According to a new report commissioned by the Housing Industry Association (HIA) from the Centre for International Economics (CIE), taxes and regulatory costs now make up $576,000 – approximately half – of the cost of a new house and land package in Sydney.
This represents a 38 percent increase of $160,000 since the previous report in 2019.
The situation is even more dramatic in Brisbane, where government charges have more than doubled, increasing by $179,000 or 106 percent over the same period.
HIA Chief Economist Tim Reardon said these costs are directly contributing to Australia’s housing shortage and affordability crisis.
“In Sydney, governments are adding in excess of half a million dollars to the cost of a new home, that new home buyers are then required to repay for decades as part of their mortgage,” Mr Reardon said.
The report also revealed that apartments face similar tax burdens, with government charges accounting for $346,000 or 38 percent of the cost of a new apartment in Sydney.
In Brisbane, these costs for apartments have jumped by $104,000 or 68 percent compared to the 2019 report.
Regulatory delays are further compounding the problem.
The report found it takes over a year to obtain a development approval for subdivision, with up to seven months attributed to unnecessary delays.
Mr Reardon said that the long-term financial impact on homebuyers was signifcant, noting that “new home buyers also have to pay interest on top of that tax.”
“Over 30 years, the value of taxes plus the interest on it amounts to more than the value of the home itself,” he said.
The housing industry is calling for a reduction in government taxes and red tape to address the housing shortage.
The report suggests that current taxation approaches are counterproductive to solving the housing crisis.
In Adelaide, the situation mirrors Brisbane with government taxes and charges on new homes doubling in the last five years, creating what the HIA describes as an unsustainable burden on new homebuyers.
Mr Reardon said there’s a huge contradiction in government policy, where housing targets are set while simultaneously increasing taxes on new construction.
“It is incongruous that governments set home building targets, while at the same time tax new home building even more,” he said.
“The more government tax new homes, the fewer homes will be built.”
The HIA argues that the primary solution to Australia’s housing shortages is to remove these government taxes and reduce regulatory barriers to allow the industry to meet housing demand.
“With government taxes, fees and charges so high, the term ‘house and land package’ may as well be changed to ‘house and tax package’,” Mr Reardon said.
“If governments were keen to solve the affordability problem, they need to look at the tax they are imposing on new housing.”
