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“Taxing housing only contributes to less houses being built causing rentals to increase and home ownership to decline.”
In 2019, the Centre for International Economics (CIE) released a research report Taxation on the Housing Sector which identified the costs associated with bringing land and housing to market and provided a breakdown of these costs as either resource costs, regulatory costs (red tape), statutory taxes (federal, state and local) or excessive charges.
The research showed that the combined costs of the statutory taxes, regulatory costs and excessive charges equate to 50 per cent of the cost of a new house and land package. The situation since 2019 has only worsened.
“While many of the taxes are applied by local and state governments, there are a range of federal financial relations mechanisms that could be used to leverage reforms that directly impact the price of new housing.
“The tax that has a direct impact on home ownership is stamp duty. The often large, one-off tax is a major barrier to first home buyers getting into a new home. The added cost of stamp duty often means the difference of being able to buy or not.
“The Government needs to lead the way via National Cabinet and encourage the states and territories to universally drop stamp duty and replace it with another more equitable and affordable tax.
“There are also many examples of cascading taxes where a tax paid at one point in the process of bringing a new home to market forms part of the taxable value at a subsequent stage of development further eroding affordability.
“With the Federal Budget just around the corner, HIA believes the opportunity needs to be now for the Federal Government to enter into frank discussions with the states and territories around tax reforms for home building. Addressing the way the industry and home buyers are taxed is key to bringing the problem of housing affordability under control,” concluded Ms Martin.
HIA has been calling loudly on the State Government to release more land for new housing, as it is a fundamental element in delivering new homes and supporting housing affordability.
Are you aware of the first home owners grant has been increased until 2026? Did you know grants are also available for existing homeowners when building new homes? Find out the latest on the HomeGrown Territory grant and FreshStart New Homes grant today.
“Victoria is behind Queensland, Western Australia and South Australia in HIA’s latest Housing Scorecard, reflecting a dramatic change in fortunes over the last five years,” stated HIA Executive Director Victoria, Keith Ryan.
This year’s State Budget has largely missed the opportunity to improve the environment for home building and contains negligible measures to increase housing supply, address housing affordability and lower the costs facing new home builders.