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Politicians and brokers are divided on whether the Albanese government’s two-year ban on foreign investors buying established homes will effectively boost housing supply.
Ahead of a looming federal election, the government has announced that it will ban foreign purchases of established dwellings from 1 April 2025 until 31 March 2027 in an effort to ease pressure on the housing market.
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A review will be undertaken to determine whether the temporary ban on foreign purchases of houses should be extended beyond 31 March 2027, the government said.
From 1 April 2025, foreign investors (including temporary residents and foreign‑owned companies) will no longer be able to purchase an established dwelling in Australia while the ban is in place unless an exception applies.
Limited exceptions will include investments that “significantly increase housing supply or support the availability of housing supply”, and for the Pacific Australia Labour Mobility (PALM) scheme, the government clarified.
The ban is aimed at freeing up homes that would otherwise have been bought by foreign investors.
To strengthen its compliance and enforcement efforts, the government said it would bolster the Australian Taxation Office’s (ATO) foreign investment compliance team to enforce the ban and enhance screening of foreign investment proposals relating to residential property by providing $5.7 million over four years from 2025–26.
Tighter rules on land banking
In an announcement on Sunday (16 February), the government also outlined plans to clamp down and reduce land banking by foreign investors to “free up land to build more homes more quickly”.
It will focus on ensuring that land banking regulations are complied with and identify investors breaking rules.
Currently, foreign investors are subject to development conditions when they acquire vacant land to ensure that it is put to “productive use within reasonable timeframes”.
The Labor government said it will provide the ATO and Treasury $8.9 million over four years from 2025–26 and $1.9 million ongoing from 2029–30 to implement an audit program and enhance their compliance approach to target land banking by foreign investors.
Foreign investors that have already acquired or are proposing to acquire vacant residential or non‑residential land will be subject to heightened scrutiny by the ATO and Treasury to ensure they comply with development conditions, the government added.
Commenting on current land banking problems in a joint statement, the minister for housing and homelessness, Clare O’Neil, and treasurer Jim Chalmers said: “This activity breaks the rules and results in delays to the development of essential residential housing and commercial developments.”
The two added that: “A temporary ban on foreign purchases of established dwellings, strengthened compliance activity by the ATO to enforce the ban, and an enhanced compliance approach by both the ATO and Treasury to discourage land banking by foreign investors will help ensure that foreign investment in housing is in our national interest.”
The ATO and Treasury will publish updated policy guidance prior to the commencement of these changes, the government stated.
Politicians wade into housing crisis
Property has become a key political issue ahead of looming elections, with several parties having made major commitments to boost housing and improve affordability.
O’Neil said about the latest announcement that her party is “coming at this housing challenge from every responsible angle”.
“These initiatives are a small but important part of our already big and broad housing agenda which is focused on boosting supply and helping more people into homes.
“It’s a minor change, but a meaningful one because we know that every effort helps in addressing the housing challenge we’ve inherited,” she stressed.
The initiatives form part of the Albanese Government’s $32 billion Homes for Australia plan, the government claimed.
After the announcement, the Greens issued a scathing attack on the reforms, accusing Labor of joining Peter Dutton in a “race to the bottom on blaming migrants for a housing crisis they didn’t cause”.
The political party stated that the proposal would only affect about 0.3 per cent of all property purchases in Australia per year - or 1,800 of the roughly 670,000 property purchases in Australia in a single year.
“Dutton and Labor are insulting the intelligence of Australians, pretending like this will do anything to help fix the housing crisis,” Max Chandler-Mather, Greens spokesperson for housing and homelessness warned.
Industry reacts
The Property Council of Australia welcomed the announcement by Labor, saying it could help close the housing supply gap.
Property Council group executive policy and advocacy, Matthew Kandelaars, said: “Australia has relied on global investment – using other peoples’ money – to help build and shape our cities for the last three quarters of a century, and we shouldn’t stop now.
“Policies that sensibly focus that investment into new homes and apartments to house our growing population make sense,” he added.
However some brokers were more sceptical of the reforms.
Founder and managing director of mortgage brokerage Kaleido Loans Jason He said that although he welcomed any policy that adds to the property supply and prioritises Australian first home buyers over foreign residents, he thought meaningful benefits would be minimal.
"Based on the government's own estimates, this ban could free up approximately 1800 homes annually for Australian local buyers, nationally," He noted.
"This figure frees up a very marginal amount of supply and in my opinion, given the size of the current housing affordability crisis, it will not have any noticeable effect," the broker cautioned.
"The main beneficiary of this policy is the government scoring quick political wins and serves more of a symbolic gesture than any actual solution to the problem."
He stressed that there were more pressing concerns impacting supply problems: "It has been well documented that the main issue is an under supply of housing construction caused by complex planning approval processes, increase in construction costs, lack of labour force, and lack of consumer confidence in apartments."
[Related: Housing issues grow in importance for voters as election looms]
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