The Government of Australia has decided to ban foreign investors from purchasing established homes for two years, starting April 1. This decision is aimed at curbing the rising property prices in the country. Housing Minister Clare O’Neil stated that the restriction will last until March 31, 2027, and will be reviewed at that time to decide whether it should be extended.
Housing Prices and Market Conditions
The cost of housing in Australia has become some of the highest in the world. In cities like Sydney, home prices have soared by nearly 70% in the past decade, with the median dwelling price reaching A$1.2 million ($762,000). Meanwhile, rent prices have continued to rise, adding more pressure to the housing market. With affordability issues affecting many Australians, especially younger generations, the government hopes this move will make homes more accessible.
Limited Impact on the Market
Although the new restrictions are significant, their effect on the overall housing market is expected to be limited. In the year ending June 30, 2023, foreign investors contributed A$4.9 billion to the residential real estate market, including vacant land and new homes. Of this amount, established homes accounted for about one-third. The Australian Taxation Office will receive additional funding to help enforce the new rules.
Political Context and Election Concerns
This move aligns with a promise made by opposition leader Peter Dutton, who advocated for similar policies. With an election scheduled before May 17, housing affordability and cost-of-living issues are central concerns for voters. This policy is likely to influence the outcome, as the government seeks to address the public’s growing concerns.
