The Australian property market has seen intense growth in the last few years, which has led to pressure on the Federal Government to curb that growth and make it possible for first-time buyers to enter the property market. Growth in the next year is expected to be around 3%.
As of 1 April 2025, the foreign purchaser ban came into effect and means that any person who is not an Australian citizen, permanent resident, New Zealand citizen, or a spouse of those exempted, will no longer be able to purchase an established dwelling in Australia.
Currently, the ban is only to take effect from 1 April 2025 until 31 March 2027 which is 2 years only. However, the Federal Government has indicated that a review will take place prior to the end of the ban to determine whether it needs to be extended.
So what does this mean for those exempt? The Federal Government has committed to boosting ATO funding to support their audit efforts into land banking by foreign investors. This effort is an attempt to ensure that vacant land sold is developed within a reasonable timeframe with a goal to have more homes built quicker to meet demand. It also provides a buffer for those exempt to purchase land or property without the concern that it’ll be scooped up by foreign investors.
The plan has been labelled by some such as M R Advocacy director Madeleine Roberts as “political theatre”. In her local area of Melbourne, less than 1% of property purchases are made by foreign investors and it is alleged the ban will do little to curb the barriers to property ownership by Victorians.[1]
Eliza Owen of CoreLogic, a leading property insight and data firm, noted that in 2023-24 financial year, property prices saw a 2% decrease while foreign investment had increased. Effectively, the idea of banning foreign investment only comes up when “affordability deteriorates”.[2]
The general expectation is that while the restriction is being touted as a win for local investors and first home buyers, it is a move that is only expected to capture less than half a percent of the housing market nationally.
With the Australian Government now in Caretaker mode with the upcoming election, these laws could change if there is a change in government.
The effect of this ban remains to be seen given there is a such a small portion of the market affected by foreign investment. With just under 4,200 properties sold in the Sutherland Shire in the last 12 months, just 16 of those statistically have been purchased by foreign investors meaning the primary market for the shire are local buyers.
If you’d like to know more or have questions about your next property sale and/or purchase, Harriss Jones Lawyers can help. Contact us today or book an appointment online to discuss how we might be able to assist you.
Seth Harlen
Solicitor, Harriss Jones Lawyers
[1] David Bonaddio, ‘Foreign buyer ban blasted as ‘political theatre’ for Melbourne, where locals dominate’, <https://www.realestate.com.au/news/foreign-buyer-ban-blasted-as-political-theatre-for-melbourne-where-locals-dominate/>.
[2] Nassim Khadem, ‘Foreign demand for Aussie property running hot, but it’s just a fraction of Australia’s lucrative real estate market’, <https://www.abc.net.au/news/2024-06-27/foreign-buyers-china-hk-india-want-australian-property-housing/104024004>.
