In its Winter 2025 Stamp Duty Watch report released today, the HIA says that high taxes on foreign institutional capital are pushing investors away, at a time when population growth is increasing demand for new housing.
“Australia cannot build 1.2 million new homes in five years while taxing the capital that is necessary to build those homes,” said HIA Chief Economist Tim Reardon.
The report argues that foreign institutional capital plays a crucial role in increasing housing supply—contrary to public assumptions that it drives up demand.
“Foreign institutional capital does not create housing demand. It creates supply,” Mr Reardon explained.
“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.”
Over the past decade, state governments have introduced significant stamp duty and land tax surcharges on foreign investors, reaching up to 9 per cent in New South Wales and 8 per cent in Victoria.
The report calculates that a typical new dwelling purchased by a foreign institutional investor in these states may now attract up to $160,000 in combined charges—up to four-and-a-half times the amount paid by local buyers.
According to the HIA, these policies are not only failing to raise revenue but are actively diverting capital to other countries.
“These imposts are likely to be revenue negative. 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,” Mr Reardon said.
Meanwhile, domestic buyers are also under pressure. The national average stamp duty on a median-priced home has risen to $31,210 – an increase of 55 per cent since 2019.
Queensland has seen the steepest rise, with average stamp duty nearly tripling. These costs, the report says, are making it harder for Australians to enter the housing market, forcing them to take on more debt or settle for lower-quality housing.
The HIA has also criticised policy confusion around migration and housing, particularly the failure to differentiate between temporary residents, who consume housing, and foreign investors, who fund its construction.
“The combination of surging migration and stagnant home building, constrained by poor policy design, has left Australia in a housing deficit,” Mr Reardon said.
“Reversing the foreign capital exodus is not only a rational economic choice, but also essential to delivering the homes Australians need.”
To address the growing shortfall, the HIA is calling for a national policy reset. Its recommendations include abolishing foreign investor surcharges, aligning migration and housing supply policy, adopting tax-neutral rules for institutional investors, reviewing surcharges annually, and providing long-term certainty to attract investment.
“Stamp duty continues to block mobility and lock buyers out of the housing market,” Mr Reardon added.
