The peak body for Australia’s construction industry believes the real culprit for the country’s high housing costs are being ignored. 

The Housing Industry Association (HIA) believes the high cost of housing and the resulting talk of Sydney and Melbourne property markets entering a bubble phase lay at the feet of governments. 

“The truth is that most of the problems having an impact on housing affordability are caused by governments and therefore governments can fix them,” HIA chief economist Harley Dale said. 

“We wouldn’t be having this conversation if Australia would get the disproportionately high level of taxation off new homes and improve the supply of new housing,”

Earlier this week, the HIA revealed that construction levels for new homes in Australia had fallen by 4.4% in April. 

The HIA believes there are five key points that should be addressed across Australia’s governments if they are concerned about prices; appointing a dedicated Federal Minister for Housing, phase out stamp duty on new homes, reinvigorate the planning system for faster approvals, support alternative funding models for residential infrastructure so new home buyers don’t pay upfront for whole-of-community assets and no increase

in the GST on new housing. 

“The two biggest taxes on a new home are stamp duty and GST - the latter which doesn’t apply to existing homes - and when combined with all the other taxes, levies and charges on a new home can be over 40 per cent of the final price,” Dale said. 

“New housing, which provides a necessity of life, namely shelter, is the second most heavily taxed major sector of the Australian economy.” 

“Equally, delays in planning and restrictions on land supply mean that new housing is not reaching the market quick enough to respond to demand, which ultimately puts upward pressure on prices.”