Australia’s Ban On Foreign Investors Buying Established Homes

The Australian Government has announced a temporary ban on foreign investors purchasing established homes, effective 1 April 2025 through 31 March 2027.

This decision aims to increase housing availability for Australians, crack down on land banking, and ensure foreign investment supports the national housing market. But what does this mean? Who will be affected? And what should buyers and investors do next? Let’s break it down.

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What The Foreign Investor Ban Means

The Albanese government’s policy effectively stops foreign investors, including expats, temporary residents and foreign-owned companies, from purchasing existing homes in Australia during the ban period.

While foreign buyers were already restricted under current laws, there were exceptions for those who came to Australia for work or study. These exceptions will no longer apply.

However, foreign investors can still:

• Buy new properties (to encourage housing supply growth).
• Invest in projects that significantly increase housing availability.
• Purchase properties under the Pacific Australia Labour Mobility (PALM) scheme.

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Who Will Be Affected?

Foreign Investors

Foreign buyers accounted for 5,360 residential property purchases in 2022-23, of which about one-third were established homes. These buyers must now redirect their investments toward new builds or vacant land.

Temporary Residents

Temporary residents, including international students and professionals, who were previously allowed to buy existing homes under specific conditions, will also be barred unless an exception applies.

Australian Home Buyers

For local home buyers, particularly first-home buyers and owner-occupiers, this ban may mean less competition in the market. With fewer foreign investors bidding on established homes, there is potential for improved affordability in some areas.

Property Developers

Foreign investors will still be allowed to purchase newly built homes, meaning demand in the new housing sector could remain steady. This ensures that investment contributes to increasing housing supply rather than increasing prices for existing homes.

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Our Expert Insights

We turned to our mortgage experts for their insights on this update.

Sheng Ye: “A Political Move Rather Than a Real Solution”

Sheng Ye views the ban as a lead-up to the next federal election, rather than a genuine effort to address Australia’s housing supply issues.
“Every voter understands that there is a housing crisis, but banning foreign buyers, who purchase only about 5000 established homes a year, will not significantly increase supply for local buyers.”

Ye believes a better approach would be for the government to encourage foreign investors to help fund new housing developments rather than restricting them from purchasing existing properties.

“Many construction companies have collapsed over the past two years due to cashflow issues,” he explained. “If foreign investors were encouraged to invest in new developments, they could help fund housing construction and increase supply, rather than simply shifting demand elsewhere.”

Jonathan Preston: “More Political Posturing than Practical Reform”

Jonathan Preston echoed Ye’s concerns, describing the policy as “more political posturing than practical reform”.

“Very few temporary residents or foreign investors actually buy property in Australia due to the already high taxes,” Preston said. “This policy will make little difference. In fact, it might be unfair to skilled migrants, who come here to start a new life and contribute to our economy.”
Both mortgage brokers agree that while restricting foreign buyers might be politically popular, it does little to fix the underlying problem: Australia’s failure to build enough homes to meet demand.

While foreign investment in Australian real estate often attracts public scrutiny, the impact has been limited compared with domestic buyers. Foreign buyers accounted for less than 1% of all home sales in 2022-23, most investing in new builds or vacant land.

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Next Steps for Buyers and Investors

For Foreign Investors:

• Consider purchasing new properties.
• Understand development requirements if investing in vacant land.
• Stay updated on compliance rules to avoid penalties.

For Australian Home Buyers:

• Monitor the market for potential price shifts as foreign demand for established homes decreases.
• Ensure pre-approvals are in place to take advantage of potential buying opportunities.
• Work with mortgage brokers to secure competitive financing options.

For Property Developers:

• Prepare for continued demand from foreign investors in the new housing sector.
• Ensure projects align with government incentives to attract investment.
• Stay informed on future policy changes that may affect development approvals.

If you need help or guidance on how to navigate these changes, our mortgage experts are here to help. Call us on 1300 889 743 or enquire online.