Tax reform the key to unlocking new housing supply, says industry body
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Photo by Mikhail Nilov
Tax reform is crucial to making housing projects financially viable and increasing supply for NSW families, according to the Housing Industry Association (HIA).
Brad Armitage, HIA Executive Director NSW, praised recent government efforts to speed up building approvals but warned this alone wouldn’t guarantee construction.
“The NSW government has made some excellent progress towards speeding up building approvals, but an approval alone doesn’t guarantee the building will be built,” Mr Armitage said.
He highlighted that many already-approved developments in Greater Sydney face economic challenges.
“Many already-approved projects in Greater Sydney will cost more to deliver than how much the apartments can be sold for,” he said.
Ahead of the upcoming NSW Budget, the HIA is urging Treasurer Daniel Mookhey to implement targeted tax reforms to boost housing supply.
Mr Armitage pointed to a paradoxical situation where governments rely heavily on housing-related revenue but impose tax rates so high they prevent development.
“All levels of government are so reliant on the revenue generated through housing that they are hesitant to make a bold move. The perverse outcome though is that the tax is so high, the houses don’t get built then government doesn’t get any revenue,” he said.
He noted that housing faces a disproportionate tax burden compared to other essential goods.
“Housing is a heavily taxed good in the economy, only after the ‘sin taxes’ of alcohol and tobacco, even though it is considered an essential commodity, on par with food and water,” Mr Armitage said.
While acknowledging recent changes to workers’ compensation in NSW would help reduce construction costs, the HIA is advocating for additional reforms.
“HIA supports that intent, but we also have a raft of other recommended reforms that could put downward pressure on the cost of new housing,” he said.
The industry body has proposed several specific tax reforms, including a full stamp duty exemption for first home buyers purchasing newly constructed properties.
Other recommendations include removing foreign investor surcharges on stamp duty and land tax for off-the-plan sales, reducing local infrastructure contributions, and lifting the small business payroll tax exemption threshold.
Mr Armitage emphasised the urgency of action from both state and local governments.
“Property taxation sits within the remit of State and Local Government. We therefore need bold tax reform from both levels of government to boost housing, and we need it now,” he said.