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Banning foreign property buyers: What you need to know

Canada has banned foreigners from buying property, but could the same plane work here?

A sold sticker on top of a for sale sign. Aerial view of Australian property red brick apartments. Australian currency staked on top of each other.
Booming property prices have led Canada to ban foreigners entering the market. (Source: Getty)

Canada and Australia have a shared problem - property prices are red hot.

To fix the problem, Canadian Prime Minister Justin Trudeau announced a ban on foreign investors buying homes for two years in early 2022.

In Canada, property prices grew more than 20 per cent in 2021. In Australia, property prices soared more than 28.9 per cent through the pandemic.

And while Aussie property prices are starting to fall thanks to rising interest rates, prices are still well above pre-pandemic levels.

While the move in Canada has been met with differing opinions, could Australia soon follow suit?

Here’s what we know about the landscape here.

Foreign investment in the Aussie property market

Australians have expressed concerns about Chinese investment in the Australian residential property market specifically, a UTS study found.

The study found a clear majority of Australians (82 per cent) felt foreign buyers from China drove up Australian housing prices.

Around seven in 10 Australians (69 per cent) said Chinese investors in Australian real estate had made it difficult for first home buyers in Australia to enter the market.

The same number of those surveyed also felt Chinese investors had negatively affected the rental market for residential real estate in Australia.

The majority of Australians (78 per cent) believed the Government should restrict the amount of Chinese investment in residential real estate.

However, the February 2022 NAB residential property survey revealed foreign buyers only accounted for 4.6 per cent of the Aussie property market.

“Foreign buyers in Australian housing markets remain subdued and well below average,” the survey said.

So, what is pushing up property prices?

Property professionals identified price levels and a lack of stock as the biggest impediments for buyers of existing property - nationally and in all states - according to the NAB survey.

Essentially, Australia just doesn’t have enough homes to sell to keep up with our rising population and demand.

On top of that, concerns over rising rates were impacting buyers of existing housing more than at any time over the past three years, NAB reported.

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