Taxes, charges and other regulatory burdens are adding hundreds of thousands of dollars to the cost of new homes and apartments, a new report suggests.

(image source: Google Maps)

The Housing Industry Association has released the 2025 edition of its Taxation of the Housing Sector report.

The report quantifies the impact of taxes, charges and other regulatory burdens on new house and land packages as well as new apartments.

Prepared by the Centre for International Economics, it has provided an update to previous work which was undertaken in 2019.

The report found that:

• In the case of detached houses, costs associated with taxes, charges and regulatory burdens ranged from $237,000 or 36 percent of the total purchase price in Perth to $576,000 or 49 percent of the overall purchase price in Sydney.
• For apartments, taxes, charges and other regulatory costs range from $149,000 or 30 percent of the overall purchase price in Perth to $346k or 38 percent of the overall purchase price in Sydney.
• Compared with the most recent report prepared in 2019, the most significant increase in the tax and regulatory burden over the past five years has occurred in Brisbane. In the Queensland capital, costs associated with taxes, charges and regulatory burdens have more than doubled (up 106 percent) for new house and land packages and have increased by 60 percent for apartments.

The latest data comes as housing affordability continues to be a growing concern for many families across Australia.

A PropTrack Housing Affordability Report released last September showed that nationwide, only 14 percent of all homes were affordable to median income households.

To address this, Commonwealth and state governments are aiming to deliver 1.2 million new homes in well located areas over the five years from 1 January 2024 – a figure which many commentators feel will be increasingly difficult to achieve.

In its report, the CIE looked at several categories of cost when measuring the tax and regulatory burden of new housing development.

These include:

• statutory taxes such as stamp duty, council rates (charged on land during development) and GST
• infrastructure charges such as developer contribution levies; and
• regulatory costs (see below).

The regulatory costs to which the report refers are not specific taxes or charges but are instead other regulatory burdens which add to the cost of new housing and apartment delivery.

Of these, the most significant are additional costs which are associated with land use and development controls and the impact which these have on the price new land for housing.

Other regulatory costs relate to what the report says are excessive delays and uncertainty created by approval systems. This includes items such as developer interest/finance costs which are incurred whilst waiting for approvals and additional developer margins which are needed to compensate for planning uncertainty.

(The above chart shows the components of the cost of delivering a new home in a greenfield area. In this chart, ‘statutory taxes’ ‘infrastructure contributions’ and ‘regulatory costs’ are all part of the tax and regulatory burdens. The bottom category, ‘resources’ represents all of the normal operating costs of development and construction along with a developer profit margin.)

Commenting on the report, HIA Chief Economist Tim Reardon said that the tax and regulatory burden on new housing is excessive.

Reardon expressed concern that cash-strapped governments may be set to look to new home building taxes in order to diversify their revenue source.

(The above chart shows the components of the cost of delivering a new apartment. In this chart, ‘statutory taxes’ ‘infrastructure contributions’ and ‘regulatory costs’ are all part of the tax and regulatory burdens. The bottom category, ‘resources’ represents all of the normal operating costs of development and construction along with a developer profit margin.)

Instead, he called on governments to remove taxes, speed up approval times and reduce red tape.

“Australia has an acute shortage of housing because governments continue to tax new home building and impede productivity in the sector,” Reardon said.

“If governments were keen to solve the affordability problem, they need to look at the tax they are imposing on new housing.”

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