Prospective home buyers will face less competition from overseas, with Labor promising to ban foreign investors from purchasing existing homes for at least two years.
But the restriction – which replicates a policy announced by the Coalition last year – will capture less than 0.4% of the housing market, casting doubts over its efficacy.
Under the government’s plan, foreign investors – including temporary residents such as international students and foreign-owned companies – will be unable to purchase an established dwelling in Australia from April 1, 2025 until March 31, 2027.
They will still be able to purchase new dwellings, to encourage the supply of housing, and a carve-out will also be provided for workers on a Pacific visa scheme.
The government will also crack down on land banking by forcing foreign investors who purchase vacant land to develop it within a reasonable timeframe.
The housing minister, Clare O’Neil, said the government had to orient all its efforts into securing home ownership for more young Australians.
“This isn’t a silver bullet, because there is no silver bullet,” she said. “But this is an important piece of Labor’s absolutely massive housing agenda.”
Foreign investors are currently barred from buying existing homes, but are allowed exceptions for some circumstances like moving to Australia for work or study.
In 2022/23, foreign investors accounted for 5,360 residential real estate purchases, of which only a third were existing dwellings.
The volume of foreign purchases of existing homes was low and would not by itself solve housing unaffordability, the Property Council said.
Matthew Kandelaars, the council’s executive for policy and advocacy, said the carve-outs for new builds were welcome as every effort should be made to boost housing supply.
“It’s pleasing that both major parties have recognised that building new homes is the most important way our nation will address its housing affordability challenge,” he said.
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“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.”
The opposition leader, Peter Dutton, announced a near-identical two-year ban on foreign purchases of existing homes in his budget reply speech in May 2024.
At the time, the treasurer, Jim Chalmers, said the speech was “unhinged”, while government minister Bill Shorten claimed fewer than 5,000 Australian homes had been purchased by foreign investors over the previous two years.
But O’Neil on Sunday said the government had been looking at the move for a long time, calling it “good public policy”.
“I really don’t care about the politics of this. Everything we do on housing is about getting more Australians into their own homes, and this change will play a part in that,” she said.
Dutton said it was interesting that the treasurer didn’t stand up with O’Neil to make the announcement, given he had “bagged this policy” when he announced it.
“We have to get housing for Australians, but you can only do that under a Coalition government,” he told reporters in Darwin.
The government will inject $1.4m a year into the Australian Taxation Office to enforce the ban and boost screening of foreign investment proposals.
The ATO and Treasury will also receive $2.2m a year until 2029/30, and $1.9m each year from then on, to increase auditing and compliance targeting land banking by foreign investors.
