Foreign Residents Barred from Buying Existing Homes for Two Years

Temporary residents will be barred from buying existing homes for at least two years, and the Albanese government will crack down on foreign investors hoarding land that could be developed into housing.

Labor has moved to temporarily ban temporary residents from buying established homes.

Overseas investors have largely been barred from buying existing homes in Australia save for limited circumstances; the new policy will mean people living temporarily in Australia, either for work or study, will also be barred between April 1, 2025 and March 31, 2027.

During the two-year ban, the federal government will conduct a review to determine whether it should be extended or made permanent, while $5.7 million over four years will be given to the ATO for a boosted compliance program. Labor is open to extending the ban or making it permanent.

There were 5360 residential real estate purchases worth $4.9 billion with a level of foreign ownership in 2022-23, Australian Taxation Office data shows. Of these, 34 per cent or about 1800 were for existing homes, with Victoria and Queensland recording the lion’s share of transactions on 458 and 403 respectively, followed by South Australia on 313. NSW recorded just 165.

Australia is in the midst of a housing crisis that is fuelled by record levels of migration, sluggish planning approvals and significant skills shortages. The cost of housing ranks as a top issue for voters, just behind cost of living.

The Albanese government has a housing policy package worth $32 billion, with $5.5 billion committed to its signature “Help to Buy” program, which passed federal parliament late last year after being held up by Coalition and Greens senators. It will help 40,000 buyers with cash for up to 40 per cent of the cost of a house, which would be repaid when the home owner sells up.

Competing Policy Visions

Labor also has plans to build 1.2 million homes by the end of the decade, though the current trajectory suggests fewer than 1 million will be built, according to modelling undertaken last year by Deloitte Access Economics.

To meet its promise, Labor needs an average of 240,000 new homes to be built each year. Australia has only ever come close to that level twice, in 2016 and in 2021. In 2023, just 173,000 homes were completed.

The Coalition has pledged to allow first home buyers to access up to $50,000 from their superannuation for a home deposit, along with a promise of $5 billion towards infrastructure such as water, power, and sewerage at housing development sites if elected at the federal election due on or by May 17.

Opposition Leader Peter Dutton in November said a Coalition government would ban changes to the national construction rules for 10 years – labelling it a freeze on red tape.

He also promised to impose a two-year ban on temporary residents buying existing homes. Labor’s move to adopt the idea is aimed at neutralising it at the election so it can focus on its supply side policies.

Treasurer Jim Chalmers said the change was “minor but meaningful”.

“Until now, incoming temporary residents have been barred from buying existing property only in restricted circumstances, but when they come to live here for work or study,” Dr Chalmers said.

Crackdown on Land Hoarding

The government already has limitations on foreign land acquisitions such as restricting investment to new properties to encourage new stock, and limiting total foreign ownership in new developments to 50 per cent.

It also imposes an annual vacancy fee on foreign-owned properties that are vacant for at least six months of the year, as well as rules about how long foreign investors can own land before it must be developed into houses.

Part of Labor’s announcement on Sunday is an additional $8.9 million over four years from 2025-26, and then $1.9 million ongoing funding afterwards, to ramp up the ATO’s ability to catch overseas owners engaging in “land banking”—the practice of holding on to valuable land and not developing it within the required timeframe.

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