This article first appeared in City & Country, The Edge Malaysia Weekly on February 24, 2025 - March 2, 2025

The Australian government has announced a two-year ban on foreigners buying homes on the secondary market, starting this April until March 31, 2027. The ban, part of efforts to tackle surging house prices, is expected to free up around 1,800 homes per year for local buyers. Overseas investors will still be able to acquire houses in Australia, but only those off-the-plan or those still under planning.

City & Country sought out property experts and developers for their views on this new policy.

Australian home prices have been on a steady increase over the past 10 years. Knight Frank Property Hub executive director for international projects Adrian Yeoh says, “Brisbane’s median house price went up from A$451,000 (RM1.3 million) to A$885,500 — a 96% increase in 10 years. Likewise, Melbourne’s median house price rose from A$634,921 to A$1,261,070.

“There are several reasons behind this increase. Low interest rates before 2022 made it easier to borrow money, which led to more property purchases. Also, Australia’s population has grown, mostly because of migration, which has raised the need for houses.

“Furthermore, the limited number of houses, construction costs and delays in building [completions] have added to the rising prices. Foreign investment is another factor, especially in big cities where overseas buyers often look for luxury homes, even though they are just a small part of the total market,” he adds.

Yeoh points out that since this ban only targets the purchase of existing homes, Malaysians who already own property in Australia will not be impacted. However, he advises them to keep an eye on market shifts due to the ban.

“One effect might be that property prices in some locations could hold steady or drop slightly due to less foreign competition. Meanwhile, demand for rentals could rise,” he says, explaining that individuals may choose to rent rather than purchase a property. “This could be a good chance for property owners to rent out their assets.”

Leigh Warner, head of residential research – Australia at JLL, says prices of Australian dwellings have increased 77% over the past decade, based on data from PropertyTrack.

“The main cause of this surge in prices is the lack of construction, and foreign buyers are only a minor factor in the growth. According to CoreLogic, there are around 520,000 dwelling transactions in Australia a year, with just 5,500 to 6,000 foreign buyers per annum and only 1,800 of those [were] for existing dwellings in 2022/23.

“As such, the direct impact on prices from these buyers is likely very minimal and perhaps only material in some higher-end pockets of Sydney, which foreign buyers might be more attracted to,” says Warner.

“The bigger issue is more the perception that Australian citizens are competing against foreign buyers in a housing shortage, so the policy aims to direct this foreign demand into supporting new supply.” 

JLL Malaysia international residential lead Chong Shu Ling says foreign buyers have largely been restricted to buying off-the-plan homes in Australia and, as such, Malaysian homeowners and potential buyers should not be too concerned about the ban.

“The key for Malaysian buyers is to make sure they are getting good advice from reputable and licensed property, legal and taxation professionals when considering buying [property] in Australia.

“All overseas buyers will need to register with the Australian government when they find a suitable property and apply for Foreign Investment Review Board approval before a purchase becomes unconditional or legally exchanged,” says Chong.

She adds that the Australian property market is highly regulated and mature; hence, it is still ideal for long-term investments due to the strong population growth and restricted new housing supply situation.

Malaysian property developers with projects in Australia do not see the ban having a significant impact on their operations as it only focuses on existing homes. They also see a positive side to the policy.

UEM Sunrise Bhd (KL:UEMS) officer-in-charge and chief financial officer Hafizuddin Sulaiman says, “This measure is designed to enhance housing availability for local buyers. It is important to note that this restriction specifically targets the secondary market and does not affect new developments such as UEM Sunrise’s mixed-use development in Subiaco, Perth; and the build-to-rent initiative in Collingwood, Melbourne. It may have a positive impact as it directs demand towards new developments.”

This sentiment is echoed by Setia (Melbourne) Development Co Pty Ltd director See Hunt Soon, who anticipates increased demand for the developer’s new projects, like its Atlas Melbourne development. “Also, the Reserve Bank of Australia (RBA) recently cut the interest rate by 25 basis points (bps) to 4.1% — the first such cut in five years. This is very positive news and will boost the property market.”

Gamuda Land CEO Chu Wai Lune concurs with his fellow developers that the ban will not affect new projects. “In fact, the ruling could increase interest from foreign [investors] who may now prefer new builds over established properties.”

Currently, Gamuda Land has two new projects: The Canopy on Normanby in Fishermans Bend, Australia’s largest urban renewal project in the heart of Melbourne; and Fareham in St Kilda. These developments are on target to be completed in 3Q2026 and 1Q2026 respectively.

Chu adds, “Also, the RBA has cut the cash rate for the first time since November 2020, lowering it from 4.35% to 4.1%. This move is expected to boost the housing market by reducing mortgage rates, making homeownership more affordable.

“Combined with the Victorian government’s temporary off-the-plan stamp duty concession, which has already driven strong buying interest, particularly in 2- and 3-bedroom units, market conditions remain favourable for both local and foreign buyers.

“Sales of our projects are expected to accelerate in 2025, driven by key construction milestones like topping out, which typically attracts more local buyers. Six months before completion, our strategy has shifted to focus more on local buyers and we are already seeing increased interest, especially in 3-bedroom units,” says Chu.

Will this ban have an impact on the Australian housing market? The property consultants believe it will.

Knight Frank Property Hub’s Yeoh says, “In the short run, less foreign demand might keep prices steady for current homes because there will be fewer overseas buyers. This action could also give local buyers more options, possibly helping with housing costs a bit.

“However, there might be more demand for rentals, especially in big cities, as foreign investors who used to buy homes might start renting instead. This situation could help current property owners by raising rental income.

“In the long run, foreign investment might focus more on new buildings, which could support the construction industry and lead to more housing projects. The government plans to review how well the policy works before deciding if the ban will last beyond 2027. If it does not help with housing affordability as hoped, additional steps may be taken. We need to monitor this closely,” Yeoh stresses.

JLL Malaysia’s Chong says, “The change is a relatively small one that is just part of a suite of initiatives, all aimed at stimulating housing supply. The best-case scenario is it boosts new construction levels a little and takes some pressure off the stock-starved existing housing market.”

Meanwhile, JLL’s Warner says, “The decision by the RBA to cut the official interest rate is a welcome boost to household sentiment and a housing market that has stalled over recent months under the weight of higher interest rates and other cost of living pressures.

“While it may ultimately prove a turning point for housing demand, one cut alone is not likely to fully arrest the current slowdown, particularly when a federal election may also keep buyers cautious in the short term.”

Housing is the largest contributor to the rising cost of living in Australia and is set to be a key issue at the next federal election, which must be held by May 17.

“However, financial markets are currently pricing in another two [cuts of 25bps each] in 2025, which should be enough to significantly lift household confidence and see the market move more clearly into recovery by late 2025,” Warner adds.

While the efficacy of the ban remains to be seen — some economists say it will do little to change the affordability of Australia’s housing market — there will likely be a review at the end of the two-year period to assess its impact.

Save by subscribing to us for your print and/or digital copy.

P/S: The Edge is also available on Apple's App Store and Android's Google Play.