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The hidden cost of housing


UDIA Victoria’s The Hidden Cost of Housing research highlights how much of a new home purchase price is attributable to Commonwealth, State and Local Government taxes, charges and levies.

Click here to access the research report: 
The Hidden Cost of Housing
Click here to read our media release: 
Government taxes and charges equal one-third of new homebuyer costs

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Key findings 

- The research shows that government charges cost up to 34% of a local homebuyer's purchase price of a new residential lot or dwelling, depending on the circumstances of the homebuyer and the property they are buying.

- Taking interest costs into account, the research finds that the large up-front cost impost then sits in the homebuyer’s mortgage, adding significantly to the length and cost of their mortgage. 
 
- In all examined cases, the total cost of government taxes, charges and levies on homebuyers is higher than the developer’s profit – a finding that disproves the view that home prices are high because developer profit margins are high.
 
- Foreign homebuyers pay up to 40% more in taxes and charges than domestic homebuyers in the examined scenarios. This is an issue particularly if the foreign buyer later sells to a domestic purchaser at a price that reflect the higher price they paid.
 
- The approach in this report has been deliberately conservative with several taxes and charges excluded. The cost to buyers and pressure on development feasibility is therefore expected to be much higher in many circumstances.
 
- In conclusion, government taxes and charges have a real impact on the cost of housing in Victoria.


On behalf of UDIA Victoria's members and homebuyers, we're using this research to: 
 
- Shine a light on how much Commonwealth, State and Local Government taxes, charges and levies contribute to the cost of new housing in Victoria.

- Demonstrate the need for a co-ordinated, whole-of-government approach to ensure taxes and charges do not accumulate to reach unsustainable levels for homebuyers.
 
- Humanise the impact of taxes and charges by showing them through the eyes of a range of buyer profiles representing a cross-section of Victoria's homebuyers.
 
- Inform homebuyers about these costs so collectively we can hold government accountable on how taxes and charges are spent, and if they increase.

- Disprove the view that home prices are high because developer profit margins are high, and show that industry cannot absorb higher charges.
 
- Bolster UDIA Victoria’s calls for tax reform, a moratorium on new taxes and charges, and a radical approach to cutting planning and development approval red tape. 
 

Click here to access the research report: 
The Hidden Cost of Housing