In a bid to address Australia’s housing crisis and increase housing supply, the Albanese government has introduced a two-year ban preventing foreign investors, including temporary residents, from purchasing existing homes in Australia. The policy aims to reduce competition for housing from overseas investors, thereby easing pressure on the property market. The restriction, effective from April 1, 2025, to March 31, 2027, will apply to foreign nationals living temporarily in Australia for work or study, alongside those already barred from purchasing existing properties.
In addition to the foreign investment ban, the government is focusing on addressing land banking practices. Land banking occurs when developers acquire undeveloped land, subdivide it into smaller lots, and sell it to investors rather than developing it into housing. The crackdown on this practice aims to ensure that land is used for its intended purpose—building homes for Australian families.
During the two-year ban, the government will review the effectiveness of the measure, with the possibility of extending or making it permanent. A boost of $5.7 million will also be allocated to the Australian Taxation Office (ATO) to strengthen enforcement and compliance during this period.
Impact of Foreign Investment on Australia’s Housing Market
Data from the Australian Taxation Office reveals that in the 2022-23 financial year, foreign investors made 5,360 residential real estate purchases totaling $4.9 billion, with 34% of those purchases being for existing homes. Victoria and Queensland recorded the highest number of these transactions, contributing to the ongoing pressure on the housing market.
Australia is currently facing a housing crisis driven by factors such as record migration levels, slow planning approvals, and a significant shortage of skilled workers. Housing affordability is a critical issue for voters, second only to the cost of living. The Albanese government has committed $32 billion to address the crisis, with a significant portion earmarked for its “Help to Buy” program, which is designed to assist 40,000 buyers by covering up to 40% of the cost of a home.
Government’s Plans for Housing Supply and Future Policy Directions
The government also has plans to build 1.2 million new homes by 2030. However, modelling from Deloitte Access Economics suggests that current construction rates may fall short, with only 173,000 homes completed in 2023. To meet its target, the government will need to increase the number of homes built each year to an average of 240,000—something that Australia has only achieved twice in the past.
In response, the Coalition has proposed allowing first-home buyers to access up to $50,000 from their superannuation funds for home deposits, as well as a $5 billion investment in infrastructure at housing development sites. They have also promised a two-year ban on temporary residents purchasing existing homes if elected.
Treasurer Jim Chalmers described the foreign investment restrictions as “minor but meaningful,” aiming to reduce competition from foreign investors and ensure more properties are available to Australian buyers.
Crackdown on Land Hoarding and Increased Compliance Measures
In an effort to address land banking, the government is ramping up its focus on ensuring that foreign-owned land is developed within the required timeframes. The government has already implemented measures to limit foreign investment in existing homes, including restrictions on foreign ownership in new developments and an annual vacancy fee for properties left vacant for extended periods. Furthermore, the government is allocating an additional $8.9 million over four years to the ATO to bolster its efforts to combat land hoarding.
Conclusion
The Albanese government’s two-year ban on foreign investors purchasing existing homes represents a significant step toward addressing Australia’s ongoing housing crisis. By cracking down on land banking and enforcing stricter compliance measures, the government hopes to free up more land for housing development and improve affordability for Australian residents. However, the challenge remains in ensuring that new homes are built at the required pace to meet the growing demand. As the housing crisis continues to dominate national discussions, both government and opposition parties are working to present policies that will alleviate the burden on Australian homebuyers.
—————BOOK YOUR EXCLUSIVE 15 MINUTE ZOOM CONSULTATION————-
We offer a 15-minute no obligation consultation to existing property investors, first home buyers and small business owners who are looking at property investments, business and asset protection. To Book an Appointment simply click here and pick a time and date.
BOOK YOUR ZOOM APPOINTMENT HERE
How can we help?
If you have any questions or would like further information, please feel free to give our office on 08 9221 5522 or via email – info@camdenprofessionals.com.au or arrange a time for a meeting so we can discuss your requirements in more detail.
How can we help?
If you have any questions or would like further information, please feel free to give our office on 08 9221 5522 or via email – info@camdenprofessionals.com.au or arrange a time for a meeting so we can discuss your requirements in more detail.
General Advice Warning
The material on this page and on this website has been prepared for general information purposes only and not as specific advice to any particular person. Any advice contained on this page and on this website is General Advice and does not take into account any person’s particular investment objectives, financial situation and particular needs.
Before making an investment decision based on this advice you should consider, with or without the assistance of a securities adviser, whether it is appropriate to your particular investment needs, objectives and financial circumstances. In addition, the examples provided on this page and on this website are for illustrative purposes only.
Although every effort has been made to verify the accuracy of the information contained on this page and on this website, Camden Professionals, its officers, representatives, employees, and agents disclaim all liability [except for any liability which by law cannot be excluded), for any error, inaccuracy in, or omission from the information contained in this website or any loss or damage suffered by any person directly or indirectly through relying on this information.
Recent Comments