Australia Bans Foreign Home Purchases to Boost Housing Affordability

Australia Imposes Two-Year Ban on Foreign Home Purchases

In an effort to address housing affordability concerns, Australia will implement a two-year ban on foreign investors purchasing existing homes. The ban, effective April 1, 2024, aims to ease supply pressures and improve access to affordable housing for local residents.

The policy, announced by Housing and Homelessness Minister Clare O'Neil and Treasurer Jim Chalmers, will apply to all foreign nationals, including temporary residents on work or student visas. The government will assess the ban's impact after two years, with the possibility of extending or making it permanent.

However, experts caution that foreign buyers are not the primary driver of Australia's housing shortage. Michael Yardney, founder of Metropole Property Strategists, cites data showing that foreign purchases constitute a small fraction of the overall market. He emphasizes the persistent issue of housing undersupply, highlighting the challenges in meeting housing construction targets.

The Australian government's broader strategy to address the housing crisis includes tax incentives for developers and shared equity programs, aiming to build 1.2 million new homes by 2029.

While high property prices remain a concern, research suggests that the impact of Chinese investors on local housing prices is often overstated. Associate Professor Shi Song's report, "How much did Chinese investors drive up Sydney home prices?", concludes that their influence is limited in scope and primarily concentrated in areas with high Chinese populations.

The report argues that foreign investment should be welcomed if it contributes to boosting Australia's housing supply.