The taxes on new housing developments cost property owners much more each month than an interest rate rise. The Residential Development Council estimates state taxes make up more than a third of the purchase price of a new house. The impost is being blamed for creating a housing affordability gap. Council executive director Ross Elliott said taxes cost the home owner between $360 and $1445 a month. In comparison, an interest rate rise of 0.25 percentage points - the figure often adopted by the Reserve Bank when it increased rates - would add about $60 a month to the average home loan.

Most housing and property taxes are levied by the states. While the Federal Government's goods and services tax is charged on new housing developments, the funds are ultimately channelled back to the states. "The established housing market is not taxed anywhere near the same degree as the new housing market," Mr Elliott said. "It means that a small section of the community is bearing a historically high share of the tax and compliance burden that benefits the whole community." On a new house the tax could account for up to 35 per cent of the overall price. On a unit, it could be as high as 28 per cent. The council's research found the tax costs had risen by up to 600 per cent in some boom areas, particularly southeast Queensland. Mr Elliott said the impost was ultimately passed on by developers to the new buyers.

The rising impost included land taxes and stamp duty which had increased in line with the soaring cost of land. And some councils and state governments had introduced infrastructure levies. "Federal, state and local government taxes are the second largest cost faced by new homebuyers," Mr Elliott said. The recently renewed Building Code, which required sound and energy efficiency ratings, had also been blamed for some of the price hikes. As well, red tape was hindering some housing developments. The government has received a report into red tape across the economy which focused on small business. The Prime Minister's office is considering the findings but is yet to release it publicly.

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