RESIDENTIAL RESEARCH - Knight Frank
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RESIDENTIAL RESEARCH LIVING & STUDYING BUYING PROPERTY WHY INVEST?
Contents
1. Sydney—The global city
page 2
2. Living in Sydney
page 4
3. Studying in Sydney A thriving global city is one that delivers
page 7 an outstanding lifestyle and attracts many
City Wealth Index
visitors from around the world. Sydney In the Knight Frank City Wealth Index
4. Housing in Sydney 2019, Sydney ranked 8th of the cities that
continues to mature as a global city with
page 10
strong investment in infrastructure and a matter to the ultra-wealthy.
5. Renting in Sydney push to increase density close to the city.
page 11 Sydney is now counted as a city that Across the three categories, Sydney
matters to the ultra-wealthy. This guide performed best in the ‘investment’
6. Buying in Sydney focuses on living, studying and buying category (6th) based on major property
page 12 residential property in Sydney. investments by private individuals or
family offices across both commercial
7. Buying as a First Home Buyer and residential markets.
page 13 Liveability
Sydney ranked in 5th place of the World’s
8. Buying as a Foreign Investor
Most Liveable Cities in 2018. This was up
page 14
from 11th place in 2017, according to the The Knight Frank City Wealth
9. Owning in Sydney Economist Intelligence Unit, as shown in Index 2019, Sydney
page 19 Table 1. 50 international cities ranked in each category
10. Selling in Sydney The index is based on 30 factors spread Ranking
page 20 across five areas: stability, infrastructure,
Wealth 27
education, health care and environment.
Feature: Investment 6
10 reasons to invest in Sydney
page 22 Lifestyle 16
OVERALL 8
Most Liveable Cities 2018
Index of 140 global cities based on Stability,
Infrastructure, Education, Health Care
& Environment
1. Vienna, Austria
2. Melbourne, Australia
The ‘lifestyle’ category also scored well
3. Osaka, Japan (at 16th), taking in the elements of the
number and quality of universities,
4. Calgary, Canada
security, as well as, the number of five-
5. Sydney, Australia star hotels and the quantity and quality of
leading restaurants.
6. Vancouver, Canada
=7. Toronto, Canada Sydney came in 27th position in the third
category ‘wealth’. Using data from
=7. Tokyo, Japan analyst GlobalData WealthInsight, the
9. Copenhagen, Denmark current population of HNWI (those with
assets of more than US$1 million) and
10. Adelaide, Australia UHNWI (those with net assets of over
US$30 million) residents were looked at
in each city, in addition to, analysing
recent growth performance.
2
FOCUS ON SYDNEY Q2 2019 RESEARCH
International Many international and luxury clothing
brands and jewellery stores are well-
Visitors established along Pitt Street Mall, George
FAST FACTS
The harbour is home to some of Street, King Street and Castlereagh
Australia’s most iconic landmarks – the Streets. Sydney also hosts a variety of SYDNEY
Sydney Harbour Bridge, the Sydney markets throughout the year with a wide
Opera House and the Royal Botanic variety of fresh food, clothing, gift wares • Sydney is the state capital of
Gardens. International cruise ships are with individual traders and established New South Wales (NSW).
regularly docked including the Queen retail stores setting up pop-up shops.
• Australia’s largest capital city,
Mary II and Ovation of the Seas; boosting
with approximately 5.1 million
tourists in and around The Rocks and The Rocks markets are iconic with the residents estimated living in the
Darling Harbour. Sydney’s famous cobblestone streets with great access to Greater Sydney region in 2017.
beaches are within close proximity to the the City and Harbour. Manly markets are
city including Bondi and Coogee whilst hosted amongst historic buildings with • Located on the East Coast,
Manly is a short ferry ride north. seaside backdrop. and covers a geographic area
of 12,350 sqm.
Sydney accommodates a vast array of The number of international visitors to • Slightly humid, hot summers
world renowned restaurants, art galleries, New South Wales (NSW) grew 3.0%, to (mean maximum 26°C) and
independent fashion houses and vibrant 4.4 million, in the year ending December cool winters (mean average
retail strips. Prominent shopping centres, 2018. The most number of international 8°C).
such as Westfield Sydney and Westfield visitors came from China (772,000),
• Most daily sunshine is nine (9)
Bondi Junction act more as destinations United States (495,000), New Zealand
hours in the month of
than simply retail outlets—providing (441,000), United Kingdom (372,000) and December.
entertainment and restaurants in addition South Korea (205,000).
to the plethora of shops. Many arcades, • Sydney operates under the
often hidden in historic buildings, are International visitors from China grew by Australian Eastern Standard
scattered throughout Sydney. Both the 17.7% in the year ending December Time (AEST) time zone from
early April to early October
Queen Victoria Building and The Strand 2018. The United States increased by
each year and Australian
Arcade offer a mix of boutique shops for 11.3% and New Zealand decreased by Eastern Daylight Time (AEDT)
locals and tourists. 10.1% over the same time. at other times of the year.
• From Sydney, current average
flying travel time is
approximately eight (8) hours
to Singapore and Jakarta, nine
(9) hours to Hong Kong and
International Visitors to New South Wales, by Country of Residence Kuala Lumpur, 10 hours to
Total number, year ending December 2018 Shanghai and 12 hours to
Beijing.
China • Sydney is regarded as
U.S Australia’s financial hub,
New Zealand attracting professionals from
U.K
Other Countries
Asia Pacific and around
South Korea the globe.
Japan
India
Hong Kong
Germany
Singapore
Other Asia
Other Europe
Canada
Taiwan
Malaysia
Indonesia
France
Philippines
Scandinavia
Italy
Thailand
Switzerland
Netherlands
Ireland
0 100,000 200,000 300,000 400,000 500,000 600,000 700,000 800,000
3
Sydney’s Language
Demographic Other than English, Mandarin (4.7%) was
the most common language spoken in
SYDNEY ANNUAL Profile Sydney at the time of the Census 2016.
EVENT CALENDAR Other typical languages included Arabic
Population (4.0%), Cantonese (2.9%), Vietnamese
JANUARY Population has been steadily rising in (2.1%) and Greek (1.6%).
• Sydney Chinese New Year Sydney with strong overseas migration
Festival
into the city. Over the year to 30 June
• Sydney Festival
• New Year’s Day Cricket Test 2017, an increase in the estimated Education
• Australia Day Sydney resident population was recorded at
Celebrations Sydney is a skilled city. A higher
2.0% to 5.1 million. This is ahead of the
proportion of people are educated at
FEBRUARY overall Australian population growth of
university level (28.3%) compared to the
• Tropfest Short Film Festival 1.6%. According to the Australian Bureau
• Sydney Gay and Lesbian Mardi Australian average (22.0%). In Sydney,
of Statistics (ABS), the Sydney population
Gras 19.2% of the local student population
is projected to grow annually by a
MARCH were studying at university in the 2016
minimum of 1.4%, to total 6.6 million
• Sydney Harbour Regatta Census, compared to the national
persons by 2036.
• Australian Athletics average of 16.1%.
Championship
• Sydney Design Week
APRIL Age Distribution Work
• Sydney Royal Easter Show
Residents are primarily in the younger
• Sydney Comedy Festival The most common occupation of
age groups—with 37.6% of Sydney’s
MAY Sydney’s residents are in professional
population aged between 20 and 44
• Vivid Sydney Light Festival services—at 26.3% compared to the
years old, compared to the national
• Sydney Writer’s Festival 22.2% national average. Clerical and
• Mercedes-Benz Fashion Week average of 34.6% for this age group.
administrative workers (14.6%),
Australia
managers (13.7%) and technicians and
JUNE trades workers (11.7%) were the next
• Sydney Film Festival Multiculturalism most common occupations.
• Bondi Winter Magic
Sydney is a true multicultural city, with
JULY 42.9% of residents born outside of Of all the employed people in Sydney,
• Parramatta Winterlight
Australia. The most prominent countries 3.4% worked in hospitals. Other major
AUGUST include China (4.7%), England (3.1%), industries of employment included
• City2Surf
India (2.7%), New Zealand (1.8%) and computer system design and related
• Sydney International Boat Show
• Oxfam Trailwalker Vietnam (1.7%). services (2.5%), cafés and restaurants
(2.5%), banking (2.5%) and supermarket
SEPTEMBER
In addition, approximately 49.4% of and grocery stores (2.0%).
• Sydney Fringe Festival
• Cabramatta Moon Festival Sydney’s resident’s parents were born
overseas—compared to the national
OCTOBER
• Sydney Night Noodle Markets average of 34.3%. This wide diversity has Travel to Work
• Sculptures by the Sea encouraged many international
In Sydney at the time of the Census
• Manly Jazz Festival restaurants, schools and cultural
• Everest Horse Race 2016, the most common methods of
activities established within communities.
travel to work for employed people were
NOVEMBER
• Emirates Australian Open by car, as a driver (52.7%), train (10.9%)
and bus (5.5%). Other common
DECEMBER Religion responses were worked at home (4.4%)
• Carols in the Domain
• Sydney to Hobart Yacht Race The most common religion affiliation in and walked only (4.0%).
• Sydney New Year’s Eve Sydney is Catholic with 25.1%, followed
Fireworks closely by 24.6% with no religion stated. On the day, 22.8% of employed people
The Anglican religion was practiced by used public transport (train, bus, ferry,
12% of the Sydney population followed tram/light rail) as at least one of their
by Islam with 5.3%. methods of travel to work and 59.8%
4
FOCUS ON SYDNEY Q2 2019 RESEARCH
used a car (either as driver or as Leonards and Chatswood. Accessible by: Industrial
passenger). train, ferry, bus and car. Industrial areas are more spread across
the metropolitan area varying from
Macquarie Park includes the suburbs of distribution centres, to warehouses, and
Key Employment Macquarie Park and North Ryde. Workers
are within close proximity of Macquarie
industrial estates. Mostly they are
accessible via bus, truck and car.
Hubs University, the Macquarie University
The distribution of employment Hospital and the Macquarie shopping South: Banksmeadow, Port Botany,
opportunities are wide across Sydney, centre. Accessible by: train, bus and car. Rosebery, Enfield, Marrickville,
although there are key concentrated Kingsgrove, Airport.
areas for office and industrial workers. Parramatta represents Sydney’s second
CBD with a high concentration of North: Artarmon, Mount Ku-Ring-Gai.
government tenants including the NSW
Commercial Law Courts. Accessible by: train, ferry, Inner West: Chullora, Silverwater,
Sydney CBD is the largest office market bus and car. Rydalmere, Lidcombe, Regents Park.
in Sydney. It extends from Central
Station to Circular Quay, and across from Suburban locations include Surry Hills, Outer West: Yennora, Smithfield,
Barangaroo to Hyde Park. Accessible by: Ultimo, Sydney Olympic Park, Burwood, Wetherill Park, Greystanes, Eastern
train, light rail, ferry, bus and car. Rhodes, Norwest, Mascot, Liverpool, Creek, Erskine Park, Arndell Park,
Bankstown, Penrith are accessible by Huntingwood, Marsden Park.
North Shore accommodates the next train, bus and car. Whilst those better
largest office market comprising the main serviced by bus and car include Pyrmont, South West: Moorebank, Prestons,
suburbs of North Sydney, Crows Nest/St Lane Cove and Alexandria. Ingleburn, Minto and Smeaton Grange.
Sydney
Major infrastructure network
5
6
FOCUS ON SYDNEY Q2 2019 RESEARCH
Schools Universities single student visa regardless of their
chosen course of study and the Student
Schools in Australia generally comprise a Most universities have a main campus Guardian Visa—Subclass 590 where
mix of local and international students. with several smaller campuses located student guardians can apply for the new
The education system is broadly divided across multiple states and territories; in Student Guardian Visa.
into primary (aged 5-12) and secondary CBD, metropolitan and regional areas.
(aged 13-18). There are two main types This provides a wide range of options All students and student guardians will
of public and private schools: when studying in Australia with many generally be required to lodge their visa
universities also setting up campuses application online by creating an
based in major international cities. ImmiAccount.
Public Schools
Public schools are financially and
administratively operated by the State
Government and provide free education
International
to domestic students. First preference is Students
normally given to those living within a Reflecting the strong reputation
particular catchment area from the internationally, universities in NSW APPLICATION
school. Student visa holders must pay a accommodate a large international PROCESS FOR
fixed fee for each year of education, student base. International student
dependent on the type of visa held.
INTERNATIONAL
enrolments in NSW increased 10.5%, to
336,391, in 2018. Higher Education had
STUDENTS
Selective public schools are financially the most demand in student enrolments
and administratively operated by the with 143,673, while international
State Government. Selective public enrolments in Schools represented a
TO SCHOOL
schools are regarded as more prestigious total 6,387 students. Expression of interest form: must
due to the academic selective nature. be completed prior to the school
Students must sit academic examination Across all education sectors, the largest year in order to guarantee a
and excel in order to be offered a group of international students have position for the student.
position from the respective school. enrolled in NSW are from China (96,500),
Nepal (34,500), India (27,500), Brazil Wait for offer: If all requirements
Additionally, these selective public (20,700) and Thailand (15,800). are met, the school will offer a
schools do not usually limit their intake to formal placement in writing.
catchment areas. Due to their public The application process for international
nature, student visa holders must pay a students applying to Australian Apply for a Student Visa: With the
fee for each year of education. universities is similar to local students. formal school offer, students can
The length of the application process can then apply for the SSVF online.
Private Schools often be longer than local students, as
more information is required before
Independent schools are financially and
acceptance.
administratively privately operated. TO UNIVERSITY
Independent schools therefore hold more Apply directly online: through the
Most universities will require an IELTS
control over the quantity and quality of university website and provide all
(International English Language Testing
teachers, classroom sizes, amenities and required evidence. In most
System) examination conducted, an
co-curricular activities. Fees for instances this is prior education,
internationally recognised education
independent schools are usually high, but financial and English language
qualification and a portfolio of previous
can be considered to provide an competence.
work experience where applicable.
investment for superior education and
amenities to students. Wait for Offer: If all requirements
The Simplified Student Visa are met, the university will offer a
Religion-based schools hold faith at the Framework (SSVF) formal placement in writing.
core of their education—however they The Simplified Student Visa Framework
continue to follow the state government (SSVF) is designed to make the process Apply for a Student Visa: With the
education curriculum. These religion- of applying for a student visa in Australia formal university offer, students
based schools are usually non- simpler to navigate via two subclasses: can then apply for SSVF online.
government, and thus often have higher
fees than government subsidised Student Visa—Subclass 500 where
schools. international students can apply for a
7
Private Schools for International Students, Sydney Sample of private schools registered to accept international students, 2019 S ub ur b S chool R elig ion Gend er Year Lev els Aub ur n Sule College Non-denominational Co-ed K-6 B ellev ue Hill Cranbrook School Anglican Boys pre-K-12 B ellev ue Hill The Scots College & Prep School Presbyterian Boys pre-K-12 B elr os e Covenant Christian School Christian Co-ed pre-K-12 B ur wood MLC School Uniting Girls pre-K-12 Chip p end ale Uniworld Non-denominational Co-ed 10-12 Collar oy Pittwater House School Non-denominational Co-ed pre-K-12 Cr emor ne Redlands Church of England Co-ed pre-K-12 Cr oy d on Presbyterian Ladies College Presbyterian Girls pre-K-12 D ee Why St Luke's Grammar School Anglican Co-ed pre-K-12 D ulwich Hill St Maroun's College Catholic Co-ed pre-K-12 E d g ecliff Ascham School Non-denominational Girls pre-K-12 For es tv ille Forestville Montessori School Montessori Co-ed pre-K-9 Gleb e Point St Scholastica's College Catholic Girls 7-12 Gor d on Ravenswood Uniting Girls K-12 Hur s tv ille St George Christian School Christian Co-ed K-12 Hur s tv ille Danebank School Anglican Girls pre-K-12 Kenthur s t Hills Grammar Non-denominational Co-ed 7-Dec King s for d St Spyridon College Greek Orthodox Co-ed pre-K-12 M anly Stella Maris College Catholic Girls 7-12 M ar oub r a The French School Non-denominational Co-ed pre-K-12 M id d le Cov e Glenaeon Rudolf Steiner School Non-denominational Co-ed pre-K-12 M os man Church of England Preparatory Anglican Boys pre-K-6 M os man Queenwood School For Girls Non-denominational Girls K-12 Neutr al B ay SCECGS Redlands Church of England Co-ed pre-K-12 Newtown The Athena School Non-denominational Co-ed pre-K-10 Nor th B ond i Reddam House, North Bondi Non-denominational Co-ed pre-K-12 Nor th Par r amatta Tara Anglican School for Girls Anglican Girls Pre-K-12 Nor th S tr athfield The McDonald College Non-denominational Co-ed 3-12 Nor th S y d ney Wenona School Non-denominational Girls K-12 Nor th S y d ney Shore, Sydney Church of England Grammar Anglican Boys pre-K-12 Py mb le Pymble Ladies' College Uniting Girls K-12 R os e B ay Kambala Anglican Girls pre-K-12 R os e B ay Kincoppal Catholic Co-ed pre-K-12 R os ev ille Roseville College Anglican Girls K-12 S ans S ouci St George Christian School Christian Co-ed K-2 S outh B elmor e All Saints Grammar Greek Orthodox Co-ed pre-K-12 S t I v es Masada College Jewish Co-ed pre-K-12 S tanmor e Newington College Uniting Boys pre-K-12 S tr athfield Meriden School Anglican Girls pre-K-12 S ummer Hill Trinity Grammar School Anglican Boys pre-K-12 S y d ney St Andrew's Cathedral School Anglican Co-ed K-12 S y d ney Macquarie Grammar School Secular Co-ed 7-12 Ter r ey Hills Northern Beaches Christian School Christian Co-ed pre-K-12 Ter r ey Hills German International School Non-denominational Co-ed pre-K-12 Ultimo International Grammar School Non-denominational Co-ed pre-K-12 Wahr oong a Knox Grammar School Uniting Boys K-12 Wahr oong a Abbotsleigh Anglican Girls pre-K-12 Water loo Taylors College Non-denominational Co-ed 10-12 Wav er ley St Catherine's School Anglican Girls K-12 Woollahr a Reddam House, Woollahra Non-denominational Co-ed pre-K-12 8
FOCUS ON SYDNEY Q2 2019 RESEARCH
Universities, New South Wales
Universities accepting international students
Annual Average
World Australian Number of International
Adjusted International
University Name Ranking Ranking International Students % of
Graduate Salary Student Fees
2017 2017 Students Total Students
University of Sydney 78 12 $50,046 13,000 24% $38,000
University of New South Wales 89 15 $50,424 12,283 24% $37,000
University of Technology, Sydney 292 11 $47,548 9,722 26% $29,000
Macquarie University 273 19 $45,797 8,790 23% $33,000
University of Wollongong 306 3 $52,120 12,429 41% $26,000
University of Newcastle 341 9 $49,629 5,338 16% $25,000
Western Sydney University 510 35 $47,035 4,537 11% $24,000
University of New England 732 14 $48,958 933 5% $20,000
Charles Sturt University 779 30 $51,022 6,847 18% $22,000
Southern Cross University 1,054 40 $47,728 1,921 14% $21,000
Definitions
World Ranking is calculated by averaging the ranking produced by QS World University Ranking, the Shanghai Academic Ranking of World Universities and Webometrics web publishing
rankings.
Australian Ranking is calculated from the combined score for World Ranking (reputation), Graduate Satisfaction (ratings) and Adjusted Graduate Salary (results).
Adjusted Graduate Salary is a measure of how well students are doing in the job market some months after graduating based on graduate salaries, rates of unemployment and the proportion
of students who go onto further study.
Annual International Student Fees are an estimate only. It is highly recommended to engage directly with the Australian university for information on the cours e and fees applicable.
Further information is available at univeristyreviews.com.au
9
Many believe Australians still aspire to mortgage. The remainder (34%) were
• Sydenham to Bankstown Urban
one day own the ‘Great Australian Dream’ being rented from a landlord. Renewal Corridor
- a house standing on a ‘quarter acre
• Turrella
block’. Although times are changing.
• Wentworthville
With our fast-paced lives many are now
Precincts with planned public transport
opting for low maintenance living, with a
Distribution of Tenure, Sydney connections include:
high standard of amenity, as more people
become accustomed to the level of % of private dwellings • Cherrybrook Station Precinct
service delivered when travelling, and • Greater Parramatta Growth Area
living in, high-density global cities around • Sydney Metro Northwest Urban
Renewal Corridor
the world.
• Telopea Precinct
Dwelling Types Precincts to provide businesses in the
region with land for industry and
Standalone houses (also known as employment include:
landed) do continue to be the most • Carter Street
dominant dwelling type in Sydney, • Frenchs Forest
representing 57% of all dwellings. This • Western Sydney Employment Area
trends lower than the national average of
• Western Sydney Aerotropolis
73% given the greater volume of higher
• Westmead
density properties. While semi-detached,
row or terrace houses and townhouses, Precincts to unlock land for future
with a compact backyard, comprised a RENTED
residential homes include:
OWNED WITH MORTGAGE
14% share. OWNED OUTRIGHT
NOT STATED
• Ingleside
OTHER
• Marsden Park North
A little over 28% of dwellings are flats or
• North West Growth Area
apartments – compared to the national
• North Wilton & Wilton
average of 13%. This reflects Sydney’s
ongoing urban consolidation over the
• Rhodes East
past decade, as well as, the increasing • Schofields Town Centre
use across the metropolitan area for • South West Growth Area
public parklands and shared facilities. • Vineyard
• West Schofields
Ownership Growth precincts
In Australia, most residential dwellings
The NSW government has identified key
locations across Sydney suitable for
Prime properties
are purchased as freehold property, that rejuvenation with new homes and jobs. Prime properties, considered the top 5%
is, the land and building are owned of the residential market by value, are
outright, in perpetuity, under the Torrens Precincts with good access to existing mostly located close to, or dotted
Title system. public transport connections include: around, Sydney Harbour. Well-respected
private schools in these suburbs attract
• Bardwell Park
The same exists for Strata Title, although many local and international families
• Bayside West Precincts
ownership allows individual ownership of alike.
• Burwood, Strathfield and Homebush
part of a property (or ‘lot'), combined with
• Camellia Suburbs in the Eastern Suburbs can
shared ownership in the remainder, or
common property, through a legal entity
• Epping and Macquarie Park Urban command some of the most picturesque
Renewal Area
called the owners corporation (see further harbour views with the opportunity to
• Glenfield
information on page 19). capture both the Sydney Harbour Bridge
• Greater Macarthur Growth Area and Opera House in the one frame.
Across Sydney, on the night of the
• Leppington Town Centre Prestige properties on the leafy Lower
Census 2016, 29% of residential private • Riverwood North Shore and trendy Inner West are
properties being lived in were owned • Seven Hills also positioned with many vantage points
outright, whilst 33% were owned with a • St Leonards and Crows Nest for water views, and the city skyline.
10FOCUS ON SYDNEY Q2 2019 RESEARCH
The process of renting (also known as sum—usually four (4) weeks rent—is held
leasing or letting) a residential property in trust. At the termination of the tenancy
can vary in each state, but generally the agreement, if the property is vacated and
main factors for a tenant to consider are left in a suitable condition, the bond will
outlined below. be repaid in full to the tenant.
Tenancy Agreement Utility & Service Charges
A tenancy agreement (property lease) is a Responsibility for utility charges will be
contract where one party conveys stipulated within the tenancy
property to another for a specified period agreement—this is not always covered by
of time, in return for a regular payment. the landlord. Although, the landlord must
When leasing out a property, the owner pay for the actual installation and initial
receives an income, but there are connection costs for electricity, gas, oil
maintenance costs and responsibilities and water supply. If these need replacing,
for the landlord. then the landlord must replace them to
the minimum efficiency standards.
Before signing a tenancy agreement, a
tenancy application must be submitted to
the real estate agency (property manager)
Inspections & Repairs
with proof of identity, ability to meet Throughout the tenancy, the property will
rental payments and good references. be periodically inspected by the landlord
or property manager. A minimum of
seven (7) days notice will be given with
Rent the purpose of these inspections being to
As stipulated in the tenancy agreement, check the maintenance of the property.
the tenant agrees to regularly pay rent to
the landlord. Most times this is Repairs to the property that are due to
conducted via a property manager and the normal wear and tear of the property
rent can be paid weekly, fortnightly or must be paid for by the landlord.
monthly. Any future increases will be Repairs classified as ‘urgent’ must be
stated within the tenancy agreement as completed as soon as possible, while
the landlord cannot increase the rent until ‘non-urgent’ repairs must be taken care
the end of the fixed term, unless of before the 14 days of notification.
otherwise stated.
Furniture
Term Generally, residential properties do not
The length of a tenancy agreement can come furnished, although this becomes
vary, however the standard term is six (6) more common for a rental property closer
months for the initial agreement although to the CBD. This will be clarified in the
alternate periods may be negotiable tenancy agreement.
dependant on the requirements of the
landlord and/or tenant.
Terminating the Tenancy
Once a tenancy agreement expires, the A tenancy can be terminated at the
tenant can request a new fixed term, or conclusion of the tenancy agreement.
alternatively the tenant can stay in the However, both landlord and tenant can
premises at the same rent and conditions request to end the tenancy for a variety of
until advised. reasons. Certain conditions must be met
before it can be terminated, including
days of notice, number of notices and
Bond reason for termination.
A bond is a lump sum payment paid
upfront by the tenants as security before For further information, contact
moving into the property. This lump NSW Fair Trading.
11The Process inspection to guarantee the quality of the made should the market slow over this
building and be aware of maintenance time. It’s wise for this type of investment,
The process to purchase a residential
required. especially with smaller and unknown
property can vary widely but the most
developers, that contracts are reviewed
common steps are outlined below. For
Negotiate by private treaty the highest by legal representation and the ‘sunset
further information and clarity, consult
price willing to be paid for the property clause’ explained, which places a
with your legal representative.
with the vendors (via the selling agent) or deadline for the construction timeline.
alternatively bid at public auction. Should a development not proceed,
Finance Representation deposits will be returned, but could be at
Before starting the journey to purchase a Holding deposit is recommended for a the expense of missed interest and
residential property, carry out due private treaty until cooling off ends (say, capital gains through other investments.
diligence of the subject property and $1,000) until formal finance is approved;
surrounding area to ensure the price at this time the full deposit (say, 10%) is There can also be more tax depreciation
expectation can be achieved with the paid. If bid was accepted at auction, the available on new properties, meaning
allocated budget. full deposit is payable at this time (say, maximising benefits and improving after-
10%) with any cooling off period now tax cash flow for investment properties.
The lending environment has become void. The deposit is generally paid by
challenging in recent years, when seeking cheque or electronic transfer (private
a loan from a financial institution. Many treaty only). General Costs
local banks will only lend if 20% of the When buying property in Australia, there
purchase price has been saved and there Contracts are signed and exchanged by
are both federal and state taxes and a
is good evidence the property loan can both parties and it’s time the solicitor (or
range of fees that are implemented.
be repaid regularly with the property loan conveyancer) finalises the formal
based on market value. Shop around as paperwork with the lender. Loan
mortgages and deposits can vary documents are signed. Transfer Duty
significantly between providers. Transfer duty (also known as Stamp
Settlement occurs when the property
Duty) is levied by the state government
officially changes ownership, following
on the purchase of property.
Legal Representation one final inspection on the day and the
Engaging a solicitor or conveyancer prior locks are changed.
to purchasing the property is highly Legal Fees
recommended so they can review the Legal fees will vary between legal firms
Buying Off-The-Plan
contract before signing, and then stay and may be dependent on property
engaged throughout the process until the In most cases, buying off-the-plan (OTP)
value. Generally fees range from $1,000
property settles (when the property is the commitment to buy a property
to $3,000 plus GST.
officially changes ownership). that’s not yet built.
An OTP property can be better priced Land Transfer Fee
Buying Established Property than established stock as developers are When a property changes ownership, a
Search for a property priced to match keen to secure sales in the project so document known as a Land Transfer is
requirements for location, proximity to lenders will provide funding and lodged and registered with the NSW
transport, work and education and the construction can commence. There is Office of State Revenue, and a fee is
quality, size and age of the dwelling. also the potential flexibility at this time to charged. It is this document that records
Staying abreast of comparable sales will make design changes to an apartment or the change of ownership. The cost to
assist in the negotiation process. house prior to turning sod. register the title varies in each state of
Australia. A solicitor or conveyancer will
Inspect the property at an open house or In most cases a deposit, typically 10%, is perform this task on your behalf.
by private appointment. Request a copy paid to the developer and the remaining
of the contract and have solicitor (or is paid on settlement of the property,
conveyancer) read over the document. allowing more time to save throughout Mortgage Application Fee
the construction period. Through this A fee charged by the state government
Gain pre-approval for loan from lender time, market forces may push market for the registration of a mortgage. A
and confirm qualification from FIRB if values up, at an advantage to the buyer, lender will perform this task on your
required. Arrange a pest and building at the same time consideration must be behalf.
12FOCUS ON SYDNEY Q2 2019 RESEARCH
Both the Australian and state Since 1 July 2018, individuals can apply
governments provide incentives for to release these voluntary contributions,
First Home Owner Grant Eligibility
Australian first home buyers. along with associated earnings, to assist Criteria
in purchasing their first home. The First Home Owner Grant (FHOG)
New Homes
Incentives for scheme allows Australians to make
voluntary contributions of up to $15,000 New South Wales; including Sydney
First Home Buyers in any one financial year, to a maximum
Threshold (the property must valued less than)
$30,000 across all years. This includes
in Australia undeducted (non-concessional) personal
Buyer of new property $600,000
contributions, deducted (concessional)
First Home Super Scheme personal contributions and salary Builder of new property $750,000
The Australian Government, from 1 July sacrifice contributions. These
2017, has allowed individuals to make Conditions
contributions, which are taxed at 15%,
voluntary concessional (before-tax) and along with deemed earnings, can then be Dwelling must be new, unless specified;
non-concessional (after-tax) contributions withdrawn for a deposit if the eligibility
into superannuation funds to fast-track criteria is met. Persons must be a minimum age of 18 years;
the time taken to purchase a new home
At least one applicant is a natural person;
under the First Home Super Scheme Concessional contributions and earnings
(FHSS). that are withdrawn will be taxed at At least one applicant is an Australian permanent
marginal rates less a 30% offset. resident or citizen;
Contributions made under this scheme
The contract date must be on or after 1 July 2017;
are not a new type of contribution. They
are voluntary contributions made to your No persons to have held a relevant interest in any
superannuation fund. As a result, a residential property in Australia prior to 1 July 2000;
First Home Super Scheme Eligibility separate special account doesn't need to
be established nor does the fund need to Must reside in the home for a continuous period of
Criteria, Australia
at least six (6) months.
First Home Super Scheme (FHSS) be notified.
Conditions
For further information, contact the
Australian Taxation Office.
First home buyer – never owned property in Australia
– this includes an investment property, vacant land,
commercial property, a lease of land in Australia or a
company title interest in land in Australia;
Incentives for First
Must live in the premises you are buying, or intend Home Buyers in
to as soon as practicable; Stamp Duty Concessions
Must intend to live in the property for at least
New South Wales First Home Buyers Assistance scheme
six months of the first 12 months you own it, after it can provide a concession on state-based
is practical to move in;
First Home Owner Grant
stamp duty for dwellings or land.
The First Home Owner Grant (FHOG) New
Superannuation contributions can be from any age
Homes is currently available in NSW.
but persons must be a minimum age of 18 years to If the new or established first home is
request for funds to be released; An eligibility criteria must be met before
valued at less than $650,000, stamp duty
the grant is issued.
Not previously requested the Commissioner to issue
is exempt, while purchasers may be
a FHSS release authority; eligible for a stamp duty reduction if
valued under $800,000.
Eligibility is assessed on an individual basis—so
multiple persons can access their own FHSS
contributions to purchase the same property;
First Home Owner Grant Available Stamp duty on lenders mortgage
First Home Owner Grant (FHOG)
insurance is exempt.
New Homes
If any persons have previously owned a home, it will
not stop any other persons being eligible to apply;
New South Wales; including Sydney If land is valued under $400,000, stamp
Don't sign contract to purchase or construct the duty concessions are available and
Grant
home until money is released or there may be FHSS exempt if valued under $350,000.
tax liability; this may take up to 25 days.
One-off $10,000
For further information, contact the NSW
Office of State Revenue.
13Current
regulations for
foreign investors
purchasing
residential • Must apply and gain approval from
the FIRB prior to purchasing
property in Sydney property in Australia.
• A temporary resident is a person
• Applications are generally approved who is residing in Australia and
if the property purchased adds to holds a temporary residency visa
the housing stock, including new which permits them to stay in
dwellings that are yet to be Australia for a continuous period of
occupied or sold, off-the-plan more than 12 months (regardless of
properties under construction or yet how long remains on the visa); or
to be built. This includes vacant has submitted an application for
land for residential development permanent residency and holds a
where ongoing construction begins bridging visa which permits them to
within 24 months. stay in Australia until that application
has been finalised.
• Non-permanent residents are
forbidden to purchase established • Are required to notify FIRB prior to
dwellings as investment properties purchasing property in Australia,
or as homes. Although there could including an established dwelling, a
be an exception if the established new dwelling that has been
dwelling is being redeveloped into purchased directly from the
multiple dwellings, and as a result, developer and has not been
For further information: there is an increase in the dwelling previously occupied for more than
count. Over the development 12 months in total and vacant land
period, the house must remain for residential development where
unoccupied. ongoing construction begins with 24
Foreign Investment Review months. Temporary residents are
Board [FIRB] • Foreign buyers can purchase an off not permitted to buy established
-the-plan dwelling, when another dwellings as investment properties.
firb.gov.au buyer has failed to reach
settlement—reverting to its previous • May acquire one established
status as a new dwelling. An dwelling only and it must be used as
apartment or house that has just their main residence (home) in
Department of Immigration been built, or is still under Australia. Such proposals normally
and Border Protection construction and for which the title meet with no foreign investment
has never changed hands, is not objections subject to conditions;
border.gov.au considered an established dwelling. such as, that the temporary resident
sells the property when it ceases to
be their main residence.
Non-Permanent Temporary Resident
Resident (Temporary
(Foreign Investor) Residency Visa)
14FOCUS ON SYDNEY Q2 2019 RESEARCH
The Australian Government welcomes foreign investment into Australia’s residential property market. The current rules around foreign
investment in residential property aim to direct investment into new housing, increasing the housing supply and support local
economic activity.
• Acquiring second-hand dwellings for
the purpose of providing housing for
their Australian-based staff normally
meet with no objections subject to
the conditions set by FIRB. • Investment migrants under this
• Investment migrants under this scheme are required to invest at
• The company must sell the property scheme are required to invest at least AUD$15 million into complying
if it is expected to remain vacant for least AUD$5 million into complying investments in Australia for a
six months or more. In remote and investments in Australia for a minimum of 12 months before
rural locations foreign companies minimum of four years before becoming eligible for permanent
may rent out dwellings acquired becoming eligible for permanent residency; a more expeditious
under this category only where they residency. pathway than the SIV.
are unable to sell the property.
• The SIV scheme is intended to • The PIV scheme is aimed at
• Whether a company is eligible, and target the migration of high net- attracting applicants with business
the number of properties it may worth individuals to Australia with and entrepreneurial skills and capital
acquire under this category, will the longer-term aim of transferring to enhance investment into
depend upon the scope of the wealth of international businesses innovative Australian businesses
foreign company's operations and and individuals to benefit Australian and the commercialisation of
assets in Australia. businesses and the broader Australian ideas, research and
economy. development.
• Foreign companies would not be
eligible under this category where • The SIV scheme was introduced on • The PIV scheme was introduced on
the property would represent a 24 November 2012 and is operated 1 July 2015 and is operated by the
significant proportion of its by the Department of Immigration Department of Immigration and
Australian assets. and Border Protection. Border Protection.
Significant Investor Visa (SIV) Premium Investor Visa (PIV)
Foreign Company Investment Migrants
with Australian (High Net Worth Individuals)
Business
15Additional Costs for Fees payable by Foreign Investors,
Foreign Buyers Residential property
Based on Property Value, AUD
All foreign persons — that is, temporary
residents and non-residents — can apply $0 - $1,000,000 $5,600
to purchase vacant residential land for
development and newly constructed $1,000,001 - $1,999,999 $11,300
dwellings in Australia.
$2,000,000 - $2,999,999 $22,700
Non-resident foreign persons are $3,000,000 - $3,999,999 $34,000
generally prohibited from purchasing
$4,000,000 - $4,999,999 $45,400
established dwellings in Australia.
However, temporary residents can apply $5,000,000 - $5,999,999 $56,700
to purchase one established dwelling to
use as their residence while they live in $6,000,000 - $6,999,999 $68,100
Australia, although on the condition the
$7,000,000 - $7,999,999 $79,500
property is sold when it ceases to be
their principal place of residence. $8,000,000 - $8,999,999 $90,900
$9,000,000 - $9,999,999 $102,300
Once a property has been identified to
purchase, an application must be made $10,000,000 or more tiered per million
to the Australian Foreign Investment
Review Board (FIRB).
It is highly recommended that an
application is submitted prior to the
advance of any transaction—to ensure
complete legality of the purchase.
The FIRB provides an interactive fee
Additionally, approval from FIRB is
estimator.
property-specific—one application per
property.
Duty Surcharge
When the application is submitted, the The NSW state government imposes a
government investigates to ensure that duty surcharge for foreign investors,
the purchase of the property will be in the payable in addition to general state-
country’s best interest. based transfer duties.
A decision on the application is made Since 1 July 2017, foreign purchasers are
within 30 days—unless complications or required to pay an additional 8% of the
alterations occur, in which it may take up sale price.
to 90 days.
Other states with foreign investor duties
Foreign Investor Application include Victoria (7%) as of 1 July 2016,
Queensland (7%) as of 1 July 2018 and
Fee Western Australia (7%) as of 1 January
All foreign investors must pay a fee 2019.
before their foreign investment
application will be processed.
Foreign investors are required to pay Duties payable by Foreign Investors,
$5,600 to purchase a new property if Residential property
valued under $1 million, with additional Based on Property Value, AUD, Payable in
addition to general state-based transfer duties
fees payable per million in the value of
the property. New South Wales; including Sydney
Duty Surcharge on Purchase Price;
This fee does not provide any assurance 8%
from 1 July 2017
of securing the property and strict
penalties are applied for those who
breach the rules.
16FOCUS ON SYDNEY Q2 2019 RESEARCH
Estimated Property Purchase Costs, Sydney
All costs represented in AUD, As at 1 April 2019
Purchase Price 350,000 500,000 750,000 1,000,000 1,250,000 1,500,000
Transfer Duty 11,240 17,990 29,240 40,490 54,240 67,990
Land Transfer Fee 150 150 150 150 150 150
Legal Fee (includes GST payable) 1,500 1,500 1,500 2,000 2,000 2,000
Mortgage Application Fee 150 150 150 150 150 150
General: Estimated Total Costs 13,040 19,790 31,040 42,790 56,540 70,290
Foreign Investor Application Fee* 5,600 5,600 5,600 5,600 11,300 11,300
Foreign Investor Duty Surcharge @8% 28,000 40,000 60,000 80,000 100,000 120,000
Foreign Investor: Estimated Total Costs 46,640 65,390 96,640 128,390 167,840 201,590
Estimated Property Purchase Costs, Sydney
All costs represented in AUD, As at 1 April 2019
Purchase Price 1,750,000 2,000,000 2,250,000 2,500,000 5,000,000 7,500,000
Transfer Duty 81,740 95,490 109,240 122,990 290,490 465,490
Land Transfer Fee 150 150 150 150 150 150
Legal Fee (includes GST payable) 3,000 3,000 3,000 3,000 3,000 3,000
Mortgage Application Fee 150 150 150 150 150 150
General: Estimated Total Costs 85,040 98,790 112,540 126,290 293,790 468,790
Foreign Investor Application Fee* 11,300 22,700 22,700 22,700 56,700 79,500
Foreign Investor Duty Surcharge @8% 140,000 160,000 180,000 200,000 400,000 600,000
Foreign Investor: Estimated Total Costs 236,340 281,490 315,240 348,990 750,490 1,148,290
1718
FOCUS ON SYDNEY Q2 2019 RESEARCH
WHAT IS THE
In Sydney, costs and taxes associated
with the ownership of a property can vary
Additional Costs as ROLE OF AN
dependent on the services the building a Landlord OWNERS
provides. CORPORATION?
Property Management Fees
General Costs Letting Fees are usually equivalent to two The rights and responsibilities of
(2) weeks rent paid to the agent as a fee both the owners corporation and
Land Tax for finding and securing a tenant. its members is different in each
Land tax is an annual state tax that is Management Fees cover any costs state but generally comprise:
calculated based on the aggregated associated with managing the property
taxable value of all land owned (or jointly and range from 7% to 8.5% plus GST. • Maintain and repair the common
owned) by an individual. Land Tax is not property of the strata scheme;
applied if the property is your principal Utility and Service Charges • Manage the finances of the
residence.
The owner must pay for the use of strata scheme;
utilities (electricity, gas, oil and water
Council Rates supply). Although if the owner leases the • Maintain required insurances
property to a tenant, some of these can including public liability and
This varies across states and local building insurance where
government areas. This is the tax the be passed on but this must be stipulated applicable;
council charges owners for the services within the tenancy agreement. However,
to the property—generally paid quarterly the owner must pay for the actual • Keep records of all details of
or annually. installation and initial connection costs. notices given under the relevant
state strata management
legislation;
Income Tax Landlord Insurance
Landlord insurance is designed • A strata register must be
Income tax is payable on gross rental established and maintained,
income, less any allowable deductions specifically to cover rental properties. detailing the owner’s name or
incurred in earning that income. As there Depending on the insurance provider, it agent’s name and address for
protects the home from damage, theft, each lot within the strata
are a number of potential allowable
severe weather or rent default in some scheme;
deductions, it is recommended that an
cases. To decrease risk, landlord
Australian Tax advisor is consulted.
insurance is highly recommended.
• Administration of any by-laws for
the strata scheme;
Owners Corporation • To provide a grievance register.
If the purchased property is Strata Titled Additional Costs for
(a building with common areas and
facilities for the use of all occupants of Foreign Owners
the building), an owners corporation will
be established for the building. Foreign-Owned Vacant
Residential Property Levy
A regular fee must be paid to the Owners The Australian government charges an
Corporation to maintain these common annual levy for foreign-owned vacant
areas. This can include elevators, foyers, residential property (ghost tax). The levy
swimming pools and spa, gymnasiums, is equivalent to the FIRB application fee
plants and foliage, lighting, staircases, imposed at the time the property was
fences, visitor car parks and security. purchased if they fail to occupy or lease
for at least six (6) months of the year.
A group of elected people manage the
operations and decision-making of the Land Tax Surcharge for
common area of the property. Foreign Investors
In most states, the owners corporation The NSW state government has imposed
comprises of an executive committee a 2% land tax surcharge for foreign
(generally individual owners of the investors since 1 July 2017. This is
apartments) who make decisions on the payable in addition to general land tax
behalf of their owners. and is based on the taxable value.
19There are costs and taxes to consider
when selling residential property in Additional Costs for
Australia.
Foreign Owners
General Costs Capital Gains Tax Clearance
Legal Fees Certificate
Foreign and temporary tax residents are
Legal fees include, but are not limited to,
no longer entitled to access the CGT
the costs for preparing a contract for
main residence exemption from 7.30PM
sale. The solicitor or conveyancer fee
(AEST) on 9 May 2017.
could be dependent on value of property,
and may vary between state and territory
Although, existing properties held prior to
as well as the particular solicitor chosen.
this date will be grandfathered until 30
The cost may range between $2,000 and
June 2019.
$4,000, plus GST.
A CGT withholding rate for foreign
Real Estate Agent Fees investors is applicable for all contracts
An agent fee is the commission paid by with a market value over $750,000 when
the owner, to the agent, for selling the signed on or after the 1st July 2017.
property—either tiered rate or a fixed
rate. Do ensure you understand the This requires 12.5% of the purchase
breakdown of the fee structure as price to be withheld by the purchaser and
commissions will vary between states, remitted to the Australian Taxation Office
and price point. Fees often range (ATO) unless a clearance certificate has
between 2% and 3% of the value of the been provided by the vendor. The money
property sold. withheld is a portion (not in addition to)
from the agreed sale price.
Marketing Costs If a purchase price negotiated between a
When an agent is selected to sell the purchaser and vendor is on an ‘arm’s
property, the fee breakdown will often length basis’, then the purchase price
DOWNSIZER stipulate the budget associated to the may be used as a proxy for market value.
INCENTIVE marketing and advertising of the
property. Additionally, there may be a The ATO can only grant a clearance
Downsizers (aged 65+ years) period allocated to marketing with certificate to a vendor who is considered
can make a non-concessional
multiple open house inspections over to be an Australian resident.
(after-tax) contribution into their
Superannuation fund of up to several weeks. Budgets for marketing,
$300,000 from the sale of their media, as well as length of advertising Do note a residency status for tax
family home. should all be discussed with the agent to purposes is not necessarily the same as
ensure maximum advertising potential. that for immigration purposes; or for the
Introduced from 1 July 2018, FIRB. It is recommended to seek
the legislation states the
professional legal advice to further clarify
property sold must be the Capital Gains Tax the residency definition for this
person’s home (main residence
Capital gains tax (CGT) is a federal tax legislation.
and be eligible for the main
residence exemption for capital levied on the gain or loss upon the sale of
gains tax) and held for at least an investment property. The foreign resident CGT regime for
the past 10 years. withholding tax applies to taxable
The tax is implemented on the difference Australian property including vacant land,
This will increase their tax-free between the cost of acquiring the buildings, residential and commercial
fund limits. Couples will be able property, and the value when sold. The
to contribute up to $300,000 property, leaseholds and strata title
difference is then added to the income schemes.
each, giving a total contribution
per couple of up to $600,000. tax for the individual or company for that
financial year, and taxed accordingly with For further information, contact the
those rates. Australian Taxation Office.
20FOCUS ON SYDNEY Q2 2019 RESEARCH
In recent years, the federal and state governments have introduced foreign investor fees, tax surcharges and levies. Below is a
summary of the current process for foreign buyers when purchasing, owning and selling Australian residential property.
The Process for Foreign Buyers when Purchasing, Owning and Selling Residential Property, Sydney
As at 1 April 2019
21Sydney is the financial and business services hub for Australia, attracting many
professionals from around the globe. According to the Global Financial Centres
Index 25 compiled by think-tank Z/Yen, Sydney ranked 11th on the index of global
financial centres in 2019. Sydney scored 735, up by 2 points. Sydney is home to
branches of the Reserve Bank of Australia (RBA), Australian Prudential Regulation
FINANCE HUB OF Authority (APRA) and the Australian Securities Exchange (ASX).
AUSTRALIA.
The NSW economy has been strong over the past three years, with the outlook for
growth to remain above trend for the next three years according to projections in the
NSW State Budget. NSW has been the fastest growing state economy over these
past three years, on the back of elevated household consumption, dwelling
construction and public investment. Construction activity and expanding health
services have contributed to more than 500,000 new jobs created since April 2011.
ROBUST ECONOMIC Momentum in the labour market remains strong, with employment growth forecast of
OUTLOOK. 3% in 2018-19.
The NSW Government has committed to spending $87b over the next four years on
health, education and transport infrastructure projects to ease cost of living
pressures. Major transport projects to receive funding include the new Metro West
(new underground rail line between CBD and Parramatta), the new Parramatta light
rail, Metro NorthWest (underway), the new Sydney Western Harbour Tunnel and
Beaches Link, the first phase of underground F6 motorway between Sydney and
GOVERNMENT
Wollongong and road upgrades around the Western Sydney Airport.
INVESTMENT.
International departure capacity at Sydney Airport expanded by 23.4% between
2012 and 2017 as reported by OAG Schedules Analyser. The increase has been
driven by Oneworld member Qatar Airways adding Sydney to its network map over
the past two years and six new routes to China following a deal to end passenger
capacity restrictions. The top three Sydney to China two-way routes by capacity, in
2017, was with Shanghai, Guangzhou and Beijing. Each year since 2012, Tourism
RISE IN INTERNATIONAL
Australia has calculated international visitors to Sydney has grown on average 7.6%.
VISITORS.
The number of international students enrolled to study in NSW education facilities
rose 10.5% in the year ending December 2018, according to the Department of
Education and Training. Higher education facilities saw annual growth of 14.6%,
while vocational education & training grew by 13.3%. The SSVF has made the
GROWTH IN process of applying for a student visa in Australia easier to navigate for both
INTERNATIONAL students and guardians.
STUDENTS.
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