A new report shows that the Australian government continues to tax new home building, impeding productivity in the sector.
The data from the Centre of International Economics commissioned by the Housing Industry Association (HIA) revealed that housing taxation has doubled in just five years and is an update of a previous report from 2019.
The value of taxes and charges in Sydney has increased by 38% to A$160,000 since 2019. Government taxes, regulatory costs and charges also make up 38% or $346,00 of a new apartment in Sydney.
“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,” HIA chief economist, Tim Reardon said.
Reardon said this creates issues for new home buyers as they are spending 15 years of a 30 year mortgage paying off tax.
“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.
“With government taxes, fees and charges so high, the term ‘house and land package’ may as well be changed to ‘house and tax package’.”
Brisbane and Adelaide have also seen price hikes with taxes fees and charges in new homes doubling over the past five years.
“Not even the best, legitimate investment strategies could achieve that same level of return,” Reardon said.
Removing government taxes and red tape to allow homes that Australians are demanding could be the primary way to fix the housing shortage, according to Reardon.
“Delays on getting approvals take much longer than the time it takes to actually build a home,” he said.
“New home building taxes appear to be the target of governments under fiscal pressure, seeking to find other sources of revenue. What they do not realise is that when they increase taxes on housing, there ends up being fewer of them.”
“If governments were keen to solve the affordability problem, they need to look at the tax they are imposing on new housing.”
The Federal Government has claimed improving housing affordability as a priority and announced many initiatives aimed at building 1.2 million homes in the next five years.
