{"id":31172,"date":"2020-01-14T17:27:04","date_gmt":"2020-01-14T09:27:04","guid":{"rendered":"https:\/\/www.99.co\/blog\/singapore\/?p=31172"},"modified":"2022-06-13T17:24:38","modified_gmt":"2022-06-13T09:24:38","slug":"why-your-plan-to-move-to-australia-and-buy-a-cheap-farmhouse-sucks","status":"publish","type":"post","link":"https:\/\/www.99.co\/singapore\/insider\/why-your-plan-to-move-to-australia-and-buy-a-cheap-farmhouse-sucks\/","title":{"rendered":"Why Your Plan to Move to Australia and Buy a Cheap Farmhouse Sucks"},"content":{"rendered":"
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Lots of Singaporeans have this great dream of moving to laid-back parts of Australia, living and working there and enjoying a chill lifestyle. How many of you know friends who want to buy a big house in the outskirts, or \u2018live out on a farm’? Now, at 99.co we always believe in supporting people\u2019s dreams. But we also believe in giving people a fair dose of truth.<\/p>\n

We\u2019ll just put this out here: Most<\/i><\/b> Singaporeans are used to a level of convenience, adjusting to rural Australia definitely won\u2019t be easy.<\/p>\n

It’s not easy to continue earning an income<\/h3>\n
\"Receiving
Do consider job availability, if you want to continue working after you move<\/figcaption><\/figure>\n

Here\u2019s a big one. Living on a farmhouse is cool and all, but have a serious think about how you are going to generate income, even if you\u2019re thinking of living \u2018off-the-grid\u2019 and being completely self sufficient. Why? Because it\u2019s naive to think you won\u2019t need to pay for anything.<\/p>\n

Jobs in rural areas are usually hard to come by though, so it\u2019s best you have a backup plan.<\/p>\n

What I\u2019d do before moving :<\/b><\/p>\n

Amass a huge amount of capital, invest it, then use it to collect passive income. The average expenditure for an Australian is around AUD$3,000 a month. To earn that amount based on a 5 per cent dividend yield, you\u2019re going to need at least AUD$900,000.<\/p>\n

If you\u2019re planning to live on less and be less consumerist, you can consider halving that down to AUD$450,000. But it\u2019s better to be on the safe side. If you have a HDB flat in Singapore, you could also potentially rent out for additional passive income.<\/p>\n

Alternatively, find a way to run a business remotely from the farmhouse. This could be an internet business, etc etc etc, Imran will have some ideas for you.<\/p>\n

Which brings us to the next point\u2026<\/p>\n

Getting a home loan is complicated<\/b><\/h3>\n

Unless you intend to pay for the farmhouse upfront, you\u2019ll need to get a home loan from either a Singapore or Australian bank. This is a complex process with a ton of unpredictable consequences.<\/p>\n

For example, Singapore banks – should they choose to give you a loan for an Australian property – might only give you a Singapore dollar-denominated loan. So if you\u2019re buying a house in Australian dollars, the currency exchange rates can result in situations like a margin call (having to top-up the loan in cash), or a sudden spike in home loan repayments for the month.<\/p>\n

\"Businessman
Getting financing for overseas property is hard; and it’s even tougher for rural properties<\/figcaption><\/figure>\n

At any rate, Singapore banks typically provide loans only for properties in major Australian cities. It’s improbable that you’re going to get a loan for a farmhouse on the outskirts.<\/p>\n

On the other hand, getting a loan from an Australian bank can result in a much higher interest rate. At the time of writing, interest rates from Australian banks are around four per cent per annum (fixed rate), whereas rates are below two per cent in Singapore.<\/p>\n

Then there are issues such as how to qualify for the loan on either side, different Loan to Value (LTV) ratios, and enough paperwork to give you a hernia just lifting the files off the desk. At the time of writing, most Australian banks will give you an LTV of just 60 per cent as you\u2019re a foreigner (and forget about using your CPF).<\/p>\n

What I’d do before moving: <\/strong>Ideally, try to pay for the whole property without the hassle of a mortgage. This immediate upfront cost will have to be factored into the retirement plans.<\/p>\n

Reduced access to services\/convenience\u00a0<\/b><\/h3>\n
\"Senior
It looks romantic, but we’ve been walking for two hours to get to a 7-11<\/figcaption><\/figure>\n

What do Singaporeans do when the trash overflows? Or when your e-scooter catches fire and razes the house down? That\u2019s right. You call the Town Council and SCDF.<\/p>\n

If you live in rural Australia, you might need to rely on a commercial (expensive) service to help you the trash, or take it to a landfill yourself. With regard to emergency services, expect slower response times from the police, fire-people and ambulances help you when shit hits the fan.<\/p>\n

While rural Australia has greatly improved its infrastructure over the past decade (especially for country towns), you should generally expect a lower level of convenience compared to the cites.<\/p>\n

What I\u2019d do before moving:<\/b> Spend a few months living in a rural area before pulling the trigger. Find out what it\u2019s like to live in a place with few shops, no nightlife, very little convenience stores \u2013 THEN decide.\u00a0Because renting an ulu place for a year \u2013 cheaper than sinking your life\u2019s savings into a property you might grow to hate.<\/p>\n

Residency and Citizenship\u00a0<\/b><\/h3>\n
\"landed
Enjoying your trips there is one thing, living there is another<\/figcaption><\/figure>\n

You\u2019ll need a certain number of points to fulfill the requirements to become a PR in Australia. And last I checked, being an \u2018unemployed farmer tending to a little garden\u2019 did not make it on the skilled immigration list. The alternative is to make investments in Australia; such as something to the tune of AUD$5 million, or securing funding of up to AUD$200,000 to commercialise a product or service in Australia.<\/p>\n

Also, have you seen how a certain group of Singaporeans like to complain about foreigners entering the country an taking up jobs? Remember, you go over to Australia, and you’re <\/em>that foreigner they’re complaining about.<\/p>\n

 <\/p>\n

Capital gain? Rental yield? Nah. <\/b>
\n<\/b><\/h3>\n

Ever wondered why properties in rural Australia are so affordable? It\u2019s really supply and demand. Much of the population growth takes place in the big cities. It\u2019s where the action is at.<\/p>\n

The small towns and rural communities where your farmhouse is set in? They\u2019re bleeding out. Young people in smaller towns and rural areas typically aspire to go to the “big city” where there are wider opportunities.<\/p>\n

Which means there is terrible demand. And lots of supply. Rural properties take much longer to resell, compared to housing in cities or larger towns. Also, don\u2019t expect high capital gain. And don\u2019t expect to rent out rooms in your house for decent income either. Your five bedroom house means nothing if there are no tenants.<\/p>\n

\"When
Don’t forget to check on the different taxes you’ll face too<\/figcaption><\/figure>\n

As an aside, note that foreigners are generally allowed to purchase only new properties. This means that when it\u2019s time to resell, you\u2019re going to have to sell back to local citizens and not other foreigners – this narrows the pool of prospective buyers somewhat.<\/p>\n

(If you\u2019re purchasing just the land to build your house on it, you need to finish it in four years – and you can\u2019t even purchase the land if it previously <\/i>had a dwelling on it. Your purchase has to add<\/i> to the current housing supply.)<\/p>\n

If you want exceptions to be made – such as if you want to buy an existing property – you\u2019ll have to write to Australia\u2019s Foreign Investment Review Board<\/a>; which is also where you pay various fees for application.<\/p>\n

What I\u2019d do before moving:<\/b> If I\u2019m going to lock down $300,000 – $500,000 in a house like this, I\u2019d make sure i\u2019m either\u2026<\/p>\n

    \n
  1. Be 300,000 per cent sure about living a quiet life in the countryside on a farm and I am determined to make EVERYTHING work. Because once you sink in that money, pulling out will be a painful process \u2013 as mentioned above foreigners like us can only sell property to Australians \u2013\u00a0 so this could be a tough sell.<\/li>\n
  2. Be so wealthy that $500,000 is nothing to you. If you found HDB prices in Singapore expensive, this will most likely not be you.<\/li>\n<\/ol>\n

    Prepare to pay to maintain your property.<\/b><\/h3>\n