Tax policies burden NSW housing industry, expert says

By Gerv Tacadena

Regulations and taxes implemented in New South Wales over the past 18 months remain a big burden to the housing market.

Regulations and taxes implemented in New South Wales over the past 18 months remain a big burden to the housing market, an industry watcher said.

Around 43% of the cost of a new house and land package is composed of taxes, charges, and levies from the state government, said David Bare, executive director of the Housing Industry Association (HIA).

He cited several regulations, both proposed and implemented, that continue to have a negative impact on housing affordability and supply. These include removing caps on Section 94 development contributions, which adds up to $40,000 per dwelling, and increasing the BASIX energy efficiency targets, which boosts costs per dwelling by an average of $10,000 per year.

Bare also cited these policies:  

  • Delaying the start of the medium density housing code to deal with Sydney’s “missing middle” for terrace and low-rise medium-density housing projects
  • Introducing a 2% defect bond and an additional double-barrel inspection regime for strata developments that Bare said would be ineffectual and add to the cost of all new strata projects and
  • Proposing a Greater Macarthur state infrastructure contribution (SIC) of $40,000 per dwelling, along with new SIC levies in the Hunter.

He said these regulations can boost the cost of each dwelling by an additional $90,000.

"There are many things our state politicians can consider to help housing supply and affordability that don’t require drastic structural change," he said.

One solution is for the NSW Productivity Commissioner to undertake a thorough review of the regulatory burden and costs to the residential sector. These efforts will reduce red tape, increase productivity, and eventually improve housing affordability, Bare said.

"All new legislation and regulation impacting the housing sector should be subject to a thorough public regulatory impact assessment. More needs to be done now, politicians need to get serious and focus on real changes that will make a real difference to the cost of new homes in NSW," Bare said.

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