FIRB regulations to drive foreign buyers to new apartment development market
The Federal Government’s latest announcement of a temporary two-year ban on foreigners purchasing existing housing in Australia has led to some confusion about its impact.
Under the updated FIRB regulations, foreign buyers can still purchase off the plan properties and newly completed dwellings without being affected by the revised rules.
The new regulation, effective from 1 April 2025, will prevent temporary residents from purchasing established houses. This change is intended to support the creation of new housing by redirecting demand towards new apartments and houses, which will see further demand channelled towards key off-the-plan markets.
Colliers Managing Director, Victoria | Residential, Tim Storey, said they expect the effects of this policy change will surprise on the upside, especially for developers of new apartments in Melbourne who will now have a larger pool of buyers.
“This policy is a positive step towards addressing the housing supply issue in Australia. By encouraging the purchase of new dwellings, we are also supporting the construction industry," Storey said.
According to the latest available statistics, foreign buyers have purchased an annual average of only 1,291 established homes over the past three years, representing just 0.24 per cent of overall housing market sales.
Significantly, Victoria has consistently attracted the highest levels of foreign buyer activity across all categories, accounting for 45 per cent of purchases across Australia over the past three years. This trend is expected to continue, benefiting developers in the state.
“The updated FIRB regulations combined with the Reserve Bank of Australia’s recent announcement of a cash rate cut, which lenders have passed through, create a more favourable environment for new housing developments," Storey added.
"Developers should see this as an opportunity to meet the growing demand for new dwellings. This change ensures that the market for off-the-plan properties remains robust and continues attracting foreign investment."
