Both the Labor party and Coalition have proposed a two-year ban on purchases of existing homes by foreign persons but the effect on supply and prices may be minimal.
Labor recently announced that they would implement a ban on foreign investment of established homes from 1st April 2025 to the 31st of March 2027. This is following on from a similar proposal from the Coalition in 2024.
This ban will apply to temporary residents, who were previously exempted if they studied or worked in Australia, and foreign‑owned companies.
Though this aims to improve the number of available homes for Australians, it is unlikely to make a major difference to supply.
According to latest data from the ATO, there were only 5360 real estate purchases by foreign persons from July 2022 to June 2023.
This accounts for only 1% of the total 538,861 transactions made during that period. From these purchases, only a third were for established homes.
Close to half of these foreign transactions were for new homes and these particular transactions are not included in the current proposal.
The ban targets a very small proportion of homes and will likely have a negligible impact on overall housing supply and affordability.
In order to address the major housing shortage we're currently undergoing, we need to focus more on initiatives that impact supply on a larger scale.
The government acknowledges that building more homes faster is the key to resolving this issue, but we continue to be too slow in responding to the demands of our growing population.
At a national level, there was a 28% shortfall in the number of new homes completed relative to the growth in population from June 2023 to June 2024. In some of our states such was Queensland and Western Australia, this shortfall was even greater.
Moreover, the shortages have accumulated over these past years as the gap between demand and supply persists.
While new home construction in our smaller states has kept up with population growth, and rezoning policies and release of unzoned land in our larger states has contributed to more homes being built in areas where people want to live, we are still behind on targets.
The continual implementation of policies that fast track the building of new homes is crucial in tackling our housing shortage.
