Foreign investment tumbles in Australian residential real estate
China was the largest source of approved residential real estate investment in the past quarter
2 min
The number of approvals for foreign purchases of residential property fell in the first quarter of FY24, according to the latest statistics released by the Foreign Investment Review Board (FIRB). China remains our biggest source of residential investment, followed by India and Hong Kong.
The FIRB approved 1,374 applications from foreign residents to buy residential real estate between 1 July and 30 September 2023 (1Q FY24). This represented $1.5 billion in investment. This is significantly lower than the previous quarter and is tracking well below the rate of investment in 2023. Between 1 April and 30 June 2023 (4Q FY23), the FIRB approved 1,932 applications worth $2.4 billion. For the full financial year of 2023, 6,576 proposals were approved, thereby averaging 1,644 per quarter.
In 1Q FY24, China was the largest source of approved residential real estate investment with 523 approvals worth $700 million. Making up the top three were India with 148 approvals worth $100 million, and Hong Kong with 111 approvals also worth $100 million.
The fall comes amid the Federal Treasurer Jim Chalmers introducing legislation into the Parliament earlier this month to significantly raise foreign investment application fees, as per his announcement in the Mid-Year Economic and Fiscal Outlook. Currently, foreign investment application fees start at $14,100 for purchases of residential property worth $1 million or less, and rise to a maximum of $1,119,100 for acquisitions worth more than $40 million.
The Albanese Government wants to triple the fees for the purchase of established homes, which foreigners are allowed to buy if they are living in Australia to work or study, and must sell when they leave. Dr Chalmers explained that the government hopes this will encourage foreigners to buy new property instead. “This will help create additional housing stock, jobs in the construction industry and support economic growth,” he said.
The government also wants to double the vacancy fee charged to foreign owners whose properties are not genuinely occupied as a residence either by themselves or a relative, and are not rented out on a lease term of more than 30 days for at least six months of the year. The vacancy fee is the same as the applicable application fee in each case, hence $14,100 on properties purchased for $1 million or less.
On Census night 2021, more than one million homes in Australia were unoccupied, which created fierce national debate about home ownership affordability and rental supply for Australians. “The increased vacancy fees will encourage foreign investors to make their unused properties available to renters,” Dr Chalmers said. The government is also proposing a reduction in application fees for build-to-rent projects to encourage more foreign investment in this emerging real estate sector.
“Higher fees for the purchase of established homes and increased penalties for those that leave properties vacant will help ensure foreign investment in residential property is in our national interest,” Dr Chalmers said.
FIRB application fees were first introduced in 2015. They are indexed to annual inflation but have been increased markedly several times by governments in response to public discourse over the impact of foreign investment on rising property prices. Real estate industry insiders say rising fees are dissuading some foreign nationals from investing here.
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Australia’s capital city housing markets have continued to record price growth, although higher interest rates and economic uncertainty are beginning to temper momentum.
3 min
Capital city home prices have continued to rise in April despite higher interest rates and ongoing uncertainty about the outlook for inflation and the global economy.
Growth rates, however, have eased, reflecting the usual subduing effect of the lengthy April holiday month.
The national capital city median house price increased marginally by 0.2% over the April quarter to $1,297,798 compared to the March quarter, according to the latest data from My Housing Market.
Annual national house prices are, however, 10.2% higher and have now increased for 14 consecutive months.
Most capitals reported house price increases over the month, with Brisbane and Perth the top performers, each higher by 1.3%, followed by Hobart and Darwin, both up 1.2%, Adelaide up 0.2%, with Sydney steady. Melbourne prices, however, fell 0.7%, while Canberra prices fell 1.7%.
Most also report strong annual house price growth in excess of 10%, with Perth, Darwin, Brisbane, and Adelaide clearly the highest, up by 25.7%, 21.6%, 20.0% and 14.2% respectively.
National unit prices were also higher in the April quarter than in the March quarter, rising by 0.5% to $728,459, and have now increased by 8.2% compared to the April quarter 2025 result.
Brisbane was the top monthly performer in April, with unit prices rising by 1.7%, followed by Perth up 1.0%, Melbourne and Canberra each up 0.9%, Adelaide up 0.6%, and Hobart up 0.1%. Sydney unit prices were steady over the month; however, Darwin unit prices were down 0.8%.
Similar to houses, Perth, Brisbane, Adelaide and Darwin continue to record the highest annual unit price growth to April 2026, at 30.1%, 27.8%, 12.9% and 11.8%, respectively.
Analysis
Capital city housing markets have generally reported higher home prices in April, although growth rates have eased compared to March.
Easing housing markets reflect the usual dampening effects of the lengthy April holiday month, although higher interest rates and increased uncertainty about the economic outlook have weighed on affordability and confidence.
Robust annual home price growth, however, continues for most capitals with Perth, Darwin, Brisbane, and Adelaide still reporting boomtime results.
Although 2026 is still set to see home price growth generally in most capitals, the rising spectre of further interest rate increases and elevated uncertainty over the outlook for inflation and the economy will continue to dampen affordability and confidence.
Brisbane, Adelaide, Perth and Darwin, however, are again set to lead capital city outcomes for both houses and units, but are unlikely to match the extraordinary 2025 results.
Brisbane, Perth and Adelaide continue to record higher median house prices than Melbourne, with Perth now closing in fast on Brisbane and set to lead all but Sydney.
Underlying drivers will continue to support overall housing market activity, although the outlook for RBA interest rates is more problematic, with inflation set to accelerate and economic activity to decline as a consequence of the recent sharp increase in oil prices.
The economy, however, remains strong, with a steady, still-low jobless rate, falling unemployment, continued robust job growth, and a high participation rate.
Housing demand continues to outpace a low and diminishing housing supply, and although high post-COVID migration levels have recently eased, numbers remain strong and will add to chronic housing undersupply, supporting high rents and low vacancy rates generally in capital city rental markets.
Following a period of easing in rental growth, the latest data continue to show extraordinarily low home rental vacancy rates and clear signs that rents are on the rise again.
High rents and higher prices continue to provide clear incentives for first-home buyers and investors chasing solid investment returns.
Ongoing government initiatives to support first-home buyers will increase demand and place further upward pressure on prices.
Capital city housing markets generally recorded higher house and unit prices over 2023, 2024 and surged over 2025, fuelled by rising buyer and seller confidence through sharp cuts to interest rates.
Although 2026 is again likely to see higher home prices, significant uncertainty has recently emerged about the near-term outlook for already-high interest rates and economic activity, which will generally dampen buyer and seller confidence.
Early signs are emerging in the recent weakening of home auction market clearance rates, particularly in Sydney and Melbourne.
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