Foreign Investors Banned from Buying Existing Homes
In a bid to make it easier for Aussies to buy a home, the government has announced a two-year ban on foreign investors purchasing existing properties.
But will it really make a difference?
How Will the Ban Work?
From April 1, 2025, to March 31, 2027, foreign investors, including temporary residents like international students, won’t be able to buy established dwellings in Australia.
However, they can still purchase new homes to encourage housing supply. There’s also a carve-out for workers on a Pacific visa scheme.
Cracking Down on Land-Banking
The government is also taking aim at land-banking by forcing foreign investors who buy vacant land to develop it within a reasonable time frame.
This move is designed to prevent foreigners from snapping up land and leaving it empty, which can drive up prices and reduce availability.
Will the Ban Make a Difference?
While the government says this is an important step in making housing more affordable, others are skeptical.
The ban is expected to affect less than 0.4% of the housing market, which has led some to question its effectiveness.
In 2022/23, foreign investors accounted for just 5360 residential real estate purchases, with only one-third of those being existing dwellings.
Reaction from Experts and Opponents
Greens housing spokesman Max Chandler-Mather has criticized the move, saying it’s a “race to the bottom” and that blaming migrants for housing unaffordability is misleading.
The Property Council has also weighed in, saying that while the carve-outs for new builds are welcome, the ban on existing homes won’t solve the housing affordability crisis on its own.
A Change of Heart?
Interestingly, the government had previously opposed a similar policy announced by the opposition leader, Peter Dutton, in May 2024.
However, Housing Minister Clare O’Neil now says the government has been considering the move for a long time and believes it’s “good public policy.”
What’s Next?
The government will invest $1.4 million per year into the Australian Taxation Office to enforce the ban and boost screening of foreign investment proposals.
The ATO and Treasury will also receive additional funding to increase auditing and compliance targeting land-banking by foreign investors. Only time will tell if this ban will have the desired effect on the housing market.