Industry confidence steady, but tax worries rise among property professionals
Concerns about property taxes have reached unprecedented levels within Australia’s property sector, according to the latest Procore/Property Council survey.
The quarterly survey, which canvassed 935 Property Council members, found that overall industry confidence remained at an index of 124 for the September quarter, with 100 representing a neutral outlook.
Housing supply and affordability continue to be the most significant national issues, cited by 32% of respondents. However, attention to national tax reform has increased sharply, with 22% now identifying it as a priority – up 10 percentage points over the past year and the highest figure since the survey began tracking the issue in September 2019.
At the state level, 32% of participants identified property taxes and charges as the leading concern for state governments, surpassing the historical average by 11 percentage points and setting a new record. This has overtaken housing supply and affordability, which was named by 29% of respondents. The trend was most pronounced in Victoria, where 63% of those surveyed considered property taxes the top issue for the state government.
For Property Council chief executive Mike Zorbas (pictured top), while tax reform has been discussed through the Economic Reform Roundtable, the current approach to taxing new homes requires change.
“New home buyers are being slugged with a shocking tax burden,” he said. “Thirty percent of a new home’s purchase price goes in government taxes, only a fraction of which end up as community infrastructure. Add the extra taxes on institutional investment in apartments, build-to-rent, student accommodation and retirement living, and it almost looks like state governments don’t want new homes to be built.
“Our planning assessment systems remain imperfect, with 21 percent of respondents identifying them as the top issue for state governments. While many governments are rightly focusing on assessment reforms to boost housing supply, taxes on property are high and rising in states like Victoria. That means less investment in homes, commercial, retail and industrial assets that make people’s lives better.”
Expectations for residential house price growth remain elevated, with an index score of 62.1 – well above the long-term average of 15.9 and the highest since June 2021. The index for housing construction expectations has also risen, reaching 39, its highest point since December 2021 and exceeding the long-term average of 22.9.
Zorbas noted that while there is some optimism for the residential sector, further action is required.
“The National Housing Accord has spurred a large effort from governments to boost housing supply, and that should be welcomed,” he said. “However, the reality is that we are behind our targets and without more effort, we won’t bridge that gap.”
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