Dutton’s pledge to curb foreign buyers is a sleeper policy with real cut-through

Australians do not have a history of overwhelmingly endorsing policy change, but Opposition Leader Peter Dutton’s promise to temporarily pause foreign investment in residential properties has resonated deeply within the Australian electorate.

Sixty-nine per cent of respondents to a survey conducted for the Herald by research company Resolve Strategic want to keep foreigners out of the real estate market. Remarkably, the proposal had strong cross-party support: 60 per cent of Labor voters want it, so too does 79 per cent of Coalition voters. Even 58 per cent of Greens backers are for it.

Dutton announced a two-year pause on foreign citizens and temporary residents buying existing homes in Australia to take pressure off the housing market as part of his budget reply speech last May.

The Coalition plan does not prevent foreign investors from buying into new apartment towers or housing projects, given arguments that their funding would encourage construction.

Dutton has also pledged to cut the permanent migration intake from 185,000 to 140,000 each year over the next two years.

Federal Labor inherited a housing policy failure that has been decades in the making. Now with the mounting cost of living, interest rate uncertainty and rising rents, the job of fixing Australia’s housing affordability crisis has arguably become the most difficult challenge in politics and looms as the major issue in the coming federal election campaign.

With a vast land mass and a small population, Australia has always drawn on foreign capital for its development – and always will. Yet, foreign investment in private homes somehow rattles people’s cages.

Incongruously, while foreign demand for property has been running hot, the reality is that it’s just a fraction of Australia’s lucrative real estate market. Foreigners still make up about only 1 per cent of all purchases in Australia. Foreign Investment Review Board figures for 2022-2023 show foreign buyers spent $4.9 billion buying 5360 pieces of residential real estate. So Dutton’s policy is small but symbolic and aimed at preferencing locals so they obtain a foothold in the housing market.

The government has dismissed the idea as too small to make a difference when there are already restrictions on foreign buyers, who must pay special investment fees if they purchase existing homes.

But whatever the difference between the political promise and the political deed, it will certainly play well among young potential homebuyers, who have been unable to put down roots, had to defer starting a family or have been prevented from building property wealth by buying affordable homes as the market slipped beyond their grasp.

The numbers involved in these transactions are not large, but that does not mean they cannot move attitudes. We believe they now constitute a part of a range of factors that are regrettably starting to turn public sentiment against migration and have turned the issue into a potent political lever.

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