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{{propApi.successMessage}} {{region}} Change locationForeign capital exodus deepens housing deficit
Foreign capital exodus deepens housing deficit
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Australia will not meet its housing targets while continuing to tax the capital needed to build new homes, the Housing Industry Association (HIA) warns in its latest Stamp Duty Watch report released today.
“Foreign institutional capital does not create housing demand. It creates supply,” Mr Reardon said.
“Taxing this capital reduces the supply of homes being built, even as migration continues to surge and create demand. This is the worst own goal in the myriads of housing policy mistakes.
The report also finds that the average stamp duty bill on a median-priced home has now reached $31,210 nationally, a record high and a 55 per cent increase since 2019. In Queensland, the burden has nearly tripled. These upfront costs are forcing Australians to take on greater levels of debt, reduce the quality of housing they can afford, or delay entering the market altogether.
State governments have introduced punitive stamp duty and land tax surcharges on foreign capital over the last decade, with rates now as high as 9 per cent in New South Wales and 8 per cent in Victoria. Foreign institutional investors in those states now face up to $160,000 in stamp duty, land tax and foreign investment fees on a typical new dwelling, up to four-and-a-half times the amount paid by local investors.
“These imposts are likely to be revenue negative. Foreign capital is highly liquid and has moved to other economies that are open to foreign capital building apartments to meet the needs of a growing population.
The report stresses the need to distinguish between foreign investors, who fund new housing, and temporary residents, such as international students, who consume it. Misunderstanding this distinction has led to contradictory policies that stimulate housing demand while simultaneously penalising those who finance housing supply.
“The combination of surging migration and stagnant home building, constrained by poor policy design, has left Australia in a housing deficit,” Mr Reardon said.
“Reversing the foreign capital exodus is not only a rational economic choice, but also essential to delivering the homes Australians need.”
The Winter 2025 report calls for a reset of national housing policy, including:
- Abolishing stamp duty surcharges and land tax surcharges on foreign investors
- Aligning migration, housing supply and planning policy
- Adopting tax-neutral investment rules to encourage institutional participation
- Reviewing the effectiveness of investor surcharges annually
- Providing long-term certainty to restore investor confidence
“Stamp duty continues to block mobility and lock buyers out of the housing market,” Mr Reardon added.
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Foreign capital exodus deepens housing deficit
“Australia cannot build 1.2 million new homes in five years while taxing the capital that is necessary to build those homes,” said HIA Chief Economist, Tim Reardon.
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