With Australian house prices back on an upward curve, the appeal of property investing in their home country may be back on the agenda for many expat Aussies currently living overseas.
The latest data from CoreLogic shows the average Aussie property price has risen 1.7% since the start of 2025, and falling local interest rates (two rate cuts in the last few months) are likely to generate further upward pressure on Australian real estate values in the coming year.
For those expats earning their living overseas at present, that may be a cue to consider investing in property back home, particularly for those looking to return to Australian shores in the foreseeable future.
But how easy is it to do?
Getting approved to buy property while earning overseas
The good news is that, despite the distance, the process for Australian citizens and permanent residents to invest in property while living and working overseas is relatively straightforward.
As long as you are earning a regular income, have a contract of employment and can produce payslips to validate your earnings, most banks and non-bank lenders will consider mortgage applications from expats overseas.
Your credit rating in Australia will also be assessed, so it’s worth checking this is in order back home before applying.
One thing to bear in mind when considering buying property from overseas is that your purchase will be treated as an investment property, even if you are intending to relocate back to Australia to live in it in the short term.
Loans for investment properties tend to incur slightly higher interest rates than if you were taking out a mortgage for a property you intend to live in immediately, so you should factor this into your calculations.
Once you return to Australia and choose to live in your property, you can convert your mortgage to an owner-occupier loan, which may reduce the mortgage rate you pay from that point onwards.
Another thing to consider is how you are earning your income overseas, as this can be instrumental in the type of lender you can access.
Expat Aussies earning their overseas income on a PAYG basis will be considered for mortgages by most lenders, subject to the usual criteria. However, that isn’t necessarily the case for those who are self-employed overseas.
Those overseas investors who derive the majority of their income from self-employment may find many of the major banks unwilling to offer them property lending. However, non-bank lenders tend to be more flexible in this scenario.
You are likely to need additional documentation to satisfy the lending criteria though, and may even be asked to produce a foreign credit report in some instances.
While buying Australian property from overseas when self-employed is still possible, contacting a local mortgage broker to talk through your options would be a prudent choice before going ahead.
Does it matter which overseas currency I’m earning?
One factor to be aware of when considering property investment from overseas is which currencies are seen as preferable from a lender’s perspective, as this can impact the amount they are willing to lend overseas borrowers.
Banks will look more favourably on lending applications from borrowers who are earning their income in “tier one” currencies such as US Dollars, Euros, UK Pounds or Singapore Dollars. What classifies as a tier-one currency varies from bank to bank, but the above four examples are a safe bet for most.
The other thing to bear in mind is that lenders will “shade” foreign income, which means they will only consider a certain percentage of the income earned in a foreign currency rather than the whole amount. For tier-one currencies, lenders will generally take around 80% of the borrowers income into account when assessing a lending application, so you need to factor this into your calculations.
If you are earning income in a minor currency, non-bank lenders are traditionally more open to lending against this. A good mortgage broker will be able to advise on your options if this is your situation.
Another scenario that is becoming increasingly common is potential borrowers who are based in Australia but earning their income in a foreign currency. This may be because they work for an overseas employer who pay their staff in one currency irrespective of where they are located.
In these circumstances, lenders will apply similar preferences to the currency in which the income is being earned, with “tier-one” currencies looked on more favourably.
The only difference for these borrowers is that they will be eligible for owner-occupier as well as investment property loans, as they are resident in Australia at the time of application.
Reduced Competition from Non-Resident Investors
One recent development that may have a positive impact for expats looking to invest in Australian property from overseas is a temporary reduction in competition for lending from non-resident overseas investors.
In the run-up to the recent Federal Election, the Australian Government announced that from 1 April 2025, foreign persons (including temporary residents and foreign-owned companies) will be temporarily banned from purchasing established property in Australia.
Although there are exceptions to this ruling, generally this means that anyone who ISN’T already an Australian Citizen or Permanent Resident won’t be able to purchase an existing property in Australia from overseas for the foreseeable future.
While non-residents will still be able to buy new build properties under the new ruling (subject to approval from the Foreign Investment Review Board), it’s still the case that a significant majority of property sales in Australia are for existing housing stock.
As a result, this temporary ban is likely to reduce the overall number of lending applications from overseas borrowers in the short term.
Expat Aussies looking to buy property back home could capitalise on this as lenders potentially look to cover this shortfall in overseas lending by focusing their offering on Australian Citizens & Permanent Residents looking to invest in their home country.
With rising house prices and falling interest rates also creating property investment opportunities, 2025 could be the ideal time for Australians living overseas to consider buying a piece of the lucky country they still call home…
