Numbers of immigrants the major problem, not the number wanting to purchase existing housing

Labor's ban on foreign investors buying existing housing will have no impact on prices and is just a pre-election piece of bi-partisan hand waving.

According to the Australian Institute for Progress, the source of capital to buy or build housing isn't the problem, it's lack of supply of new land and demand caused by immigration levels that are off the scale.

"Inasmuch as this ban targets temporary residents it makes no sense as they need to live somewhere, and whether they buy or rent is immaterial.

"To the extent it affects foreign investors not living here, then as well it restricts the amount of capital available to provide rental accommodation," according to AIP Executive Director Graham Young.

Mr Young said that because of increased taxes on land and misguided legislation protecting tenants "rights", the number of Australians wanting to invest in rental housing is reducing.

"That means in the short-term we need investors who aren't deterred by these imposts. If some foreign investors are deterred from investing because of this policy, then that will push rentals up further, impacting the least well-off."

Mr Young said that in the long-term state governments need to stop targeting rental investors with ever-increasing taxes and onerous requirements.

"Longer-term again, the situation will only be fixed by slashing planning restrictions, regulations, approval timelines and providing the infrastructure needed to produce an increased supply of land coupled with enhanced competition.

"This shouldn't be too hard. As recently as the 70s and 80s we had such a system."

Mr Young said that most of these were issues that were not directly under the control of the federal government.

"That doesn't mean the federal government can't exert influence, firstly by spelling out the real situation and suggesting real solutions to address it."

Mr Young also noted that this policy had first been adopted by the Opposition.

"It could be a long time before we see affordable housing again if both sides of politics are determined to solve it via investment xenophobia."

For further information contact Graham Young on 0411 104 801 or graham.young@aip.asn.au.