Foreign buyers snap up $1.3 billion in Australian homes ahead of new restrictions

Treasury’s Foreign Investment Review Board has revealed foreign investors were approved to purchase $1.3 billion worth of Australian residential real estate in the first quarter of the 2024-25 financial year.

The figures released on Tuesday show 1123 home purchases received approval between July 1 and September 30.

Chinese investors led the buying activity with $400 million in approved purchases, followed by investors from Hong Kong, Taiwan, Vietnam and Indonesia, each accounting for $100 million.

Daniel Ho, co-founder and group managing director of Chinese property portal Juwai IQI, said Australia had become more attractive amid political uncertainty in the United States.

“Australia looks like a much friendlier country,” Ho said in a statement.

“They are purchasing for their children who they expect to attend school in Australia, or for themselves in advance of obtaining permanent residency,” he said.

Ho noted that economic conditions in China were driving some of the investment decisions.

“China’s slower economy is behind some of these transactions. Parents see their children struggling in hyper-competitive schools for too few university places, and then they see that the job market after they graduate with a degree won’t be great,” he said.

The Albanese government recently announced a two-year ban on foreign investors buying established homes, set to begin on April 1.

Housing Minister Clare O’Neil and Treasurer Jim Chalmers defended the policy as necessary to reduce housing market pressure.

“This is all about easing pressure on our housing market at the same time as we build more homes,” they said in a joint media release.

“The ban will mean Australians will be able to buy homes that would have otherwise been bought by foreign investors.”

Under current rules, foreign buyers without Australian citizenship or permanent residency can only purchase new homes unless specifically approved by Treasury, and must pay fees to the Foreign Investment Review Board.

The total value of approved residential real estate investment for the 2023-24 financial year was $6.6 billion, down from $7.9 billion in the previous year.

Sydney real estate agent Fiona Yang from Plus Agency predicted the impending restrictions would drive a surge in foreign buying activity in early 2025.

“You will have a significant increase in FIRB transactions as they want to catch the last train,” Yang said.

“They worry that this is their last chance to buy,” she said.

“Now, it is true the letter of the law doesn’t ban purchasing of new homes, but many buyers only see the headline. Also, many unscrupulous agents are using the ban as a selling point to urge buyers to move quickly.”

Immigration and housing affordability are expected to be major issues in the upcoming federal election, due within the next three months.