The federal government has declared a two-year ban on foreign investors purchasing existing residential properties nationwide.
The move, which comes into effect on April 1, aims to address the nation’s escalating housing affordability crisis by increasing the availability of homes for domestic buyers.
Unveiled yesterday, Labor’s ban blueprints align with a proposal previously put forward by the Liberal opposition late last year, which also seeks to ban foreign property purchases.
This means the first-of-its-kind foreign investment ban is now virtually guaranteed, regardless of who wins May’s upcoming federal election.
The bipartisan approach underscores the urgency of tackling Australia’s housing challenges as both parties seek solutions to curb soaring property prices and rental costs.
Australia is currently facing a severe housing shortage, with the government setting an ambitious target to construct 1.2 million new homes by 2030.
However, Build-it earlier revealed progress has been sluggish, intensifying pressure on both major parties to implement bolder strategies that could expedite housing availability.
The ban, which will run until March 31, 2027, will prohibit foreign nationals, including temporary residents and businesses, from purchasing existing homes during the specified period.
However, foreign investors will still be permitted to invest in new housing developments, a measure designed to stimulate construction and expand the overall housing supply.
Labor Housing Minister Clare O’Neil expects the ban to free up approximately 1,800 properties annually for Aussies who need a roof over their heads.
“This is all about easing pressure on our housing market at the same time as we build more homes,” she said.
“These initiatives are a small but important part of our already big and broad housing agenda.”
O’Neil also defended the government’s broader approach to housing supply, insisting that more reforms were underway to support the construction industry.
“We are investing billions in social and affordable housing, reforming rental laws, and making it easier for first-home buyers to get into the market,” she said.
Foreign investment under scrutiny
The role of foreign buyers in Australia’s property market has long been contentious, with many questioning the extent of their influence on housing affordability.
According to Treasury data, foreign investors account for less than 5% of property purchases in Australia, with most acquisitions concentrated in new housing developments rather than established homes.
However, the government argues that curbing foreign demand will free up properties for Australians struggling to enter the market.
“Australian families should come first when it comes to buying a home,” O’Neil stated.
“Given the housing pressures that Australians are facing today, we need to orient the entire efforts of the Australian government around security of housing for Australians, and, wherever possible, home ownership for a broader range of young Australians.”
Foreign investment facts
- Foreign buyers purchased 11,355 properties in 2016-17, compared to 4,768 in 2022-23.
- Victoria leads in foreign investment, accounting for 41% of all foreign property purchases.
- New South Wales accounts for 33 per cent of all purchases
- Queensland accounts for 15 per cent of all purchases.
- Government reforms have doubled foreign investment fees and tripled non-compliance fines.
Figures from the Foreign Investment Review Board (FIRB) show that China remains the largest source of foreign investment in Australian real estate, with buyers from Hong Kong, the United States, and Singapore also contributing.
In the 2022–23 financial year, foreign investors purchased 4,768 residential properties across Australia, with Victoria and New South Wales being the most popular states.
Foreigner ban won’t fix crisis
The ban on foreign investment has sparked mixed reactions, with some questioning whether it will meaningfully impact housing affordability.
Greens housing spokesperson Max Chandler-Mather has labelled the move a “band-aid solution” that fails to address the root causes of housing affordability.
“This is nothing more than political theatre,” he said.
“Foreign buyers make up a tiny portion of the market, and banning them does nothing to stop property developers from hoarding land or investors from driving up prices.”
“Foreign buyers make up a tiny fraction of the market, and banning them does nothing to stop property developers from hoarding land or investors from driving up prices.”
Instead, The Greens have called for rent freezes, greater investment in public housing, and an end to negative gearing tax concessions that have contributed to rising property costs.
“Instead of stunts like this, we need real action; more public housing, stronger rental protections, and an end to the tax rorts that let wealthy investors outbid everyday Australians.”
