Australia cannot meet its target of 1.2 million homes while continuing to penalise the capital needed to build homes, according to the Housing Industry Association (HIA).
In its Winter 2025 Stamp Duty Watch report, HIA warned that investor surcharges and rising transaction costs are deterring foreign institutional capital – undermining housing supply just as migration-driven demand intensifies.
“Australia cannot build 1.2 million new homes in five years while taxing the capital that is necessary to build those homes,” said Tim Reardon (pictured), HIA chief economist.
HIA argued that current policies wrongly treat foreign investment as a source of housing demand rather than supply.
“Foreign institutional capital does not create housing demand. It creates supply,” Reardon said.
“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.”
The HIA report found that the average stamp duty bill on a median-priced home has reached $31,210 nationally, a 55% increase since 2019. In Queensland, the burden has nearly tripled.
These upfront costs are forcing home buyers to borrow more, downgrade property expectations, or delay entering the market.
Over the past decade, most states have introduced stamp duty and land tax surcharges on foreign buyers. The combined rate now reaches 9% in New South Wales and 8% in Victoria.
In those states, foreign institutional investors now face up to $160,000 in combined stamp duty, land tax, and foreign investment fees on a typical new dwelling – around four-and-a-half times more than local investors pay.
HIA warned these taxes are counterproductive.
“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,” the report said.
The report urges policymakers to clearly distinguish between temporary residents, like international students who consume housing, and institutional investors who fund its supply.
“The combination of surging migration and stagnant home building, constrained by poor policy design, has left Australia in a housing deficit,” Reardon said. “Reversing the foreign capital exodus is not only a rational economic choice, but also essential to delivering the homes Australians need.”
Despite the federal government’s pledge to build 1.2 million homes by June 2029, the National Housing Supply and Affordability Council (NHSAC) forecasts only 938,000 completions during that period. After demolitions, the net new supply is projected at just 825,000.
To reverse the housing shortfall, HIA recommends a coordinated national reset that includes:
“Stamp duty continues to block mobility and lock buyers out of the housing market,” Reardon said in a media release.
