Treasurer Joe Hockey has rejected a foreign purchase of a house in Sydney in what some experts say could be a new direction in government policy.
The knockback comes as Prime Minister Tony Abbott leads a large delegation to North Asia to show Australia is "open for business" when it comes to investment and trade.
The purchase of the established four-bedroom house in Strathfield by Zhixiong Hua was rejected under the Foreign Acquisitions and Takeovers Act because it would have been "contrary to the national interest".
It is understood the purchase was screened by Treasury, under the foreign investment review process, and the buyer declined to provide further information when it was sought.
In 2012-13, a total of $51.9 billion of foreign investment in real estate was approved, including $5.42 billion in existing residential property.
But no proposal has been rejected in the national interest since 2011/12, according to the Foreign Investment Review Board's annual reports.
Parliamentary secretary to the treasurer Steven Ciobo would not comment on the specific case but said the rules applied equally to all potential investors and the government expected compliance.
"There is absolutely no change in policy," Mr Ciobo told AAP from Washington.
Foreign investors can purchase new but not second-hand property, unless other factors applied such as the property no longer had any economic life, he said.
Queensland University of Technology business expert Mark McGovern said the decision was an unusual one.
"It would be appropriate for the government to release information in order to inform the market more fully about whether it is a change of policy or this case is an exception," he told AAP.
Dr Alan Moran, from the Institute of Public Affairs, said he was unaware of any precedent for the decision.
"I've not seen any case of this," he said.
"We want to encourage immigration of entrepreneurial sorts of people, including from China, and this sends a bad message."
Real Estate Institute of NSW president Malcolm Gunning said foreign investment rules stated that foreign buyers could not purchase this class of property.
"If you are a foreign national and not resident, this is urban land not permitted for purchase," Mr Gunning said.
"We think this is exactly what should happen under the rules."
He said it appeared the buyer had been badly advised.
Mr Gunning said foreign buyers should be encouraged to purchase new properties, because this had a flow-on effect for jobs and investment, but existing older homes should be left to local buyers.
It appeared the Abbott government was "toughening up" in this policy area, he said.
"There's a little bit of political heat as far as this is concerned."
Mr Hockey last month referred the issue of foreign investment in residential real estate to parliament's economics committee.
Committee chairwoman Kelly O'Dwyer said at the time there have been concerns that foreign investment in Australian real estate is "causing a distortion in the market and making housing less accessible and affordable".
The four-bedroom house, on a 902 square metre block, is listed as having sold for $1.8 million on March 22.