A two-year ban on foreign property purchases began last month, potentially impacting the short-term rental market while benefiting hotels with accommodation.
The ban, which took effect 1 April, is primarily a move to deter foreign land banking and ease pressures on the housing market.
Overseen in part by the Australian Taxation Office, the new regulations ensure foreign investment will be allowed only under a limited set of circumstances, dictating any established property must be vacant and can only be purchased if the current structure is to be demolished and at least 20 dwellings constructed in its place. No part of the property may be occupied until the new housing is complete.
This does exclude temporary residents, such as students and contract workers, who can still buy an established dwelling as their main residence.
Seiko Ma, MD of short-term rental (STR) property management company Bodhitree Group, believes the ban will adversely affect their market because foreign property buyers often invested in homes for rental purposes, such as through Airbnb.
Ma suggests this would likely lead to more tourists choosing to stay in hotels.
Last year, Airbnb pushed back against new levies for the short-term stays industry, although it conceded that STRs added to the problem of housing affordability in Australia.
The adoption of residences as STRs has also put additional strain on many hotel businesses, as visitors have more options of cheap lodgings that typically don’t have to comply with the same stringent public standards.
The government will look at a possible extension on the ban after it is slated to expire, in March 2027.
