Over one-third of new home cost is tax: report

New figures have laid bare how much Hobart families are paying in red tape and tax on the cost to build their new home. Picture: Supplied

---

A Tattslotto win of a quarter of a million dollars is life-changing.

It is also the amount that Hobart home buyers are being slugged in tax and red tape for a typical new house.

A Housing Industry Association-commissioned report from the Centre for International Economics — Taxation of the Housing Sector — shows Hobart house and land new builds require $257,000 in tax, including $88,000 in regulatory costs, $163,000 in statutory taxes and $6000 in infrastructure contributions.

The research tracks the typical costs incurred in building a four-bedroom, two-bathroom, two-carpark home. In Hobart, the total cost is $694,000, higher than Adelaide and Perth.

MORE: Riverfront living with boathouse, jetty, pool and waterfront gazebo

Fertile and flexible 366ha farm is unusually close to thriving town

‘Essentially zero’ rental options for singles, students or retirees

HIA Tas executive director Stuart Collins. Picture: supplied

---

HIA Tasmania executive director Stuart Collins said 37 per cent of the cost of a new home in Hobart is tax.

Mr Collins said new home building has failed to keep up with growing demand because of the high tax on, and consequently cost of, delivering new house and land packages to market.

He said the time it takes to obtain an approval is inflated by delays.

“It takes longer to gain an approval in Hobart than to build a home,” he said.

“If the Tasmanian Government were keen to help improve housing affordability, it should look into reducing the taxes on new homes.

“Tasmania has an opportunity to attract young people from the mainland with more affordable homeownership prospects, if it chooses to help lower the cost of new homes.” 

HIA chief economist Tim Reardon. Picture: Tertius Pickard

---

HIA chief economist Tim Reardon said the research showed that despite claims to have housing as a top priority, governments at all levels were just paying lip service to the housing crisis “given the volume of taxes, charges, regulations and delays they impose on building”.

“With government taxes, fees and charges so high, the term ‘house and land package’ may as well be changed to ‘house and tax package’,” Mr Reardon said.

“Taxes and government charges have more than doubled, but housing supply has not. This points to the fact that governments cannot tax their way out of fixing the housing supply problem.”

Tasmania’s average loan to build a new home is about $408,000, research shows.

---

Meanwhile, analysis by money.com.au has revealed the nation now has an almost $4000 “new home premium”, with the $674,649 average loan for a new house above the $670,972 typical loan for an established residence.

However, Tasmania was among the states that bucked this trend, with the average new home loan $408,889 compared to $467,208 for existing properties.

Money’s property expert Mansour Soltani said for homebuyers, if building new became more expensive, “at some point the cost becomes not viable”.

“The government is going to have to cut red tape and cut costs, that’s the only way,” he said.