Australia has announced a two-year ban on foreign investors purchasing existing homes, starting 1 April 2025, as part of efforts to address the ongoing housing crisis. This policy aims to free up approximately 1,800 properties annually for local buyers. The decision comes amid growing dissatisfaction with housing affordability, a key issue in the upcoming general elections.
"We're banning foreign purchases of established dwellings from 1 April 2025 until 31 March 2027," said Treasurer Jim Chalmers. The ban, which will run until 31 March 2027, is seen as a move to ease the pressure on the housing supply. A review of the policy will be conducted to determine whether it should be extended further.
Under the government's plan, foreign investors – including temporary residents such as international students and foreign-owned companies – will not be allowed to purchase an established dwelling in Australia from 1 April 2025 until 31 March 2027.
They will still be able to purchase new dwellings to encourage housing supply. Additionally, the government will crack down on land banking by forcing foreign investors who purchase vacant land to develop it within a reasonable timeframe.
For new developments, foreign investors are restricted to owning no more than 50 per cent of the property, ensuring local buyers and investors maintain a significant stake in the development.
Foreign owners of properties that remain vacant for six months or more in a year are subject to an annual vacancy fee. This discourages "land banking," where foreign investors hold onto properties without using or developing them, driving up housing prices and limiting availability for local buyers.
Foreign investors must develop land they purchase within a certain period, ensuring that the land is used to build houses rather than left idle, which can cause housing shortages.
This new measure addresses the ongoing housing affordability crisis that has affected many Australians, particularly in large cities like Sydney and Melbourne. The Labor Party's policy is quite similar to a policy introduced by the previous Coalition government, which also sought to limit the impact of foreign investment in Australia's housing market.
The move comes amid growing concerns that foreign investment in residential property has exacerbated Australia's housing affordability crisis. Many locals have been priced out of the market as overseas buyers, often with more capital, can outbid them.
The ban will last for at least two years, though there will likely be a review of the policy after that period to assess its impact. The ban is designed to give time for the housing market to adjust and for more homes to be available for local buyers.
