Property

Building costs, not interest rates, are killing housing affordability

Published

6 months ago

May 26, 2025

Terry Ryder

Terry Ryder exposes how government taxes, red tape, and soaring construction costs—not “greedy developers” or interest rates—are the real culprits behind Australia’s worsening housing crisis.

The real barrier to fixing the housing crisis

The single biggest issue preventing solutions to the housing shortage in Australia at the moment is the incredibly high cost of building new dwellings.

It is also what is having the biggest impact on housing affordability, not high interest rates as some would have you believe.

Nearing a million-dollar price tag

The official data shows that the median price for home sites in capital cities is now around $420,000, and the average cost of building a new house is $530,000.

That means it’s getting close to a million dollars to create a new house and land package in our capital cities.

Not just about “greedy developers”

Despite what some suggest these high costs are not all as a result of “greedy developers” trying to screw every last dollar out of hapless buyers.

The Housing Industry Association (HIA) has released some interesting data which shows that government fees and account for about half the cost of a new house and land package in cities like Sydney.

That effectively means about 15 years of loan repayments (on a 30-year loan) go toward paying off that portion of cost of a home.

Industry survey reveals key obstacles

The Residential Property Survey, published each quarter by National Australia Bank, asked industry professionals what the barriers were preventing the construction of new housing, amid the worst housing crisis in the nation’s history.

Almost three-quarters (71%) of respondents said that construction costs were the main hurdle to starting new housing developments.

When you understand that between 40% and 50% of the cost of creating a new dwelling is taxes, fees and charges at all three levels of government, you realise that government is the single biggest cause of the hideously high cost of building new homes.

Red tape and falling productivity

Adding to that is the red tape that causes delays in building new homes. In the NAB survey, 62% of respondents said delays in achieving approvals to build homes was a major issue preventing new housing supply being achieved.

A report from the Productivity Commission found that the residential construction industry is half as productive today as it was 30 years ago. That means we were building homes twice as fast in the 1990s compared to now. And the report blamed bureaucracy as the biggest factor.

More pressure on prices and rents

Other smaller issues affecting supply according to the survey are a shortage of tradespeople, lack of development sites and high interest rates.

The ongoing shortages of homes – which will continue for the foreseeable future – means that there will be upward pressures on prices and rents for years to come.

Terry Ryder is the Founder of Hotspotting and Host of The Property Playbook on Ticker.

Related Topics:the property playbook article

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Property

Investors discover 25 top house markets for growth

New report reveals 25 Australian suburbs offering strong rental growth, affordability, and investment potential

Published

2 weeks ago

November 3, 2025

Ahron Young

New report reveals 25 Australian suburbs offering strong rental growth, affordability, and investment potential

In Short:
– New research identifies 25 Australian house markets offering affordability, yield, and growth for investors.
– Strong local economies and infrastructure investments drive demand in these markets, ensuring long-term capital growth.

As rental markets tighten across Australia, new research identifies 25 house markets where investors find a strong match of affordability, yield, and growth.

The latest Pulse report by Washington Brown and Hotspotting highlights suburbs outperforming national trends, offering sustainable investment opportunities.

The list includes regions from New South Wales, the Northern Territory, Queensland, Tasmania, and Victoria.

These selections are based on solid fundamentals, including strong local economies, infrastructure investments, and low vacancy rates, according to Hotspotting General Manager Tim Graham.

The report emphasises the potential for cashflow-positive outcomes without sacrificing long-term capital growth.

“These are not speculative picks,” Hotspotting General Manager Tim Graham said.

“They’re backed by real fundamentals, including strong local economies, infrastructure investment, and low vacancy rates.

“We’re identifying locations where investors can achieve cashflow-positive outcomes without sacrificing long-term capital growth.”

Strong Markets

Examples include Park Avenue in Rockhampton, which experienced a 29.1% annual price increase, and Lismore in New South Wales, surging 26.8% despite flood recovery efforts. Washington Brown Director Tyron Hyde notes that these markets are resilient and attract strategic investors focused on long-term growth rather than short-term returns.

“These markets are resilient, affordable, and on the move,” Mr Hyde said.

“They’re attracting investors who are thinking strategically and not just chasing short-term returns, which is always a bad idea.”

Regions like Victoria’s Red Cliffs and Mooroopna, as well as Northern Territory’s Moulden and Rosebery and Tasmania’s Ravenswood, signify a shift towards regional centres with increasing demand and infrastructure development.

Property

Why government policies keep driving property prices higher

“New book reveals politicians’ policies inflate property values, making homes less affordable; insights for buyers from Terry Ryder.”

Published

1 month ago

October 4, 2025

Ahron Young

“New book reveals politicians’ policies inflate property values, making homes less affordable; insights for buyers from Terry Ryder.”

Politicians often speak about housing affordability, but a new book reveals how their policies are in fact fuelling higher property values and making homes less affordable. Terry Ryder from Hotspotting joins to discuss his new book Why Property Values Rise.

We explore what politicians really want when it comes to property prices, how location myths mislead buyers, and why luxury features like pools or prestige suburbs aren’t what really drive value.

Ryder also explains how constant change shapes the housing market, what myths investors should ignore, and the key insights every buyer needs to know.

Property

The hidden costs driving Australia’s housing crisis

Published

2 months ago

September 12, 2025

ticker NEWS, Terry Ryder

The biggest single problem causing Australia’s housing crisis is the cost of creating new dwellings.

The cost of the standard city house-and-land package is now $950,000 and is getting scarily close to $1 million for a newly constructed house in our capital cities.

Governments of all levels and persuasions tell us constantly that they desperately want to improve housing affordability, but what few of them shout about as loudly is that about 40% of the cost of new housing is made up of government taxes, fees and charges.

It seems incongruous that when cost is the biggest factor preventing new dwellings from being built, governments, which promise they are working on solutions, are doing nothing to ease the tax burden.

Builders and developers cannot deliver their normal products because the cost of construction is prohibitively high.

Earlier this year, the Productivity Commission revealed that government interference and bureaucracy had massively reduced productivity in the building industry.

Delays double the timeline

It now takes twice as long to deliver a new home compared to the 1990s.

This alone added considerable cost to new homes to the point where it is often no longer financially viable to build.

Recent analysis by the National Australia Bank confirms this. Its quarterly Residential Property Survey found that high construction costs and delays in getting approvals are by far the biggest barriers to producing new homes across Australia.

While much of the media would have us believe that interest rates are a big barrier, that was not the case, with very few of the survey respondents nominating that or tight finance as an issue.

It doesn’t matter how many new homes the Federal Government says it will build: until the issues of bureaucratic delays, high property taxes and the overall cost of construction are dealt with, building targets will not be met and the shortage will remain.