The federal government will again require temporary residents to sell their houses when they leave the country following mounting complaints about foreigners driving up prices.
Travel details and ownership data will be matched to catch cheats, and the public will have a new hotline - 1800 031 227 - to dob in foreigners they suspect of breaches.
Those leaving Australia must sell their properties and the government will claw back any capital gains made by foreign investors who breach the arrangements. Real estate agents will face new penalties under civil law that are being developed.
Assistant Treasurer Nick Sherry issued a statement on Friday night saying he would reinstate restrictions on foreign property investment scrapped in 2008 and impose new measures and tougher penalties to further tighten the system and improve compliance.
"The Rudd government is acting to make sure that investment in Australian real estate by temporary residents and foreign non-residents is within the law, meets community expectations and doesn't place pressure on housing availability for Australians," Senator Sherry said.
"The new provisions announced today will mean that anyone trying to flout Australia's strict foreign investment rules will face tough new penalties that will be fully enforced."
Treasury is reportedly investigating 50 cases of suspicious residential property purchases by foreigners in Melbourne, contributing to rising property prices.
Under reinstated regulations, temporary residents and foreign students will be screened by the Foreign Investment Review Board to determine if they will be allowed to purchase a property.
Foreign residents without temporary visas cannot buy existing houses, and may buy property only if it adds to the housing stock.
If buying land, they must build within two years or sell it to stop "land banking".
