Excessive taxes and red tape are inflating the housing costs in Sydney and putting a strain on property buyers who are often unaware of these charges, the latest study by Housing Industry Association of Australia found.
Housing taxes account for around half the cost of a house and land package and roughly a third of unit costs in Sydney, said HIA NSW executive director David Bare.
"Stamp duty on the land and the house, GST, land tax, council rates, payroll, income and company taxes combine to raise almost $180,000 in taxes on a typical new house and land package. This does not include the additional $40,000 in development charges or the $220,000 incurred in red tape," he said.
Duties imposed on housing are nearly on the same level of taxes imposed on cigarettes and alcohol, making the housing market one of the heavily taxed sectors of the economy.
"Housing is a true necessity of life and the current tax imposts on housing have constrained housing supply and driven the escalating house prices over recent decades leading to higher rents and unnecessary financial pressure on all Australians," Bare said.
The study said 10% of revenue raised across three tiers of government and 14% of GST revenue come from taxes and red tape – and Bara believes housing affordability would likely deteriorate due to these skyrocketing costs.
"We need a coordinated national approach to addressing affordability that includes addressing the tax and regulatory system that constrains the supply of new homes and is the root cause of the affordability challenge," he said.
These additional costs add to the barrier many Australians face, hindering them from breaking into the market.
"More than 92% of renters in Australia aspire to own their own home, but yet less than half of these people anticipate achieving this goal," Bare said.
The worse thing is, many homebuyers are not even aware how much tax they were paying, given that some of these costs are hidden, said Property Council of Australia director Jane Fitzgerald
"They are the second largest cost of a new home after the construction itself. By inflating the cost of a new home, these taxes and charges add to the size of a mortgage, meaning that Australians are having to borrow more just to pay costs imposed by government," she said.
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