Australia to ban foreigners from buying some homes as costs soar

(Bloomberg) — Australia’s government will ban foreign investors from buying established houses for the next two years as part of an election pitch to tackle surging home prices.

From April 1, foreign investors will be banned from buying established property until March 31, 2027, Housing Minister Clare O’Neil said in a statement Sunday. The restriction will then be reviewed to determine whether it should be extended.

Australia’s housing is some of the most unaffordable in the world and soaring property prices will be a key election issue amid a broader cost-of-living crisis, especially among young voters who fear they’ll never be able to buy a home.

In Sydney, housing values have jumped almost 70% over the past 10 years, with the median dwelling price now around A$1.2 million ($762,000), according to property consultancy CoreLogic Inc. Rents have also been climbing.

Still, the ban is likely to have only a marginal effect on prices. Overseas investors bought A$4.9 billion of residential real estate — including vacant land, new and established dwellings — in the 12 months ended June 30, 2023, according to the Australian Taxation Office. Established dwellings accounted for about one third of the total.

The tax office will be given extra funding to help enforce the ban, O’Neil said Sunday.

The government’s move to ban foreign purchases of established houses matches a pledge by opposition leader Peter Dutton made last year. An election must be held by May 17, and polls show it will be a close fight, with cost-of-living concerns and housing among the top three issues.

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