The home building industry calculates that taxes add more than $250,000 to the price of a new home in Sydney.
That, says the Housing Industry Association, accounts for 40 per cent or $1,350 per month for the life of a home mortgage.
"Taxes on new housing are a brake on economic activity, and represent a constraint on housing affordability and labour productivity," the association's head of industry policy Graham Wolfe says.
His concerns came as a Property Council of Australia analysis estimates that average stamp duty costs have surged by up to a staggering 800 per cent in the past 20 years. Its chief executive, Ken Morrison, said stamp duty is out of control and this astounding increases "are nothing short of scandalous".
He says stamp duty has to go with an increased and broadened GST the "most logical option" replacement for state revenue. Mr Wolfe agreed there is no question that stamp duty is one of the most inefficient taxes in the system.
However, he said there are many other taxes on new homes, including developer infrastructure levies, which can add over $70,000 on a new home and land package.
GST is also levied on new homes but not existing properties, adding tens of thousands of dollars to a new property home.
His comments come after recent political debate over housing affordability given the escalating house prices in Sydney and parts of Melbourne.
The Property Council's research shows that in the past 20 years the median house price in Sydney has risen just shy of 500 per cent, from $177,000 in 1995 to $880,000 in 2015.
However, the consumer price index has risen just 169 per cent in comparison.