HIA and the Centre for International Economics (CIE) have released their 2025 report into Taxation of the Housing Sector, which identifies the tax and regulatory costs that governments impose on new Australian housing.

The situation has deteriorated across every large capital city.

Government taxes, regulations and charges are costing Australians more than ever in their battle to achieve the dream of homeownership. Sydneysiders are paying $576,000 in taxes, fees and government charges alone before they even build a house and land package, up from $417,000 in 2019.

That's half the cost of a house and land package in Australia’s largest capital city. This means over a 30-year mortgage, homebuyers are spending the first 15 years just paying off taxes and government costs. With the interest charged on top of that, over 30 years the value of these taxes and government charges amounts to more than the value of the home itself.

Melbourne and Brisbane are a distant second and third, at $373,000 and $348,000 respectively, while Perth and Adelaide are just under $240,000. In every one of these capitals, the price burden of government has increased since 2019. In Brisbane and Adelaide, these costs have doubled.

Not even the best, legitimate investment strategies could achieve the same level of return.

The biggest determinant of the variability of these costs across the capitals is, interestingly, not explicit taxes such as GST, income tax and stamp duties. These taxes account for a relatively stable, albeit significant, share of the total cost burden across Australian housing.

The most variable component is regulatory costs, and nowhere is this more evident than in Sydney.

In Sydney, government policies that restrict the supply of land and housing relative to demand add $284,000 to the cost of a house and land package – a far larger burden than in any of the other large capitals.

In Melbourne and Brisbane, these costs are still more than $150,000 and $125,000 respectively. Even in Perth and Adelaide, where the shortage of shovel-ready land is relatively less acute, these restrictions are still adding around $60,000 to a house and land package. That’s still around twice the cost of stamp duty in these cities, even if more modest than other capitals.

Put simply, the capitals, especially the largest ones, do not release enough shovel-ready land for the volume of housing required. Moreover, it often takes over a year to obtain a development approval for subdivision, most of this time being attributable to unnecessary delays. This is longer than it takes to actually build the house.

Australia has an acute housing shortage due to these government taxes, costs and delays. The solution is to reduce them, not increase them.

Reducing these costs and delays will be essential to meeting the Australian government’s target of 1.2 million new homes over five years. This means reforms across multiple policy fronts, including skilled migration, tax, regulation, planning, approvals, lending, land supply and infrastructure provision.

Policymakers need to be ambitious. Solving Australia’s housing crisis will produce enormous benefits, not just to aspiring homeowners, but also in terms of improving broader Australian productivity and living standards.

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First published 12 May 2025