Foreign buyers banned from buying SA homes for two years

New rules are stopping foreign buyers from snapping up SA homes, find out why and how many were sold last year.

Foreign investors are banned from buying SA homes. Picture: Brenton Edwards

Foreign buyers snapped up more than 2500 South Australian houses in the past five years but a tough new federal government rule is now blocking sales.

Figures released to The Advertiser showed the number of foreign investors buying SA houses peaked at 630 last year, with buyers forced to pay a Foreign Owner Surcharge that amassed $36m for state government coffers.

From April 1, a new two-year ban comes into play stopping foreign buyers outbidding locals on established homes in a bid to free up more stock in an acute housing shortage.

In the past five years fees paid to the state government by foreign buyers amounted to $125.7m with another $12.5m in surcharges paid for 300 home sales leading up to February this financial year.

Stephen Mullighan said that many homes were bought by cashed up parents of foreign students staying in Adelaide. Picture: Brett Hartwig

Treasurer Stephen Mullighan said anecdotal evidence was that many homes were bought by cashed up parents of foreign students staying in Adelaide.

Rules announced in the Federal Budget on March 25 banned foreign buyers from buying existing houses for two years with the Australian Tax Office (ATO) handed $5.7m to enforce the rule.

“We would see something in the order of 43,000 to 45,000 transactions a year of houses being bought and sold in SA so the 500 to 600 homes figures may look like a small proportion,” Mr Mullighan said.

“But it’s still a significant number of homes and hopefully that will take some of the pressure out of the housing market particularly for South Australians wanting to buy into home ownership for the first time.”

SA figures showed that in the past five years the number of houses bought by foreign investors in SA has jumped from 420 in 2019-2020 to 630 last financial year.

There have been 300 sales to date this year.

The ATO and federal Treasury were also tasked with targeting foreign buyers who secured vacant residential land pockets and left them vacant.

New legislation would force foreign investors to develop the land “within a reasonable amount of time”.

November 16, 2024: Aerial images of Adelaide. Housing, real estate, roof, suburb, Burnside, Norwood. Picture: Brenton Edwards

Property Council SA chief Bruce Djite said the new rule made sense but foreign investment should still be encouraged to push developments.

“Policies that sensibly focus that investment into new homes and apartments to house our growing population make sense,” he said.

However, Mr Djite said Australia “has relied on global investment – using other peoples’ money – to help build and shape our cities for the last three quarters of a century, and we shouldn’t stop now”.

“We need to double-down on the delivery of new apartments, build-to-rent developments, retirement villages and purpose-built student accommodation and greenfield homes by ensuring investment and tax settings are right and boosting productivity and cutting red tape,” he said.

Originally published as Foreign buyers banned from buying SA homes for two years