a Kiwi buyer could afford to pay that loan at interest rates as high as 10%, Davey said.

Only after that analysis was done, would the Australian bank then look at how much income was left over to pay the mortgage on the Australian property.

Davey said this “stress testing” on worldwide income and debt meant Kiwis often couldn’t afford to keep their NZ home while also buying in Australia.

He said every individual case is different and Kiwis should take professional advice.

But, as a general rule, Kiwis with large mortgages on NZ properties would typically need to sell up before buying in Australia, Davey said.

Typically only those with homes in which the rental income covered mortgage repayments were able to keep their NZ properties while also buying in Australia, he said.

“So Kiwis often have a choice to make,” Davey said, about the decision on where people wanted to own property.

“Either I’m going to remain in the NZ housing market, or I’m going to remain in the Australian housing market.”

Kiwis can qualify for first home-owners grants

Kiwis can also qualify for schemes like First Home Owner Grants.

These grants vary from state to state in Australia and usually come with conditions.

But in Queensland, for instance, Kiwis could get a grant of $30,000 for buying or building a new home valued less than $750,000.

Can Kiwis use KiwiSaver to buy Aussie homes?

Couples moving to Australia can also transfer their KiwiSaver accounts across the ditch, Davey said.

Once they do that they can each withdraw up to $15,000 – so potentially $30,000 combined – to put towards an Aussie home’s deposit.

Davey said most Kiwis he works with as a mortgage broker do bring their KiwiSaver across to help with a home purchase.

However, families should take professional advice on this as money put into an Australian superannuation fund can be hard to bring back to NZ if people decide to return home.

Kiwis moving to New South Wales can be charged an extra foreign buyer tax if have not lived in the state for at least 200 days.

Stamp duty: The extra cost

One of the costliest new barriers to buying in Australia that Kiwis need to understand is stamp duty.

It’s a property tax charged on all house sales by Australia’s state governments.

It varies from state to state but is typically around 3%.

In Queensland, stamp duty on a $800,000 property would roughly come out to about $22,000 in tax.

First-time buyers in Queensland can be exempt from paying stamp duty if they are able to buy a home for less than $700,000, Davey said.

However, finding a property in the main cities for that price can be difficult.

Kiwis should also wait until they arrive in Australia before buying a home there, Davey said.

That’s because Australia also charges a second form of stamp duty on foreigners called the Additional Foreign Acquirer Duty.

Kiwis resident in Australia are usually automatically exempt from that second tax, although in New South Wales the rules are slightly more complicated.

Kiwis in New South Wales must have lived in the state for 200 days or plan to live in their new home for 200 days to be exempt from paying the foreign surcharge tax.

If Kiwis buy an Australian home while still living in NZ, they will have to pay the foreign surcharge - potentially adding tens-of-thousands of dollars to the purchase price.

In the case of the $800,000 Queensland home above, for instance, the addition of the foreign surcharge can triple the cost of the tax up to about $64,000.

What documents do Kiwi buyers need?

Buying in Australia requires similar documents to what’s needed in NZ.

First Kiwis should land a job in Australia so they can use payslips to show they have Australian income.

Other documents could include proof of identify such as a birth certificate, driver’s licence or passport.

Financial documents, like details of your savings and bank account and credit cars are needed.

Property documents like a contract of sale are also needed for the home loan application.

Kiwis should also be prepared for additional costs beyond the deposit, including stamp duty, mortgage insurance and conveyancing fees.

Older Kiwis should take note about

Older Kiwis receiving NZ Super who want to buy a home and retire in Australia should know that they can lose their payments if they are not careful.

As Herald columnist Diana Clement reported this year, NZ Super residents should not spend more than 26 weeks in Australia or risk losing their benefits.

That’s because while NZ Super is paid to every Kiwi over 65 regardless of wealth, in Australia payments are means-tested.

In Australia, therefore, the Social Security Agreement means Kiwis only get to keep their NZ Super payments if they qualify for the Australian Age Pension.

As Clement said in her column, the rules are detailed. But basically, a home-owning couple who has more than $511,000 (A$470,000) in assets, or $784,000 (A$722,000) for non-homeowners, will be stripped of their NZ Super if they stay in Australia too long.