The cost of building a new home in Australia has skyrocketed, and a major culprit behind this surge is government taxes and regulatory charges. A recent report by the Housing Industry Association (HIA), conducted in partnership with the Centre for International Economics (CIE), has shed light on the increasing financial burden placed on new home buyers across the country.
The Rising Cost of Housing Taxes
Over the past five years, taxation and regulatory charges on new homes have seen a dramatic increase. In Sydney, these costs now make up 50% of the total price of a new house and land package, amounting to a staggering $576,000—a 38% increase since 2019. Brisbane has experienced the most significant hike, with tax and regulatory costs more than doubling, jumping by $179,000 (106%).
For new apartments, the situation is equally concerning. In Sydney, $346,000 (38%) of the cost of a new apartment is directly linked to government-related charges. Brisbane has seen a sharp rise as well, with taxation on new apartments increasing by $104,000 (68%) over the past five years.
How Taxes Are Impacting Housing Affordability
According to HIA Chief Economist Tim Reardon, these growing taxation costs are placing immense pressure on home buyers and negatively impacting housing supply.
“Australia has an acute housing shortage because governments continue to tax new home building while restricting productivity in the sector. In Sydney, government charges are adding more than half a million dollars to the cost of a new home, which buyers then spend decades repaying through their mortgage.”
Reardon also pointed out that taxation policies have extended mortgage repayment periods and added significant financial strain on homeowners. With taxes making up half the cost of a new home, buyers are effectively spending the first 15 years of a 30-year mortgage just paying off taxes and government charges. When factoring in interest, the total cost of taxation over a 30-year loan ends up exceeding the value of the home itself.
Taxation and Delays Are Choking Housing Supply
The report also highlights another major issue—regulatory delays. In some capital cities, it takes over a year to obtain development approvals for subdivisions, with up to seven months of that time attributed to unnecessary delays.
Reardon stressed that these delays, combined with increasing taxes, are worsening the housing crisis.
“In Brisbane and Adelaide, government taxes, fees, and charges on new homes have doubled in just five years. Not even the best investment strategies could achieve that level of return.”
Governments Are Worsening the Housing Crisis
The report suggests that governments under fiscal pressure are targeting the property sector as a revenue source, without considering the consequences on housing affordability. As Reardon explains:
“It is incongruous that governments set ambitious home-building targets while simultaneously increasing taxes on new housing. The more they tax new homes, the fewer homes will be built.”
A Call for Change
With homeownership already out of reach for many Australians, the need for a serious review of housing taxation policies has never been greater. If governments are truly committed to improving housing affordability, they need to reconsider the heavy tax burden placed on new home buyers.
“If governments were keen to solve the affordability problem, they need to look at the taxes they are imposing on new housing.”
As the cost of living continues to rise, tackling excessive housing taxes and regulatory barriers is essential to ensuring more Australians can afford to own their own homes. The challenge now lies in whether policymakers will take action to relieve this burden—or continue making homeownership an increasingly unattainable dream.