Cost of red tape on new ACT housing revealed as industry calls for help

Detailed summary

Property Council says government can do more to ease housing costs.

Almost half the cost of a new house in Canberra, and more than a third of the price of a new apartment, is driven by taxes and regulation, a new analysis shows, prompting calls for the government to ease the burden it puts on construction.

An analysis commissioned by the Property Council found 44.5 per cent of the price of a new detached house in the ACT was made up of taxes and regulatory costs, while the costs would make up 35.3 per cent of the price of a new, two-bedroom apartment.

The analysis, conducted by Australian Economic Advocacy Solutions, modelled the total a home buyer would spend on a representative house-and-land package was $1.24 million, with $277,590 attributed to statutory taxes and $275,801 on modelled regulatory costs.

The modelled apartment would cost $671,000, with $155,975 attributed to statutory taxes and $80,136 on regulatory costs.

Buyers eligible for stamp duty waivers in the ACT would pay more than $59,000 less for the house-and-land package and $18,400 less for the apartment in the scenarios modelled.

The territory government has a long-term commitment to slowly phasing out "inefficient" transaction taxes, including stamp duty.

Statutory taxes examined in the analysis included GST, transfer duties, land tax and general rates, while regulatory costs included compliance costs, approval processes and government-controlled delays. Not all regulatory costs are paid directly to the government.

"The issue is not whether the government should raise revenue, but whether the total tax burden on new housing is sufficiently understood and tested against the ACT's objectives to improve affordability and deliver more homes," the Property Council's report said.

The analysis modelled the cost of a house-and-land package on a 450-square-metre block, with a two-storey, four-bedroom home of about 175 square metres.

Opening of the article, excerpted from The Canberra Times. To read the rest, open the article on the publisher's site.