Foreign home approvals drop 22% as proptech demand shifts

For proptech founders and operators, this is not just housing policy; it is a demand signal. The 22% fall in foreign residential approvals and the 98% commercial share of foreign investment value mean product roadmaps built around foreign residential buyers will need to pivot. Platforms serving commercial leasing, investment analytics, build-to-rent or renewables infrastructure are better positioned for the next funding cycle.

Foreign investment into Australian residential property has begun a sharp retreat, according to the Productivity Commission's annual trade and assistance review for 2024/25. The number of foreign investment approvals fell more than 22% to 5,284, and the Commission attributed the decline almost entirely to residential real estate. The timing is no coincidence: the Albanese government's ban on foreign purchases of existing Australian homes took effect in April 2025, and the May budget extended the prohibition by two years and three months until June 2029. That policy signal appears to have already chilled overseas buyer activity, even though the Commission cautioned that the full impact will only appear in the next financial year because the ban did not operate for the full 2024/25 period.

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While approvals by count fell by more than a fifth, the total value of foreign investment into Australia rose 32% to $256.4 billion in 2024/25, with commercial approvals accounting for 98% of the total value.

The divergence between the number of approvals and the total value of foreign investment is the most important market signal in this data. While approvals by count fell by more than a fifth, the total value of foreign investment into Australia rose 32% to $256.4 billion in 2024/25, with commercial approvals accounting for 98% of the total value. In other words, the ban is doing what it was designed to do at the residential end of the market, but it is not discouraging large-scale foreign capital from entering Australian commercial property, infrastructure, energy and industrial assets. For portfolio investors and institutions, Australian commercial real estate and renewable infrastructure remain attractive despite a more restrictive residential regime, which suggests the government's housing affordability intervention is being accepted as a targeted measure rather than a broader anti-foreign-investment stance.

The legislative layer around these figures is equally significant. Parliament passed laws ensuring foreign residents must pay a 30% tax on capital gains, adding a clear cost to offshore owners of Australian property and other assets. However, a crossbench amendment extended a 15% capital gains tax concession for foreign investors in renewable energy projects by an additional 10 years, pushing the concessional window to 2040. Treasurer Jim Chalmers positioned this as alignment with the long investment horizons typical of renewable projects, saying it followed stakeholder consultation. Francesca Muskovic, policy director for the Investor Group on Climate Change, went further, arguing the amendment removed uncertainty and avoided what would have been an unforced error that could have stalled investment needed to lower energy prices and grow clean-energy industries.