Australia has long operated a clear and principled foreign investment framework. Since 1975, Australian Government law has prohibited non-resident foreign investors from purchasing established dwellings. Foreign capital has instead been channelled toward the construction of new homes, allowing investment to add to supply without competing with Australians for existing housing and without adding to demand for homes. This framework remains firmly in place under the Foreign Acquisitions and Takeovers Act 1975.

From the mid-2010s, however, this framework was overlaid with a growing suite of additional imposts. State and territory governments introduced stamp duty and land tax surcharges on foreign investors, while the Australian Government increased application fees and introduced vacancy charges. These measures were introduced rapidly, escalated

over time and were applied broadly, with little differentiation between speculative activity and investment that directly delivers new housing.
The origins of this policy shift are important. The 2014 Inquiry into Foreign Investment in Residential Real Estate found that while FIRB had responsibility for assessing foreign investment, it lacked the administrative capacity, enforcement tools and data needed to monitor compliance effectively. At the same time, public debate was shaped by political pressure to explain deteriorating housing affordability, media narratives about “ghost towers” and widespread misunderstanding of dwelling vacancy statistics. Together, these factors created support for blunt, punitive measures as a substitute for appropriate regulatory oversight.

Since that time, regulatory capacity has improved markedly. FIRB administration has been strengthened, data collection expanded, enforcement powers enhanced and compliance supported by integrated migration, taxation and land title information. The proportion of dwellings genuinely inactive is now estimated by the Australian Bureau of Statistics to be closer to 1.3 per cent of the housing stock, generally located in areas with limited employment opportunities, not the widely cited 10 per cent. The original institutional justifications for blanket punitive taxes have therefore materially weakened.

The report also finds that foreign investor taxes have no meaningful effect on demand for established dwellings or directly on established home prices. Foreign investors have been prohibited from buying established homes for almost five decades, and temporary resident purchases are small in number and tightly regulated. Improved compliance mechanisms further constrain the scope for non-compliant activity. These taxes cannot therefore improve affordability in established housing markets.

Public debate has also increasingly framed foreign investors as contributors to land banking and housing scarcity. However, concentrated ownership of future residential land is largely a product of Australia’s land supply and planning systems, not investor behaviour. Where state and local governments ration land supply and impose long approval timelines, ownership naturally concentrates among these participants. In such circumstances, land cannot be brought forward more quickly regardless of ownership and treating these holdings as speculative land banking misdiagnoses the true constraint on housing supply.

Instead, foreign investor taxes adverse impact is concentrated on impeding new housing supply. Apartment and multi-unit developments are particularly exposed. These projects rely on pre-sales and equity to secure finance and foreign investors historically played a material role in both. By increasing costs and complexity for foreign investors, state surcharges have reduced the availability of both pre-sales and development equity, making it harder for projects to reach financial close.

The timing is instructive. Multi-unit commencements peaked in 2016, before the escalation of most state surcharges, and have since fallen to around half that level nationally. Detached housing has also been affected, particularly where overseas-owned volume builders face higher land acquisition costs when delivering new homes.

Although foreign investor taxes were introduced as revenue measures, transparency around actual collections is limited. Once forgone construction activity and reduced GST, income tax, payroll tax and company tax are taken into account, there is a growing risk that these policies are revenue negative, particularly for the Australian Government.

Recent developments underscore these findings. Queensland’s 2025 reforms, which publicly streamline exemptions and fast-track approvals for foreign investors delivering new housing, mirror similar administrative relief now operating in other jurisdictions. That these taxes increasingly require work-arounds to avoid suppressing supply highlights a fundamental misalignment between policy design and housing objectives.

The report concludes that foreign investor taxes have become one of the most damaging own goals in Australian housing policy. It calls on the Australian Government to initiate a National Review, in cooperation with states and territories, to assess the impact of these taxes on housing supply and public revenue and to restore a nationally coherent framework that supports, rather than constrains, the delivery of new homes.

Download the full HIA Foreign Investor Taxes and Housing Supply

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