Australia Bans Foreign Buyers from Purchasing Existing Homes for Two Years

Image credits: The Australian Financial Review, Nine Entertainment Co. Pty Ltd

The Australian government has announced a ban on foreign investors from purchasing existing homes in the country for at least two years, in an effort to improve housing affordability and crack down on land banking. The ban, which will come into effect on April 1, 2025, and last until March 31, 2027, will prevent foreign investors, including temporary residents and foreign-owned companies, from buying established dwellings in Australia. However, they will still be able to purchase new dwellings to encourage the supply of housing, and a carve-out will be provided for workers on a Pacific visa scheme.

The government's plan has been met with criticism from some, who argue that the ban will have a minimal impact on the housing market, as foreign investors account for less than 0.4% of the market. The Property Council has also stated that the volume of foreign purchases of existing homes is low and would not by itself solve housing unaffordability. However, the government believes that the ban is an important piece of its housing agenda, and will help to secure home ownership for more young Australians. The government will also inject $1.4m a year into the Australian Taxation Office to enforce the ban and boost screening of foreign investment proposals.

The opposition leader, Peter Dutton, has announced a similar policy in the past, and has criticized the government for stealing its idea. Dutton has also hinted that a Coalition government might use divestiture against recalcitrant insurance companies, and has cast doubt on whether the opposition would support any extension of government relief on power bills. The government's announcement has been seen as a move to neutralize the opposition's policy and to shore up its credentials on housing, ahead of the upcoming election. The government will also provide $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.

Here are the key points of the government's policy: * Foreign investors will be banned from buying existing homes in Australia for at least two years * The ban will come into effect on April 1, 2025, and last until March 31, 2027 * Foreign investors will still be able to purchase new dwellings to encourage the supply of housing * A carve-out will be provided for workers on a Pacific visa scheme * 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 government will provide $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.

The government's policy has been met with mixed reactions from stakeholders, with some welcoming the move to improve housing affordability, while others have expressed concerns about the impact on the housing market. The policy is seen as a key part of the government's housing agenda, and will be closely watched in the lead-up to the election. The government believes that the ban will help to secure home ownership for more young Australians, and will play a part in addressing the issue of housing unaffordability in the country.