Australian taxes and regulatory costs make mortgages for home buyers "60% to 100% more expensive” than they’d be otherwise, according to research commissioned by the Housing Industry Association (HIA).
HIA chief economist Tim Reardon, named stamp duty, GST and land tax among the costs amounting to $180,000 on a typical new house and land package.
“This does not include the additional $40,000 in development charges or the $220,000 due to red tape,” said Reardon.
“Households have to borrow more to pay these taxes in order to put a roof over their head. They then repay these costs over the lifetime of the loan.”
“Half of the cost of a house and land package in Sydney is red tape and taxes.”
The investigation into the scope of such additonal costs found that 10% of all government revenue is raised from taxes on housing.
“Housing is one of the most heavily taxed sectors of the economy alongside of the ‘vice taxes’ applied to cigarettes and alcohol,” noted Reardon.
“Housing is a true necessity but, unfortunately, the current tax imposts have constrained housing supply and driven the escalating prices over recent decades, leading to higher rents and unnecessary financial pressure on Australians.”
While there has been a slight reprieve from the affordability challenges that have dominated the housing market for years, “structural reform” in how housing is taxed is necessary for lasting change.
“More than 92% of renters in Australia aspire to own their own home, yet less than half of these people anticipate achieving this goal,” said Reardon.
“We need a coordinated national approach to addressing affordability that incudes addressing the tax and regulatory system that constrains the supply of new homes and is the root cause of the affordability challenge.”