Government taxes, fees, and charges now make up up to half the cost of a new home and land package in Australia, significantly impacting residential mortgage lending.

Research by the Centre for International Economics reveals that in Sydney, taxes and charges account for $576,000 on an average new home and land package.

Over the past five years, the value of taxes on new builds in Sydney has increased by 38%, while Brisbane has seen an even steeper rise of 106%.

This growing tax burden is contributing to Australia’s ongoing housing shortage, as noted by HIA Chief Economist Tim Reardon.

He argues that these taxes are impeding industry productivity and driving up the overall cost of new homes.

“When up to half the cost of a new home is made up of taxes and charges, buyers can end up spending up to 15 years of a 30-year mortgage just paying off these government levies,” Reardon says.

The analysis shows that 49% of the cost of a new house and land in Sydney is comprised of taxes, with Melbourne at 43%, Brisbane at 41%, Adelaide and Hobart at 37%, and Perth at 36%.

Reardon advocates for the removal of government taxes and red tape to allow the housing industry to better meet demand.

For those in the residential mortgage lending space, these figures underscore the growing challenge for homebuyers, who are increasingly burdened by taxes that extend the length of time needed to pay off their mortgage.