Australia’s dream of building 1.2 million new homes in five years is looking less achievable by the day, with the Housing Industry Association (HIA) warning that state and federal tax policies are chasing away the very capital needed to make it happen.
In its latest Stamp Duty Watch report released today, the HIA places the spotlight on foreign institutional capital—not as a driver of demand, but as a source of housing supply. And it’s leaving. Fast.
“Foreign institutional capital does not create housing demand. It creates supply,” said HIA Chief Economist Tim Reardon. “Taxing this capital reduces the supply of homes being built, even as migration continues to surge and create demand. This is the worst own goal in the myriads of housing policy mistakes.”
According to the report, the average stamp duty bill on a median-priced home now stands at $31,210 nationally—a record high. Since 2019, that’s a jump of 55 per cent. Queensland has seen some of the steepest increases, with stamp duty burdens almost tripling.
These costs aren’t just hitting foreign players—they’re distorting the entire housing market. For everyday Australians, the impact is clear: higher debt loads, compromises on quality, or being priced out altogether. But foreign investors are getting hit with a separate playbook. In New South Wales, a combination of stamp duty, land tax, and foreign investment fees can total up to $160,000 on a standard new apartment. In Victoria, the figure is not far behind. That’s up to four-and-a-half times more than what a local investor would pay.
The result? Money is flowing elsewhere. “These imposts are likely to be revenue negative,” Reardon said. “Foreign capital is highly liquid and has moved to other economies that are open to foreign capital building apartments to meet the needs of a growing population.”
The HIA draws a sharp distinction between the people who fund new housing—such as institutional investors—and those who consume it, such as temporary residents or international students. That difference, the report argues, has been blurred by reactive politics and policy inconsistency.
Australia now finds itself in a situation where migration-fuelled demand is rising, yet home-building remains sluggish. The result is a deepening housing deficit.
The HIA’s Winter 2025 report urges a rethink. It proposes several key measures to steady the system:
- Remove stamp duty and land tax surcharges on foreign investors
- Coordinate migration settings with planning and supply pipelines
- Create tax-neutral investment rules to encourage institutional capital
- Conduct annual reviews of investor-targeted surcharges
- Guarantee long-term policy stability to restore confidence
The report lands at a time when both state and federal governments are under pressure to fix housing affordability. But so far, much of the political focus has been on increasing subsidies or reworking planning rules. The HIA argues that these won’t go far without also addressing the supply-side squeeze caused by capital flight.
Reardon was blunt about the need for change. “Reversing the foreign capital exodus is not only a rational economic choice, but also essential to delivering the homes Australians need.”
The message from the industry is clear: don’t chase away the builders, then complain that the houses never came.
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