A new report maintains that two new property taxes recently imposed by the NSW government will render major housing developments in Sydney’s west financially unviable.
The “Release the Pressure” report by the Property Council of Australia and Savills indicated that the projected rates of return are too low for banks to fund and for developers to build the desperately needed homes.
Katie Stevenson (pictured above), Property Council NSW executive director, expressed serious concerns about the new taxes’ impact.
“The NSW government’s ever-increasing tax agenda is crippling our industry’s ability to build new homes,” Stevenson said.
She highlighted the irony of the government declaring a housing crisis while introducing costs that she said make new developments unfeasible.
“Without a change, there’s no question the state will fail to deliver its 377,000 new home goal under the National Housing Accord. In fact, it’s best described as an ‘own goal’,” Stevenson said.
The modelling within the report found that typical housing developments, including a 250-unit apartment project and a 115-lot greenfield development, would no longer be financially feasible by 2024.
The situation is expected to worsen by 2026 due to planned increases in Sydney Water DSP and HPC charges. These charges, part of 15 separate levies and taxes on new housing, are set to constitute up to a third of the cost of a new home in some areas by 2026.
The report suggests immediate action to mitigate these challenges.
“The good news is if the NSW government suspends these two new charges and also introduces faster approvals, the industry could deliver an additional 190,000 new homes in Sydney over the next five years,” Stevenson said.
Furthermore, Savills’ Stephanie Ballango stressed the need for the government to halt increasing costs and reduce approval timeframes to meet housing targets.
“These additional charges could accurately be described as the straws that are breaking the industry’s back,” Ballango said.
The Property Council-Savills report called for a moratorium on new taxes and charges over the Accord period, a suspension of specific charges, and a six-month reduction in planning approval times for new projects.
“A moratorium on new taxes and charges will give industry more confidence that the goal posts on our ambitious housing agenda won’t shift mid-game,” Stevenson said.
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