Government fees swallow chunk of new-home costs
VICTORIANS desperate to break into the property market are handing over up to a third of the new-home purchase price to government bodies.
The results of a four-year study, to be released on Monday, shines a light on the costs eaten up by local, state and federal government charges.
The study by the Victorian division of the Urban Development Institute of Australia found 19-34 per cent of a home purchase price was government taxes and levies.
It has prompted calls for reform and tax breaks.
UDIA Victoria chief executive Danni Hunter said the findings exposed how much levies such as stamp duty, GST and statutory fees added to the cost of new housing.
“We’ve found that government charges can amount to a whopping one third of the purchase price of a new home or block of land in Victoria,” she said. “The large upfront cost then sits in the homebuyer’s mortgage, accumulating interest which adds even more.’’
A single parent buying a block of land in Melbourne’s growth areas for $200,000 would hand over about $62,000, or 29 per cent of the purchase price, in government taxes and charges.
A couple buying land in the same area for $315,000 would pay $106,000 which is 34 per cent of the purchase price.
Ms Hunter warned these were conservative figures and did not include all taxes and charges. She said there had never been a better time “to get real about the high cost of housing’’ and make “radical change’’ to the tax system.
“What we should explore is targeted tax adjustments and a radical approach to cutting planning and development approval red tape,’’ she said.
Ms Hunter said it would reduce the total cost to homebuyers and get more people into the housing market.
The report called for a moratorium on new taxes, found home buyers paid more in government than developer fees and said foreign buyers copped about 40 per cent more in charges.