The cost of property investment is as high as 50% in Sydney, 37% in Melbourne, and around 33% in Brisbane, Perth, and Adelaide stated by HIA. Federal Housing Minister Michael Sukkar says. “It is unacceptable that the red tape and tax incurred in the construction of a house and land package as a percentage of the purchase price is 50% in Sydney and 37% in Melbourne. It is also unacceptable that the supply of new housing is so badly constrained by state and territory planning and regulatory bottlenecks.”
According to studies from the Center for International Economics, excessive taxes and red tape enforced by the government made up for half the price of a house and land package. The study commissioned by the Housing Industry Association discovered that 14% of Goods and services tax (GST) and 10% and of all government revenues are derived from housing taxes.
Property Council of Australia director Jane Fitzgerald said most buyers didn’t even realise how much tax they were paying as many government charges were hidden out of sight.“They are the second-largest cost of a new home after the construction itself. By inflating the cost of a new home, these taxes and charges add to the size of a mortgage, meaning that Australians are having to borrow more just to pay costs imposed by the government.” she said.
HIA executive director NSW David Bare says “Housing is one of the most heavily taxed sectors of the economy alongside the ‘vice taxes’ applied to cigarettes and alcohol. Housing is a true necessity of life and the current tax imposts on housing have constrained housing supply and driven the escalating house prices over recent decades leading to higher rents and unnecessary financial pressure on all Australians.
Developer Legacy Property CEO Matthew Hyder said an inefficient planning system was compounding the delays from excessive red tape. “Developers can respect the need for certain tests and regulations but the problem is that you have to deal with multiple departments that don’t talk to each other,” he said. “This can add years to each project so housing is more expensive to make and buyers end up paying more.”
“As house prices stabilise, housing affordability will again deteriorate unless there is structural reform in how we tax and regulate the supply of new homes and apartments. “We need a coordinated national approach to addressing affordability that includes addressing the tax and regulatory system that constrains the supply of new homes and is the root cause of the affordability challenge,” concluded Mr. Bare.