The Australian government has announced a two-year ban on foreign investors purchasing existing homes, a policy aimed at addressing housing affordability concerns. The restriction, set to take effect from April 1, 2025, to March 31, 2027, mirrors a similar proposal introduced by the Coalition last year.
As per The Guardian, housing minister Clare O’Neil said that while this measure is not a “silver bullet,” it forms a key part of Labor’s broader housing strategy.
“This isn’t a silver bullet, because there is no silver bullet,” O’Neil said. “But this is an important piece of Labor’s absolutely massive housing agenda”, O’Neil added.
Foreign investors, including international students and foreign-owned companies, will be restricted from acquiring established residential properties during the period. However, they will still be permitted to invest in newly built homes to encourage housing supply. Workers on the Pacific visa scheme will also be exempt from the ban.
Additionally, the government plans to curb land banking by foreign investors, requiring them to develop vacant land within a set timeframe.
The Sydney Morning Herald reported that in 2022-23, foreign buyers accounted for 5,360 residential real estate purchases, with only a third of these being existing dwellings. Property Council executive Matthew Kandelaars noted that while limiting foreign investment in existing homes may have minimal impact on affordability, the focus on new developments was a positive step.
“It’s pleasing that both major parties have recognised that building new homes is the most important way our nation will address its housing affordability challenge,” Kandelaars said.
This policy follows a similar announcement by opposition leader Peter Dutton in May 2024. At the time, Treasurer Jim Chalmers criticised the proposal, calling it “unhinged,” while Labor Minister Bill Shorten pointed out that fewer than 5,000 Australian homes had been purchased by foreign investors over the past two years.
However, on Sunday, O’Neil defended Labor’s approach, stating, “I really don’t care about the politics of this. Everything we do on housing is about getting more Australians into their own homes, and this change will play a part in that.”
The government has allocated $1.4 million annually to the Australian Taxation Office (ATO) to enforce the ban and enhance foreign investment screening. Additionally, The Guardian reported that the ATO and Treasury will receive $2.2 million per year until 2029-30 and $1.9 million annually thereafter to increase auditing and compliance efforts against land banking by foreign investors.
Despite the policy’s intentions, experts question its impact on overall housing affordability. As reported by The Sydney Morning Herald, polling from January 2024 indicated that 69% of voters supported the Coalition’s approach, believing it would help local buyers enter the market.
Dutton has continued to criticise the Albanese government’s handling of the housing crisis, arguing that increased migration without sufficient home construction has worsened affordability.
“It’s not just a cost-of-living crisis, it’s a housing crisis that the government has created by bringing too many people in and not building enough homes,” Dutton said.
With an election on the horizon, housing policy is expected to remain a key issue, with both major parties positioning themselves as the best choice to tackle Australia’s affordability crisis.
