What role does overseas money play in your property investment plans?

Is foreign investment influencing the Australian property investment market?

It’s no secret the Australian property market is under the microscope. Supply is tight, prices are high, and talks of interest rate changes have kept everyone on tenterhooks for the last couple of years. Among all this, one question keeps popping up: “Is foreign investment making it harder to get into the market?”

At Capital Properties, we work with current and former ADF members to build wealth through smart property investment. We hear these concerns regularly, so we want to set the record straight. This blog post cuts through the media noise to show you what foreign investment really means for your property plans, and why you might have more opportunities than you think.

Thinking about your next property move? Let Capital Properties help you make smart, strategic investment decisions with confidence. Start now with a FREE  Capital Properties Discovery Session.

On the go? Here’s 30 seconds of take outs:

  • From April 2025 to March 2027, foreign investors are banned from buying existing homes in Australia.
  • The ban aims to free up homes for local buyers, but some exceptions apply (e.g. large-scale redevelopments).
  • Foreign buyers purchase less than 2% of residential property in Australia.
  • Real pressure comes from low housing supply, high demand & population growth.
  • Knowing where foreign investors are active can help shape your Defence-friendly property strategy.
  • Foreign investment can increase market confidence & pave the way for new infrastructure.

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What counts as foreign investment?

Foreign investors are individuals or entities who are not Australian citizens or permanent residents. They may be temporary visa holders, overseas corporations, or non-resident individuals.

The Federal Government regulates these buyers through the Foreign Investment Portal. Although applications made before June 2025 went through the Foreign Investment Review Board (FIRB).

Policies around foreign property investment

On 1 May 2024, the Treasurer announced reforms to improve transparency and streamline Australia’s foreign investment process. While the government recognises the importance of foreign capital, it decided changes were necessary to tighten rules around higher-risk proposals, e.g. critical infrastructure, minerals, or access to sensitive data.

At the same time, they promised a faster approval process for low-risk investments, such as new housing or commercial real estate. They argued that it would help to boost supply and stimulate the economy. However, not long after, the government paused approvals for some foreign investment applications in sensitive residential areas. This move responded to the growing pressure on the housing market – or the “housing crisis” that’s been dominating headlines since Covid.

We’ve discussed this crisis in our previous blog post “Housing affordability/rental crisis/extremely low vacancies. What does it all mean?”. In that post we looked at how rental vacancies were at their lowest in over 10 years, with demand far outpacing supply. The Government was forced to step in, promising new homes to match the demand. However, despite those promises and billions committed to new housing, change didn’t happen fast enough. And so, to ease the burden, they decided on another new change in policy…

Two-year ban on foreign investors buying existing homes

In February 2025, the Albanese Government announced a two-year ban on foreign purchases of established dwellings – from 1 April 2025 to 31 March 2027.

To goal? To give Australians a better shot at buying homes that might otherwise have gone to overseas buyers. This policy isn’t entirely new. Foreign investors were already restricted from buying existing homes, unless they were temporary residents living in the property, for example, here to work or study. But the updated rules remove that exception. Now, even temporary residents and foreign-owned companies won’t be able to buy existing properties during the ban, unless they qualify for a special exemption.

Foreign investment exemptions

Despite the two-year ban, there are still a few situations where foreign investors can be granted approval. These include:

  • Major redevelopment: If an existing home is being replaced by at least 20 new dwellings and the properties won’t be sold until the construction is complete.
  • Commercial-scale housing: Investments that support large-scale housing like aged care, retirement villages, assisted living, or student accommodation.
  • Build-to-Rent (BTR) developments: Foreign investors can purchase existing BTR developments if they meet strict conditions, such as:
    • Has to allow for a minimum of 50 dwellings
    • Leases offered for at least 5 years
    • At least 10% of homes are classed as affordable housing

Plus, overseas investors need to show they can stick to those conditions for up to 15 years, or they may be forced to sell

Foreign investment ban loopholes

Just a quick mention that even with the ban in place, we’re hearing whispers that some savvy individuals are bypassing the new rules by using trust structures. Apparently, some foreign investors are setting up trusts with Aussie nominees to quietly buy existing homes. As you can imagine, the Australian Taxation Office (ATO) and FIRB are on the case and are threatening forced sales if the investors are caught. So, although the ban is not foolproof, it’s definitely a deterrent.

Are foreign investors really pushing up prices?

Are foreign investors making it harder for Aussies to buy? This is question that’s worth asking. After all, it’s a common headline. But the truth is more nuanced. The fact is that foreign buyers make up only a small proportion of overall property purchases. FIRB data shows they’re responsible for less than 2% of residential transactions.

Plus, foreign investors are mostly focused on high-rise developments in capital cities, e.g. Sydney and Melbourne – or new projects approved by state planning authorities. So, unless you’re buying an off-the-plan apartment in a CBD tower, you’re unlikely to be competing with foreign investors.

The real pressure on Australian house prices is far more likely to come from limited housing supply, domestic investor activity, rental demand outstripping availability and last but not least, migration-driven population growth.

All of which also create investment opportunities if you know where to look.

Should foreign investment affect how and where you invest?

Yes, although foreign isn’t usually a direct threat to ADF investors, understanding where they’re active (and where they’re not) can shape your investment strategy. In many Defence-friendly regions and affordable growth corridors, foreign activity is low – but population growth and infrastructure investment are strong.

That’s why a strong investment strategy often focuses on areas like outer metro regions with new housing estates, regional hubs with the lifestyle factor that renters desire. Or we might look at suburbs that are undergoing upgraded transport systems, gentrification, or rezoning.

Knowing where to buy should be determined by your individual investment strategy – based on YOUR short and long-term goals. It’s why we spend so much time nailing your strategy in our FREE Discovery strategy and supply you with tools to maintain your goal setting strategy.

Does foreign investment create opportunity?

There’s a reason the Australian government have traditionally been very amenable to foreign investment. That’s simply because foreign investment helps to drive construction – especially new housing developments. These projects don’t just boost housing supply; they often improve local infrastructure and create fresh opportunities for nearby suburbs and local investors.

In particular, if you’re thinking about buying off-the-plan or getting into a new land release, foreign investment in the area can actually be a positive sign. It shows market confidence and potential for future growth.

How Capital Properties supports smart ADF investing

Whether foreign investment is making headlines or not, the fundamentals stay the same. Your investment decisions should be guided by strategy, not fear.

That’s where we come in.

At Capital Properties, we specialise in supporting ADF members to understand how market forces (including foreign investment) impact your investment strategy. We’ll help you create a clear step-by-step investment plan that uses your Defence entitlements effectively to achieve your long-term goals.

Come along to our FREE Capital Properties Discovery Session to get started.

Plus, as a Capital Properties client, you’ll also have exclusive access to our Property Investment Tools & Apps and the Pinnacle Support Program .

Note: This information is general advice only. Always conduct your own research and seek independent financial advice before making investment decisions.