Federal Government foreign investment ban from 1 April 2025 – What you need to know

What is changing?

Earlier this year, the Federal Government announced a temporary ban will be introduced on foreign investors purchasing established dwellings in Australia.

This policy change, effective from 1 April 2025, will last until 31 March 2027, with a review to assess if the ban should be extended beyond that two-year period. Under this new regulation, foreign persons (including temporary residents and foreign-owned companies) will not be able to buy established homes unless specific exceptions apply.

The ban aims to ease pressure on Australia's housing market by limiting foreign investment in established dwellings. However, it’s important to note that foreign investment in new properties or land for development will not be impacted by the ban.

Aren’t foreign investors already barred from buying existing property?

Until now, foreign investors have typically been restricted from purchasing established properties, except in specific situations, such as when they move to Australia for work or study.

The change will mean that foreign investors will no longer be able to purchase an established dwelling in Australia unless a limited exception applies including:

• Investments that significantly increase housing supply or support housing availability.
• Purchases under the Pacific Australia Labour Mobility (PALM) scheme.

Other existing exceptions remain in place, such as for purchases by:

• Permanent residents
• New Zealand citizens
• Spouses of Australian citizens, permanent residents or New Zealand citizens (when purchased as joint tenants).

What does this mean for real estate professionals?

From 1 April 2025, any offer from a foreign investor will require additional attention. If the offer is accepted by the vendor, there is a risk that the buyer may not be able to follow through on the purchase unless they meet the specific exemptions.

As sales agents, it is beneficial to be aware of the buyer’s residency status and confirm whether they fall under any exceptions to the ban. You or your client’s legal advisor may wish to confirm a buyer's eligibility before accepting an offer, when dealing with foreign residents or foreign-owned entities.

Keep informed, advise your clients accordingly, and stay ahead of the regulatory curve to ensure continued success in a shifting market.

Will this impact the market?

The REIQ does not anticipate that this ban will have a material impact on the market.

According to the Register of Foreign Ownership of Residential Land, during 2022–23, foreign buyers made 5,360 purchases and 1,119 sales of residential real estate by foreign buyers in Australia. Most of these transactions occurred in Victoria, Queensland, and New South Wales. Notably, new dwellings and vacant land represented 66% of these purchase transactions, indicating that a significant portion of foreign investment was directed toward new housing stock rather than existing properties.^[1]

In Queensland, 403 established dwellings (36% of all foreign purchase transactions) were purchased by foreign buyers in 2022-23.^[2] However, this only represented 0.32% of total dwelling transactions in Queensland (the five-year average share was 0.19% since 2018-19).^[3]

Although foreign investment is a relatively small portion of the market, there may be a minor impact on the number of prospective buyers on specific market segments (such as high-end properties or properties in areas popular with foreign investors).

Other: Heightened scrutiny on land banking by foreign investors

Additionally, the Federal Government plans to focus on cracking down on land banking by foreign investors to ensure they comply with development conditions including that land is developed within reasonable timeframes. They will implement an audit program and enhance their compliance approach with stricter enforcement.

Guidance material

Guidance material has been updated following recent changes to the foreign investment framework. You can access these resources here: https://foreigninvestment.gov.au/news-and-reports/news/updates-guidance-material

Read another sales article from the REIQ: Does an agent have actual or ostensible authority to vary contract terms?

Or browse our suite of property sales articles.