Being mindful of hidden costs of your mortgage

HIDDEN costs and regulatory creep are driving up house prices and the cost of living according to a new report commissioned by Master Builders Australia.

Master Builders Australia chief executive officer Denita Wawn said surging house prices are stretching household budgets and placing more families under mortgage stress.

A new independent economic study by Cadence Economics and commissioned by Master Builders confirms hidden land costs and red tape are major factors in rising house prices and increased cost of living.

“It means that new home buyers are actually paying more for land than they are spending on building their new home,” Ms Wawn said.

“The same constraints have prevented the supply of new homes keeping up with demand over the past decade,” she said.

“Previous analysis by Master Builders has shown that increased infrastructure investment outlined in the Federal Budget could result in an additional 93,000 new homes by 2021, which would go a long way to closing the gap with the Government’s estimated housing shortfall of 100,000 dwellings.

“Now this new report shows that removing regulatory constraints at the state and territory level will be essential to unlocking this new supply.”

Importantly, the report highlights that these problems exist in all states and territories despite the different market conditions that prevail in each jurisdiction and the benefits to these communities if the recommendations are implemented.

In particular, the report supports the Governments intentions to place conditions on housing related funding to the State/Territory Governments, and backs calls to set benchmarks in terms of additional housing supply — specifically for affordable housing.

“Master Builders is calling for reforms to unlock the supply of more new homes,” Ms Wawn said.

“We want action to be taken now to preserve home ownership as a mainstay of Australian life.”