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Shockingly, the taxes paid on a Greenfield estate (a new residential development built on previously undeveloped land) in Sydney is 49 per cent of its total value, as of 2023–24.
This is made up of regulatory costs (24 per cent), statutory taxes (19 per cent) and infrastructure charges (5 per cent).
This is according to the Taxation of the Housing Sector Report from the Housing Industry Association (HIA) and the Centre for International Economics (CIE).
Other capitals fared better, but are still paying a significant portion of the property value in taxes on a Greenfield estate:
- Melbourne (43 per cent)
- Brisbane (41 per cent)
- Adelaide (37 per cent)
- Hobart (37 per cent)
- Perth (36 per cent)
Infill apartments saw slightly less taxes paid, but still make up a large portion:
- Sydney (38 per cent)
- Brisbane (34 per cent)
- Hobart (33 per cent)
- Melbourne (32 per cent)
- Adelaide (31 per cent)
- Perth (30 per cent)
HIA said that other than alcohol and cigarettes, housing is the most taxed sector in the country.
This is only increasing too, with the tax paid on a new house and land package in Sydney climbing 38 per cent or $160,000 since 2019.
Other areas like Brisbane saw these figures more than double, climbing 106 per cent or $179,000 in the same period.
With housing remaining a key concern for Australians, HIA chief economist Tim Reardon believes these inflated taxes are only exacerbating the problem.
“Australia has an acute shortage of housing because governments continue to tax new home building and impede productivity in the sector. In Sydney, governments are adding in excess of half a million dollars to the cost of a new home, that new home buyers are then required to repay for decades as part of their mortgage.
“With half of the cost of a new home being taxes and government charges, new home buyers are spending 15 years of a 30-year mortgage just paying off that tax. New home buyers also have to pay interest on top of that tax. Over 30 years, the value of taxes plus the interest on it amounts to more than the value of the home itself,” Reardon said.
“With government taxes, fees and charges so high, the term ‘house and land package’ may as well be changed to ‘house and tax package’.”
Broken down city by city, this is what you can expect to pay on taxes for a new house and land package:
- Sydney ($576,000)
- Brisbane ($348,000)
- Melbourne ($373,000)
- Hobart ($257,000)
- Adelaide ($237,000)
- Perth ($237,000)
Reardon continued: “In Brisbane and Adelaide, government taxes, fees and charges on new homes have doubled in five years. Not even the best, legitimate investment strategies could achieve that same level of return.
“The primary solution to resolve Australia’s housing shortages is to remove government taxes and red tape to allow the industry to deliver the homes Australians are demanding … Taxes on housing have not resulted in more of them being built. Higher taxes on new housing will only lead to fewer new homes and higher prices for existing homes.
“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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