Foreign investors buying more properties in Victoria despite new taxes

While the report does not assess the impact of these purchases on housing affordability, the data shows Victoria’s continued role as a drawcard for foreign investment.

Sha Liu, senior housing policy researcher at the University of Adelaide, said that while the latest data appeared to show a rebound in foreign investment, the figures were historically low.

“Foreign buyers now account for only about 1 per cent of total housing transactions, both in number and in value,” she said. “That’s a huge drop from the nearly 5 per cent share we saw at the peak around 2015-16.”

She said new measures introduced by federal and state governments over the past decade – including application fees, stamp duties, land-tax surcharges, capital gains tax for non-residents, and the annual vacancy fee – had made it more expensive for foreign buyers to buy and hold property in Australia.

Liu said foreign buyers were attracted to prime locations in Sydney and Melbourne, meaning they attracted attention. But she said the impact of foreign buyers on local housing markets was often overstated compared with “larger forces”, including supply constraints, domestic investor activity and tax settings.

“Foreign buyers are not locking out local first-home buyers in any broad or systematic way, given their small share of the overall market,” she said.

“As for where the investment is happening, it’s still concentrated in New South Wales and Victoria, mainly Sydney and Melbourne.”

“Global cities tend to attract international students and knowledge workers; they are generally more appealing to global capital. But even in those markets, the activity level is nowhere near what it used to be.”

According to the report, Australian farmland continued to be a magnet for overseas capital. Registered interest in Australian farmland increased to 12.7 per cent in 2024, up 3 per cent since 2022.

Investors from Britain, China, Canada, the United States and the Netherlands remain the largest foreign holders of Australian farmland, collectively accounting for nearly half of all land with foreign ownership.

The register records parcels of land that have a foreign ownership share of 20 per cent or more. It found that of the 49.12 million hectares with a level of foreign ownership, 23 per cent was indirectly held by Australians investors via foreign entities.

In Victoria, the overall proportion of foreign ownership of agricultural land was 5.9 per cent as of June 2024, which equates to 675,000 hectares of the state’s 11.3 million hectares of farmland.

In the 12 months to June 2024, there was an increase of about 9000 hectares in foreigner-owned Victorian farmland – up from 666,000 hectares a year earlier. Most foreign-owned agricultural land in Victoria is used for forestry, followed by cropping.

Victorian Farmers Federation president Brett Hosking said it was important to continually monitor investment to ensure Australia continues to attract investment without undermining local farmers and “the next generation from a life on the land”.

“Foreign investment is an important source of jobs and future growth for our sector, although it must always be considered in terms of its impact on farmers, communities and the interests of every Australian who enjoys the fantastic food and fibre our family-owned farms produce,” he said.

Victoria’s level of foreign agricultural ownership still remains well below that of states such as Tasmania (23.9 per cent) or the Northern Territory (27.6 per cent). Foreign investors also held 4932 gigalitres of water entitlements – up from 4,775 GL a year earlier – representing about 12.3 per cent of all water entitlements on issue nationwide.