Foreign Capital Taxes Slow Housing Growth, HIA Warns

Foreign investment is intended to support Australia's rising housing needs, but increasing taxes on overseas buyers could be worsening the shortage.

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Pick & Scroll News
June 16, 2025

Foreign investment is intended to support Australia's rising housing needs, but increasing taxes on overseas buyers could be worsening the shortage. According to the Housing Industry Association (HIA), as migration rises, high stamp duty and land tax surcharges on foreign investors in NSW, Victoria and Queensland are restricting housing supply when it is most needed.


Australia is currently facing one of the most challenging housing markets on record. Several factors are adding pressure. Migration is increasing, demand for housing continues to grow and the pace of new home construction is lagging behind. The HIA, which represents top home builders, says government policies are pushing in opposite directions. The federal government is lifting migration targets while state governments impose taxes that discourage the capital needed to fund construction.


Foreign investors who support new home development are being hit with higher upfront costs. In NSW, they can pay up to $160,000 for a typical new home when combining stamp duty, land tax and foreign investor fees. These investors usually do not live in Australia. Instead, they finance new housing projects. Without their involvement, large-scale developments involving global partnerships may become less common. For example, joint ventures between Japanese or Thai companies with Australian builders could decline.


At the same time, the national median stamp duty bill has climbed to a record $31,210, which is 55% higher than in 2019. In Queensland, this amount has almost tripled. These growing costs make it harder for Australians to buy a home. Many are borrowing more, accepting smaller homes or walking away from purchasing altogether.


The issue appears to go beyond just taxes. The HIA believes that higher charges may be discouraging the institutional investment that helps build homes, which could worsen the current shortage. If policies do not shift to better align migration targets with housing supply, the goal of delivering 1.2 million new homes in five years may not be achieved.