Rising taxes and fees making new builds costly for Victorian homebuyers
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Victorian families looking to build a new home are facing steep taxes and government fees totalling an average of $373,000, significantly impacting affordability and pushing buyers towards existing properties instead.
Recent data commissioned by the Housing Industry Association (HIA) highlights that for a typical new four-bedroom, two-bathroom home priced around $866,000, approximately 43% of the cost—about $373,000—is going directly to government taxes, fees, and regulatory requirements. This represents an alarming increase from 37% just six years ago.
The extensive charges are driven by regulatory costs ($154,000), statutory taxes ($193,000), and infrastructure contributions ($27,000), placing a considerable financial burden on buyers aiming to achieve homeownership through new builds.
Tim Reardon, HIA Chief Economist, emphasised the severity of the situation, describing the increasing charges as turning traditional “house and land packages” into “house and tax packages.”
“Taxes and charges on new homes have more than doubled without a corresponding increase in housing supply, clearly showing that governments cannot solve the housing crisis by taxing homebuilders,” Reardon said.
This issue is further compounded by rising construction costs and the lengthy process of obtaining regulatory approvals, driving up expenses even before construction begins. According to lending data analysed by money.com.au, the costs associated with building new properties now result in a “new build premium,” making it significantly pricier to buy new rather than existing homes.
Victorian buyers currently face a premium of around $11,000 for new properties compared to established homes, with average new home loans reaching approximately $641,882.
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Property expert Mansour Soltani warned that such high costs could discourage homebuyers from pursuing new construction altogether.
“At a certain point, the costs of building new become unfeasible, and buyers naturally turn their attention to existing homes,” Soltani explained. He also noted that the increasing expenses may lead homeowners to expect to recover the higher costs when selling, potentially widening the gap in property prices.
Industry experts suggest that government action to reduce red tape and taxes could help alleviate these financial pressures, ultimately making homeownership more accessible for Victorian families.