"They are completely out of control. Over in the property section of the Fin Review, a report by the Centre for International Economics, commissioned by the Housing Industry Association, shows that taxes make up between 36 per cent and 44 per cent of the price of a new home. Seriously.
So there you go. House prices are not unaffordable because interest rates are too high. They are unaffordable because you have leeches at every level of government trying to get their share of blood from the homeowner.
The article cites an example of a young Sydney-based couple with a $612,000 house and a 10 per cent deposit. In such an example, the tax component of the purchase price would consume half their mortgage repayments.
The study points out that nearly all the burden of the taxes fall on the homebuyer. Land bankers, developers and builders only absorbed between 2 per cent and 6 per cent of the tax burden.
There are a few reasons why governments will likely do very little about this massive rort. Firstly, the property gravy train provides them with too much money. A separate report released yesterday revealed the property industry provided the Victorian State government $5.4 billion in taxes in 2009/10. That's nearly 40 per cent of the State's total tax revenue.
And if governments seriously attempted to reform the property tax system, you would see prices drop. Falling house prices and winning elections don't usually mix"....................................................... article continues !
