As housing affordability continues to decline, new commentary suggests we may be looking at the problem through the wrong lens. While supply constraints have long been cited as the key driver of the housing crisis, recent data points to another issue: the growing tax burden on the property sector.
According to ABS figures, property taxes collected by local and state governments have surged by 80% over the past decade, reaching $45.1 billion—and that doesn’t include federal revenue through GST. In some parts of the country, taxes and charges now make up nearly half the cost of building a new home.
A recent Housing Industry Association report found that government-imposed costs on new developments ranged from $149,000 in Perth to $346,000 in Sydney for a new apartment. On house-and-land packages, as much as $237,000 can be attributed to taxes, regulatory fees, and infrastructure charges.
It’s a tough environment for smaller developers, who face significant financial barriers just to bring new housing stock to market. As one industry voice put it: “We have a housing crisis because we have a taxation crisis.”
If governments are serious about improving affordability, they must confront the role taxation plays in discouraging new supply—especially for the next generation of buyers trying to get into the market.
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