As has been well documented in the press recently, investment in property assets by offshore players, whether direct or indirect, has significantly increased. This increased activity, along with concerns over the current regulatory framework, triggered the Federal inquiry undertaken by the House of Representatives Standing Committee on Economics (Committee) into:

  • Foreign investment in residential real estate in Australia
  • The role of the Foreign Investment Review Board (FIRB), the body established to regulate and monitor foreign investment in Australia.

Key Findings

The Committee chaired six public hearings and received 92 submissions. In summary, the Committee’s key findings are:

  • There is no accurate or timely data that tracks foreign investment in residential real estate
  • There has been a significant failure of leadership at FIRB
  • Insufficient enforcement activity leads to non-compliance
  • Currently the taxpayer foots the bill for the administration of FIRB rather than the foreign investors applying for approval.

The Committee also commented on the public perception that overseas investment in Australia’s property market puts upward pressure on house prices. Whilst acknowledging that affordability is a serious issue, the Committee concluded that:

  • The current foreign investment framework should be retained
  • From the evidence received, foreign investment is not causing significant market distortions, particularly for first home buyers
  • Foreign investment levels are not high enough to cause such market distortions, and that overseas buyers mainly buy different types of properties at different price brackets from first home buyers
  • Foreign investment is crucial to the continuing development of the housing sector and restrictions on foreign investments would likely result in price increases.

Whilst the Committee’s recommendations will have no legal effect until, and if, legislation is drafted and passed by the Commonwealth Parliament, they may certainly be influential in helping Government make informed policy decisions and may result in greater scrutiny by FIRB to applications in the meantime.


To see some of the recommendations made by the Committee, click here


Nick Holuigue - Partner, Maddocks