Labor matches Coalition ban on foreign housing investment

Labor will impose a two-year ban on the purchase of existing Australian homes by foreign investors, mirroring a Coalition policy.

The ban announced by Treasurer Jim Chalmers and Housing Minister Clare O’Neil will take effect from April 1 and prohibit purchases from any foreign investors, including by foreign-owned companies and temporary residents.

Opposition Leader Peter Dutton made the same proposal last year in his budget reply address, and Labor sources told the ABC the move was intended to neutralise the issue in light of indications it had resonated with voters.

Foreign purchasers account for a very small proportion of Australia’s housing stock, owning about two per cent by some estimates.

In 2022-23, the last financial year for which data is available, there were 5,360 foreign home purchases, less than one per cent of all sales.

Only one third of those were of established dwellings, with the remainder either new dwellings or vacant land, not included in either major party’s ban proposal.

Ms O’Neil said the government was “coming at this housing challenge from every responsible angle” and that the announcement was “a small but important part of our already big and broad housing agenda, which is focused on boosting supply.”

The government proposes limited exceptions for investments that “significantly increase housing supply”, and for participants in the Pacific Australia Labour Mobility scheme.

It has also allocated a modest amount of additional funding to the Australian Tax Office to enforce the ban, and to audit foreign landowners to assess whether they are complying with requirements to develop the land in a timely manner.

Major parties now agree on foreign buyers, but other housing policies diverge

Economists have warned a foreign ownership ban would do little to change the affordability of Australia’s trillion-dollar housing market, given the small proportions.

But there are some signs Mr Dutton’s foreign buyer ban has found traction, including social media posts on the topic that have well outperformed his posts on other subjects.

The announcement is the second Labor has made in the space of a week on housing, which shapes as a key election issue for voters.

Earlier this week, Mr Chalmers announced he had requested that financial regulators clarify their guidance on the treatment of HELP debts in home loan assessments, broadening the scope for banks to overlook the debts in some circumstances.

Labor’s primary housing focus is on boosting the supply of homes, chiefly by providing payments to states and territories if they boost supply, and also by boosting investment in social and affordable housing.

The Coalition’s major housing policies, in addition to the foreign buyer ban, are a plan to let first homebuyers access their superannuation and funding for infrastructure such as sewers and roads to enable new housing on urban fringes.