Guide to Buying Property and Earning Rent in Australia
- Alison Wong
- May 15
- 9 min read
With an increasing interest among Hong Kong residents in asset diversification and overseas retirement planning, Australia has become a highly attractive hotspot for real estate investment. With its stable legal environment, strong rental demand, and transparent transaction system, many people are beginning to ask, "Can I also buy property in Australia and earn rental income?"
This article will guide you step by step on how to achieve this goal.
1. Why Choose Australia for Real Estate Investment?
Australia is not only a country with a beautiful natural environment, but also a stable economy and transparent legal system, making it a paradise for investors.
Firstly, Australia’s economy has grown steadily for many years, with a median property price increase of 6.8% annually over the past 25 years. Additionally, most properties in Australia are freehold (permanent ownership), giving investors peace of mind to hold them for the long term without any restrictions on the ownership duration.
Furthermore, major Australian cities such as Sydney, Melbourne, and Brisbane, due to the continued influx of international students and immigrants, create a stable and growing rental demand, ensuring that investment properties consistently have tenants.
In short, Australia offers a real estate market that is suitable for both capital appreciation and stable cash flow, making it an ideal choice for long-term investment for Hong Kong residents.
2. The Process of Buying Property in Australia and Restrictions for Foreigners
As a foreigner (non-Australian resident), before purchasing property in Australia, there is a key mechanism you need to understand: FIRB (Foreign Investment Review Board) approval. In most cases, foreigners can only purchase newly built homes, vacant land (with a construction commitment within a certain period), or development-related investment properties under specific conditions.
The home-buying process includes:
Applying for FIRB Approval: This typically takes about 30 days.
Choosing a Property and Signing a Contract: Work with a real estate agent to find a suitable property and sign the agreement.
Loan and Financial Planning: You can apply for loans from Australian banks or specific institutions, typically requiring a deposit of at least 30%.
Hiring a Lawyer and Building Inspector: Ensure the transaction is legal and free from potential risks.
Completing the Transaction and Transfer of Title: Pay the remaining balance and register the title transfer.
It’s recommended to build relationships with lawyers, accountants, and real estate agents from the start to ensure a smooth process.
3. Analysis of Popular Investment Cities and Regions
Choosing which city to buy property in will directly affect rental returns and capital growth potential.
Sydney: As Australia's largest city, property prices in Sydney remain high. The median house price in 2025 has surpassed AUD 1.07 million. Despite this, demand remains stable, particularly with strong employment and ongoing infrastructure development, making it ideal for investors seeking long-term capital growth. The overall residential rental return rate is about 2.7%, which is slightly lower than other cities, but areas like Rosehill offer high rental returns of 6.2%. For those valuing asset appreciation and able to bear some risk, Sydney remains a top choice.
Melbourne: As Australia's education and cultural capital, Melbourne continues to attract large numbers of international students and immigrants, ensuring a stable rental market. In 2025, residential rental returns in Melbourne range from 3.5% to 4.2%, with apartment assets reaching 4.0% to 5.1%. The annual property growth rate is around 5.2%, indicating strong long-term potential. With benefits from urban renewal projects and abundant educational resources, Melbourne remains a hotspot for investors.
Brisbane: The capital of Queensland, Brisbane’s residential rental return rate in 2025 is around 4.5% to 5.2%, ranking highly among major capital cities. With a lower entry barrier, property prices are more affordable compared to Sydney and Melbourne, attracting medium-term investors. Some areas like Russell Island can offer rental returns of 5.6%, while apartments in Brassall can even reach 11.4%, demonstrating strong cash flow potential. As the 2032 Olympic Games approach, infrastructure development will further enhance the city's appeal and capital growth potential.
Perth: Benefiting from the recovery of the resource sector, Perth's property prices have surged with an annual growth rate of 18.4% in 2025. Residential rental returns range from 4.5% to 5.5%, with apartments achieving 6.5%. With a median house price of AUD 1.074 million (for detached homes) and AUD 500,000 (for apartments), Perth offers good value compared to major cities. Although the market is slightly more volatile, the potential for high returns makes it suitable for investors seeking high-yield opportunities.
Adelaide: Known for stable property prices and low living costs, Adelaide is an ideal choice for first-time homebuyers and conservative investors. The residential rental return rate in 2025 is about 4.45%, with stable market demand. With a steady population structure and urban planning, Adelaide's real estate market remains resilient, and property sales have grown by around 6% over the past year. For investors looking to enter the market at a lower cost and receive stable rental income, Adelaide is a worthwhile option.
4. Property Management and Maximizing Rental Income
The ultimate goal of real estate investment is to achieve stable rental income, so effective property management and operations are crucial for investors. Good property management not only ensures the stability of rental income but also maximizes your investment returns.
Hiring a Professional Property Management Company Most investors choose to hire professional property management companies to handle daily affairs after purchasing property. These companies typically charge 7% to 10% of the rental income as a management fee, taking care of many tedious tasks, including but not limited to:
Tenant Search: The property management company is responsible for finding and screening suitable tenants to avoid long vacancies.
Rent Collection: Collect rent on behalf of the property owner and ensure timely payments, preventing rent arrears or missed payments.
Maintenance Management: Handle regular maintenance to ensure the property remains in good condition and address tenant concerns promptly.
Tenant Communication: Address tenant needs or complaints and resolve any issues during the lease period.
The professional experience of property management companies reduces the time and energy investors need to invest, making it easier to manage multiple properties.
Understanding Local Rental Laws and Regulations Familiarity with and adherence to local rental laws is crucial to protect the landlord's rights. Each state or city has different rental laws, including rent adjustment frequency, lease termination conditions, and tenant rights. For instance, in some areas of Australia, landlords must notify tenants in advance before adjusting the rent, and rent can only be adjusted once a year. Lease termination conditions also need attention. In some regions, the law requires landlords to give tenants sufficient notice (for example, when terminating the lease) and provide a valid reason for the termination. Understanding these regulations helps investors avoid legal disputes and ensures the leasing process runs smoothly.
Strategies to Maximize Rental Income To maximize rental income, investors can consider several strategies to enhance the property’s market value:
Renovation and Upgrades: Updating internal features such as kitchens, bathrooms, or flooring can significantly increase the property’s rental value. Modern kitchen and bathroom facilities can attract more potential tenants and justify higher rental prices.
Furniture Upgrades: For apartment or short-term rental properties, consider offering high-quality furniture and household items. Well-designed and modern furniture not only boosts the property’s appeal but can also make it stand out in the market, increasing rental returns.
Short-Term Rental Services: In some cities, short-term rental markets (like Airbnb) are booming. If your property is well-located and attractive, you might consider converting it into a short-term rental, which can significantly increase rental income. Although short-term rentals have higher management requirements, they typically yield higher returns than long-term leases.
Property Facilities Upgrades: Adding facilities such as a gym, swimming pool, or meeting room can attract higher-end tenants and increase rent levels. Depending on local market demand and property type, these facilities can effectively boost the property’s appeal and rental value.
In conclusion, maximizing rental income depends not only on the choice of property but also on professional property management, understanding local rental laws, and implementing reasonable appreciation and operating strategies. For investors looking to invest in real estate in Australia, these methods can effectively enhance investment returns and ensure a smoother leasing process.
5. Tax Planning and Fee Estimates
Although Australia is an ideal destination for real estate investment, there are several tax and fee items that investors need to be aware of.
Stamp Duty: Varies by state, and foreign buyers are required to pay an additional 7% to 8% surcharge.
Capital Gains Tax (CGT): If a property is sold for a profit, CGT must be paid. Foreigners are not eligible for the 50% discount available to Australian residents, meaning they will pay a higher tax rate.
Land Tax: Land tax is levied based on the value of the property, and foreigners may need to pay additional taxes.
Vacancy Tax: In some states, if a property remains vacant for over six months, a special tax must be paid.
The good news is that through depreciation deductions and negative gearing strategies, investors have the opportunity to significantly reduce their income tax burden. Depreciation allows investors to claim the property's depreciation as an expense, thus reducing the taxes owed, while negative gearing enables investors to deduct property losses (such as loan interest and maintenance costs) from other income, further lowering their tax liabilities.
6. Fund Transfer and Financing Strategies
Buying property in Australia is not just about selecting the right property; the flow and management of funds are equally important. For overseas investors, understanding how to efficiently and cost-effectively transfer funds and choose the right financing options can significantly improve investment returns. Here are a few important fund management and financing strategies:
Fund Transfer Choices: Lowering Transfer Costs Transferring funds from Hong Kong or other countries to Australia is a challenge investors must face. In addition to traditional bank transfers, investors can consider specialized transfer platforms such as Wise (formerly TransferWise) and OFX, which typically offer lower fees and more competitive exchange rates, helping to save substantial transfer costs. For example, traditional banks typically charge higher handling fees for international transfers, and the exchange rate may not be favorable for investors. Using platforms like Wise or OFX, however, often results in lower fees and exchange rates closer to market rates, helping to reduce currency loss. For large transfers, these differences can result in significant savings.
Loan Options: To buy property in Australia, many Hong Kong investors will choose to apply for mortgages. Mortgage rates in Australia typically range from 5% to 7%, and foreign investors usually need a higher deposit (usually 30% to 40%) when applying for a mortgage. Unlike Hong Kong, where most buyers can borrow up to 80% of the property value, in Australia, foreigners face stricter lending policies.
Using Offshore Funds: Some investors choose to use funds from Hong Kong or other overseas sources for property purchases. If you plan to borrow from overseas banks, it’s important to assess whether there are any restrictions or penalties for transferring funds abroad.
7. Frequently Asked Questions (FAQs)
Q1: Can foreigners buy second-hand properties in Australia?
A: In principle, no, unless the property is to be redeveloped to increase housing supply. This is a policy set by the Australian government to address housing shortages.
Q2: Is the FIRB application process complicated?
A: The FIRB application is not complicated, but it is recommended to work with a lawyer for the application process. The approval typically takes around 30 days.
Q3: How is rental income taxed?
A: Rental income must be declared as income earned in Australia and will be taxed according to the income tax rate. Expenses such as loan interest and property management fees can be deducted for tax purposes.
Q4: Do I need to visit the property in person?
A: It is not mandatory, but visiting the property in person or hiring a professional to inspect on your behalf will provide more peace of mind, especially when it comes to choosing the right area and evaluating the property condition.
Q5: What type of property is the best to invest in?
A: If you have sufficient funds, detached houses (e.g., villas) generally have more potential for capital appreciation, especially in major cities or areas with strong growth potential. If your budget is limited, high-quality new apartments are also a good option, as they usually offer stable rental returns.
Conclusion
The Australian real estate market undoubtedly offers great potential but also carries some risks. From understanding local laws and regulations to choosing the right location and managing finances, every step needs careful planning. Only with the right strategy and professional team support can you ensure that your real estate investment in Australia is not just a dream, but a stable option for wealth growth. With proper preparation and careful management, investing in Australian property can be a trustworthy, long-term investment choice, providing consistent returns.
Alison’s Story
Born in Hong Kong an moved to Australia, I have been associated with real estate all my life. As the plane slowly landed on the runway of Melbourne Airport, my life and career also changed to another runway. I changed from a Hong Kong real estate agent to an Australian real estate agent, and successfully obtained the Australian lawyer qualification.
When I was working in a law firm, I was surrounded by highly educated professionals. Even though their wages are very well, and they are absolutely the elites in society, but their lives are full of hard labor, and it’s hard for them to get rich through buying properties.
So I spend all my time and effort on learning financial and real estate investment knowledge, hoping to achieve financial freedom as soon as possible, and let my parents who have worked hard for many years live a good life.
Now I will share with you the knowledge and experience of investing in Australian real estate, and embark on the road to financial freedom together.
Alison Australian real estate information platform
The original intention of Miss Alison to establish investwithalison.com is to provide neutral Australian real estate information through this platform and help investors establish the most suitable investment strategy.
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