The numbers are in. Now the question is whether anyone in power will act on them.

Next time one of your clients complains about the cost of their new build, tell them this: nearly half of what they are paying has nothing to do with you.

Not your trades. Not your materials. Not the margin you need to keep the doors open.

It is tax. And the data to prove it has never been clearer.

The number your clients need to see

The Housing Industry Association commissioned a detailed economic study through the Centre for International Economics earlier this year. The findings are the kind of thing worth having on your phone.

On a median Sydney new house and land package, currently priced around $1.175 million, the breakdown looks like this:

Government charges account for $576,000. That is 49 per cent of the total price. The remaining $599,000 covers everything else: the land, the build, materials, labour, trades, and margin.

Nearly half the cost of a new Sydney home is government. Stamp duty. GST. Infrastructure contributions. Developer levies. Council charges. Regulatory compliance. Land tax.

The picture is similar in every capital city. Melbourne sits at 43 per cent. Brisbane at 41 per cent. Perth and Adelaide, the cities most often described as affordable, are at 36 and 37 per cent respectively.

But the number that should really land is this: across most of those cities, the government share has roughly doubled in the past five years. In Brisbane, that component has increased by 106 per cent since 2019. In Melbourne, the government portion has risen by around $157,000 per home. That is more than fifteen times the value of the first home buyer grant a young family can still access today.

HIA chief economist Tim Reardon has suggested the product should be renamed. Not a house and land package. A house and tax package.

He is not wrong.

The 10 per cent question

Set aside the politics for a moment and ask a single practical question: what would it actually take to make a new home 10 per cent cheaper?

For a Sydney buyer, that is $117,000 off the price. In Melbourne, around $87,000. In Brisbane, roughly $90,000.

That kind of reduction is not a rounding error. It is the difference between a young couple signing a contract and walking back out the door because their borrowing capacity falls short.

There are at least five realistic ways to get there.

Option one: cut the charges

A 20 per cent reduction in government charges would deliver approximately 10 per cent off the total price of a new home. That is not an act of radical reform. It is roughly equivalent to returning charges to where they sat in 2019. Not 1990. Not some distant past. Five years ago.

Governments are understandably reluctant to give up the revenue. But the framing matters. This is not a giveaway. It is a correction.

Option two: three targeted cuts

Remove stamp duty on new builds and a buyer saves around $55,000. Take GST off new home construction and that figure rises by another $50,000. Halve developer and council infrastructure charges and there is a further $45,000 reduction.

Any two of those three measures clears the 10 per cent target. All three would deliver a saving of nearly 13 per cent.

None of these changes require new funding. They require governments to agree that the current settings are producing the wrong outcome.

Option three: fix the approvals

This one does not require anyone to cut a dollar of revenue.

HIA research shows the average subdivision approval now takes more than twelve months to process. Of that time, roughly seven months are classified as unnecessary delay. Seven months of holding costs on development finance. Seven months of materials cost movement while waiting on a signature.

That delay alone adds approximately 4 per cent to the final price of a home. Around $47,000 per house. For nothing delivered in return.

Fixing the approvals process is not a tax cut. It is government doing the job properly. And it gets you almost halfway to the 10 per cent target without touching a single revenue line.

Option four: build differently

Prefabricated wall panels, modular sections, panelised floor systems and factory-built trusses have existed for decades. Australian construction has been slow to adopt them at scale, partly because the Building Code has not kept up with the technology and partly because the industry has lacked strong incentives to change.

The opportunity is real. A meaningful shift toward modern construction methods could reduce build times significantly, take pressure off an already stretched trades workforce, and deliver savings of 15 to 20 per cent on the build component alone. On a Sydney package, that is another $80,000 or more off the price.

This one sits with the industry as much as with government. It does not require a policy announcement. It requires builders, manufacturers and certifiers to move together.

Option five: a combination approach

The most realistic path is not one dramatic lever. It is four modest ones.

Stamp duty reform, not full abolition, could save around $45,000. Faster approvals would remove roughly $30,000 in unnecessary holding costs. A trim to infrastructure charges could take off another $25,000. Efficiency improvements in the build itself could deliver $20,000 more.

Combined, that is a saving of approximately $120,000 per home. A 10.2 per cent reduction. Achieved without any single government or industry body having to do anything heroic.

The funding question, answered

A common objection is that cutting charges means cutting services. Roads, schools, hospitals still need to be paid for.

Two things are worth understanding here.

First, faster approvals and better building methods do not cost the government a cent. They are operational improvements. Fix the approval pipeline and modernise how we build, and you can get within striking distance of the 10 per cent target before any tax policy is touched at all.

Second, stamp duty is widely acknowledged as one of the worst-designed taxes in the country. Every serious review of the Australian tax system over the past three decades, from the Henry Tax Review to the Productivity Commission to the Grattan Institute, has said so. It falls entirely on new buyers, which means it lands hardest on the people with the least financial buffer. It discourages mobility in the housing market. And it creates volatile, unpredictable revenue for state budgets.

The alternative, a modest annual land tax applied to all residential land, is already being phased in by the ACT. It spreads the load across all landowners rather than concentrating it on young buyers at the moment they can least afford it. It is more stable, more equitable, and better designed. Whether it is the right answer for every state is a conversation worth having. But the case for leaving stamp duty untouched grows weaker every year.

What this means for builders

The affordability problem in Australia is not a mystery. The contributors are known. The reform options are documented. The modelling has been done.

What is missing is the pressure to act.

Builders are in a better position than most to apply that pressure. When clients query cost, showing them where the money actually goes changes the conversation. It shifts the narrative away from margin and toward policy. That is a useful shift.

It is also worth knowing which of these arguments to make to whom. Faster approvals is a conversation for local and state government. GST and federal levy reform is a federal conversation. Building methods is an industry conversation. Each lever has a different owner.

The industry knows what the fix looks like. Economists have confirmed the numbers. The Reserve Bank has weighed in on housing costs repeatedly. The political will to act tends to appear when enough voices make the status quo harder to defend than the alternative.

That is where builders, trades and industry bodies have real leverage. Not in accepting the current settings, but in making clear that they no longer add up.

Author: TGB Editorial