There are many reasons why housing is so expensive in Australia, but there’s one major reason that overrides all the others. Politicians keep adding to the cost. Housing is ridiculously expensive in this country and it keeps getting more so because all three levels of government treat the Housing Industry as a cash cow. They love to milk the Housing Industry for revenue and they’re Adept at finding new and innovative ways to create new taxes, fees and charges or increase the existing ones.
Politicians think they can do this with little electoral risk because as they see it they’re slugging property developers, builders and investors with tax hikes and nobody cares about them, right ?
The reality is that ultimately it’s home buyers who pay, including first home buyers. If a state government implements a new policy that adds $50,000 to the cost of building a new house on a block of land the end price Rises accordingly or the builder goes broke. Whether it’s changing the building code, or adding to safety features, or improving energy efficiency, or making homes more accessible to more people all this tinkering collectively adds massively to the cost of new dwellings.
Recent design changes mandated in Queensland and New South Wales have added around $40,000 to the cost of building the average new house in those States. It’s the consumer who pays that considerable increase and it’s the politicians they elect who are to blame.
The irony is that politicians love to stand up in front of a crowd or press conference and declare how much they care about the housing affordability problem but everything they do makes it worse.
Now here’s just one example of how a government organization given the responsibility of contributing to the solution to the national housing shortage crisis decided instead to use the opportunity to milk more tax revenue from the housing industry and to hell with the consequences.
This was Brisbane City Council, one of the largest local authorities in Australia controlling a huge chunk of the greater Brisbane metropolitan area. The council which has a notable track record of
milking the property industry for extra revenue has just hit owners and builders of certain types of accommodation with rate increases of up to 200 percent. Brisbane Council also recently did a similar thing with property owners who use short-term letting options like Airbnb by doubling their rates. Their claim was that they are doing this to “relieve the rental shortage crisis” even though an independent study by the University of Queensland (and indeed by anyone who has any sense) has found that short-term letting activity is not the cause of their (or any other) rental shortages. This was just another cash grab by an unethical council. But they are only one amongst many at all levels of government across Australia who keep adding to the costs of creating dwellings thereby pushing up prices and rents.
In Australia, when we’re looking for scapegoats we always blame the wrong people. Property investors and developers are popular targets frequently demonized by media and politicians but usually it’s the politicians who are creating and exacerbating the worst of our problems in the property industry, and it’s property investors and builders who create and build the bulk of Australia’s housing supply.
There are multiple factors contributing to the high cost of housing in Australia, but one dominant factor stands out above the rest: politicians continually drive up the fees and costs. Housing in this country has become exorbitantly expensive, and this trend continues because all levels of government view the housing industry as a lucrative source of revenue. They eagerly capitalize on the housing sector by devising new taxes, fees, charges, or increasing existing ones, constantly seeking innovative ways to do so, often in the name of “easing the housing shortage” or “relieving the rental crisis”. It’s really complete nonsense.
Politicians believe they can impose these financial burdens on property developers, builders, and investors without much electoral risk, assuming that these groups don’t engender much sympathy. They’re easy targets. However, the reality is that it’s ultimately the homebuyers, including first-time buyers, who bear the brunt of these costs. When a state government enacts policies that add, say, $50,000 to the cost of constructing a new house on a piece of land, the final price naturally rises accordingly or the builder goes out of business. Whether it involves alterations to building codes, enhancements in safety features, improvements in energy efficiency, or increased accessibility, all these changes collectively contribute significantly to the cost of new residences.
Recent mandated design changes in Queensland and New South Wales, for instance, have added around $40,000 to the cost of building the average new house in those states. The consumer ultimately pays this substantial increase, and the politicians they elect are responsible.
Ironically, politicians often make grandiose statements about their concern for the housing affordability issue, but their actions consistently exacerbate the problem. Here’s an example of a government organization tasked with addressing the national housing shortage crisis, but instead, they exploit the opportunity to generate more tax revenue from the housing industry, disregarding the consequences.
In this case, we’re talking about the Brisbane City Council, one of the largest local authorities in Australia, overseeing a significant portion of the greater Brisbane metropolitan area. The council, known for its history of extracting additional revenue from the property industry, recently imposed rate increases of up to 200 percent on certain types of accommodations owned by builders and property owners. They had previously doubled the rates for property owners who used short-term letting options like Airbnb, claiming it was to alleviate the rental shortage crisis, despite an independent study by the University of Queensland revealing that short-term letting activity was not the cause of the rental shortages. This action was merely another opportunistic revenue grab by an unscrupulous council. Unfortunately, they are not alone; many government entities at all levels across Australia continually contribute to the rising costs of housing, thus driving up prices and rents.
Regrettably, in Australia, when we seek scapegoats for our problems, we often point fingers at the wrong individuals. Property investors and developers are frequently vilified targets, demonized by both the media and politicians, when in reality, it is often the politicians themselves who create and exacerbate the most pressing issues in the property industry.