Foreign Investment Policy Changes: What It Means for the Perth Property Market

The Australian federal government has announced a two-year ban on the purchase of existing homes by foreign buyers, aligning itself with a policy previously proposed by the Coalition. This move, effective April 1, aims to address housing affordability concerns while resonating with voter sentiment.

Understanding the Ban

Under the new policy, foreign investors, including foreign-owned companies and temporary residents, will be prohibited from purchasing established homes in Australia for two years. However, the ban will not apply to new dwellings or vacant land, as these categories are considered crucial for boosting the housing supply.

Limited exemptions are included for investments that significantly increase housing stock or involve participants in the Pacific Australia Labour Mobility scheme. Additionally, the government will allocate funding to the Australian Tax Office to enforce compliance and audit foreign landowners.

The Bigger Picture: Impact on the Housing Market

Foreign buyers currently own about 2% of Australia’s housing stock and accounted for less than 1% of all home purchases in the 2022-23 financial year. These figures highlight the relatively small role foreign investors play in the broader housing market. Of the 5,360 foreign home purchases recorded last year, only one-third involved established homes—the type targeted by the ban.

Economists suggest that this measure’s direct impact on housing affordability will likely be minimal, given the limited scale of foreign ownership. Nonetheless, the policy may hold symbolic value, demonstrating government responsiveness to public concerns over housing accessibility.

Expected Impact on Perth’s Property Market

In Perth, where housing affordability and availability are already critical concerns, this policy could have a marginal but noticeable impact. While foreign buyers represent a small segment of the market, the ban may slightly ease competition for established homes, potentially benefiting local buyers.

However, with the exemption for new builds, the policy aligns with efforts to encourage development, which could support Perth’s growing population and demand for housing. Local real estate dynamics will largely depend on complementary measures to boost overall supply and address affordability challenges.

Housing Policies: Diverging Approaches

While Labor and the Coalition now share common ground on restricting foreign ownership, their broader housing strategies differ significantly:

Labor: The focus is on increasing housing supply through financial incentives to states and territories and boosting investment in social and affordable housing. Additionally, Labor is addressing barriers to homeownership by revisiting the treatment of HELP debts in home loan assessments.

Coalition: Their key policies include allowing first-home buyers to access superannuation savings for property purchases and funding infrastructure to support new housing developments on urban fringes.

A Small Step in a Larger Challenge

Housing affordability remains one of Australia’s most pressing issues, with the housing market valued in the trillions. Treasurer Jim Chalmers and Housing Minister Clare O’Neil have emphasised that this policy is just one component of a broader housing agenda. The government aims to tackle the housing crisis from multiple angles, prioritising supply-side solutions.

Voter Sentiment and the Road Ahead

Public sentiment appears to favour measures addressing foreign ownership, with Opposition Leader Peter Dutton’s proposal on the topic gaining significant traction online. By adopting a similar policy, Labor seeks to neutralise the issue as a potential political liability.

However, addressing Australia’s housing crisis will require a multifaceted approach that extends beyond foreign investment. Policies that stimulate housing supply, improve affordability, and support first-home buyers will be crucial in the years to come.

As the federal government rolls out its initiatives, all eyes will be on their effectiveness in easing the housing burden for Australians. Will these measures be enough to make a meaningful difference, or are more robust reforms required? Time will tell.

At Adaptive Settlements, we understand the complexities of navigating Australia’s evolving housing market. As policies like this foreign buyer ban shape the real estate landscape, our team is here to guide you through every step of your property journey.

Whether you’re buying your first home, investing in new developments, or navigating settlement processes, we’re committed to helping you adapt to these changes with confidence. Contact us for your next property transaction.