For a long time I have argued that housing is expensive in Australia because politicians have made it so – AND keep making decisions that add to the cost.
The value of all residential real estate in this country is under-pinned by the cost of creating new dwellings – and those costs keep rising, way beyond the rate of inflation.
One of the biggest elements in the cost of new homes is the taxation component.
The research shows that a massive share of the cost of creating a new dwelling in Australia is taxes, fees and charges at all three levels of government.
The Federal Government, the various state governments and local government authorities all use residential real estate as a cash cow – in other words, they milk it for revenue.
Over the past 5-10 years, there have been a number of research reports which quantified how much of the cost of new dwellings comprises government imposts.
Some of that research has come from the building industry and some have been independent research reports by credible organisations.
And they have all arrived at similar conclusions: that somewhere between 30% and 50% of the cost of a new home in Australia is taxes, fees and charges at the three levels of government.
Why is it 30% to 50%? Because the percentage differs depending on location.
And now that reality has been confirmed by a new research report by the Property Council of Australia in Queensland – which has found that one third of the cost of new homes and apartments in that state is made up of government charges.
The report says: “The Queensland Government’s promise of delivering ‘a home for every Queenslander’ cannot be fulfilled under the current tax model.”
The ‘Stacked Against Us’ research report shows that government taxes, fees and charges make up 32 per cent of the total cost of a new house and land package in Queensland and 33.3 per cent of a new apartment.
For a $730,000 mortgage, that equates to $233,440 in taxes, fees and charges.
The report says: “The impact of these tax settings is seeing Queenslanders spend the first nine years of a 30-year mortgage package paying off prohibitive taxes, fees and charges – plus interest.”
And the report also says: “Queensland is in the grips of a housing affordability crisis. A key reason why houses aren’t affordable is the increasing burden of taxes and regulatory costs in the development of new houses and apartments.
“Taxes on new homes are a double whammy – they increase costs (and therefore sale price) of new builds, in turn increasing the costs of buying or renting established homes.”
The report points out that, over the past three years, the Queensland Government has experienced a $3.5 billion in windfall transfer duty receipts alone – representing a 29 per cent increase in receipts above the forecast level.
The situation in Queensland is being replicated across Australia.
It’s worse in New South Wales. In Sydney, the taxation component of a new dwelling on a block of land can be as high as 50%.
It’s becoming diabolically bad in Victoria, which has by far the highest taxes on residential real estate of anywhere in the nation.
The message to politicians is clear: if you really want to create affordable housing, as you say you do, stop treating the process of creating new homes for Australian families as a cash cow.
