Returning Australian expats face purchase hurdles say property, mortgage cos

Australian expatriates looking for a speedy retreat due to unrest in Europe and the recent Brexit vote are set to find that a return home may not be as easy as they think.

According to a number of Australian mortgage and property companies, as reported on Aussie property website Domain, lending clampdowns by banks coupled with low stock levels are making it increasingly tough for expats across the world, not only those in Europe, wanting to return to Australia.

Some advocates and brokers representing offshore-based Australians said that tightened red tape across the industry due to calling measures had reduced enquiries across most of the market.

Buyers’ advocate Nicole Jacobs told Domain that Brexit spurred many expats to assess where they were planning on keeping their assets and expects international calls to roll into Australian property advisers come September.

“At the upper end [of the market] expats are very conscious of making sure they have secure investments, and working out what the implications could be if something happens,” said Jacobs. “A lot of them are already then finding out that they are coming back, so they are approaching us to secure a home before their children start the [2017] school year.”

Financial hurdles

Returning expats will also face financial hurdles as banks tighten the screws on local applications that rely on foreign income. For example, Westpac Group has recently given buyers a maximum loan-to-value ratio of 70%, reduced from 80%.

David McMillan, director of investment firm Performance Property Advisory, said with the Australian dollar low, expat enquiry should be high.

“But the problem that expats are facing at the moment is that the banks have really tightened up their lending to expats,” McMillan said. “Banks are looking for a minimum 30-40% deposit, and they are looking at [expats] income, depending on which currency it is, and they are discounting the currency aggressively.

“Your average expat who was making a couple of hundred-thousand dollars a year and perhaps had a couple of hundred thousand dollars saved to buy a home, and in theory was in a good position, can’t do it anymore.”

Mortgage adviser Clinton Waters, director of Axton Finance, said he recently assisted a client in Kuwait who wanted to “stick it out” for another year.

“The expat market has definitely been tightened up,” said Waters. “It used to be that the policy was generally open if you were an Aussie working overseas. The level of enquiry for us is relatively static, but those clients who are Aussies working overseas, I get a sense of contingency planning.”

UK-based Aussie clients

Property agent Ross Savas, managing director at Kay & Burton a company that promotes ‘prestige’ properties, told Domain that his UK-based Aussie clients were becoming increasingly keen to return and that recent terror attacks in neighbouring France had contributed to their sense of urgency

“I was in London for two weeks and saw many, mainly in banking and finance, saying ‘we don’t like this direction, time to come home’,” he said. “That underlying unrest, they are saying ‘how long will it take to hit London?’”

Savas regularly visits Singapore, Hong Kong, New York and London to meet high-net clients who want to buy in Australia. He said the peak period for expat activity in the Melbourne property market was approaching, and he anticipated a busy spring in 2017.

“They want to set themselves up for January, so from August onwards that is when it begins, and that is why I spend so much of my time travelling, and [the mood] is very serious,” he said.

ABOUT THE AUTHOR
Gary Robinson
Deputy Editor, International Investment and Head of Video at Open Door Media Publishing. A fully qualified journalist and filmmaker with more than 20 years' financial services experience, both as journalist and originally as an IFA.

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