The federal government's November 2014 report into foreign investment in residential real estate has recognised the benefits of foreign investment in this market and argued for maintaining the framework. However, it remains to be seen which, if any, of the report's recommendations will be adopted.

The government's policy seeks to channel foreign investment in the housing sector into activity that directly increases the supply of new housing and brings benefits to the local building industry and its suppliers. 

The Standing Committee on Economics was commissioned by the Federal Treasurer to examine if the policy is fulfilling these objectives, and how to better enforce compliance and monitor rules. The committee found that housing supply would be further constrained if foreign investment was curtailed. 

The committee made 12 recommendations including retaining the current framework, albeit with better audit, compliance and enforcement measures in place, as well as maintaining accurate data to track foreign investment in residential property, and imposing civil and criminal penalties for breaches. Other recommendations propose the government retaining capital gains where a foreign owner divests an illegally held established property, and requiring temporary residents to divest established property within three months of it ceasing to be their primary residence.

The report recognised that although offshore buyers represent just a small percentage of overall sales, they are an important factor in maintaining business confidence and giving developers the impetus and security to embark on new projects.