There are calls for the GST to be frozen on housing construction while the nation pursues the Albanese government’s 1.2 million new homes by 2029 goal. Picture: NewsWire / Martin Ollman.
The Albanese government reaped north of $8.6bn from the nation’s home building boom last year, even as the country struggled to hit critical housing affordability goals.
Australians spent a record $95.482bn on building costs in 2025, according to new Australian Bureau of Statistics data — with Victorians shelling out a whopping $29bn worth of that sum alone.
But building industry experts have called on the government to review their taxation of the housing sector, with up to $8.68bn of the nation’s unprecedented spend in 2025 believed to be going towards GST payments for what is an “essential item”.
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It has potentially cost the nation thousands of new homes as it tries to build its way out of a housing affordability crisis.
With homebuyers also incurring costs from stamp duty, as well as likely having their land costs inflated by land tax and other government-linked holdings costs the Housing Industry Association has said change is needed if the nation is to hit its home building targets.
Australia is most of the way through its second year of a five-year timeline intended to establish 1.2 million new homes around the nation under the National Housing Accord, spearheaded by the Albanese government.
It ended the first year about 60,000 homes short of the 240,000 needed per annum to reach the goal.
GST has been branded a barrier to building homes in Australia, with scope that at least 8600 could have been built from tax payments made last year.
Latest ABS data shows Victoria covered more than $29.3bn worth of the payments for trades, materials and associated construction costs for work done on new residences from apartments to houses.
With most of that money ultimately paid by homebuyers, it would also mean they were hit with the nation’s biggest GST bill for housing — an unprecedented $2.665bn.
NSW was next with a $27.432bn outlay, followed by Queensland which topped the $20bn mark for the first time in the state’s history.
South Australia and Perth both notched roughly a billion extra dollars at $6bn and $9.44bn respectively, while Tasmanians’ $1.029bn spent was slightly lower than a year ago.
Homebuyers in most Aussie states are funding billions of dollars in building work — and GST payments.
The figures were tallied from the latest release of the ABS’s Construction Work Done data analysis, which covers building activity on works above $10,000 and uses builder surveys to estimate paid costs.
GST calculations were completed using the government’s Moneysmart calculator.
Housing Industry Association chief economist Tim Reardon said assuming even a $1m cost for a house and land package meant, an $8.68bn GST bill nationally could have built about 8680 new houses.
Alternatively, it could equate to more than 17,000 affordable homes with a total cost of $500,000.
HIA chief economist Tim Reardon believes housing construction should not include GST costs. Picture: Tertius Pickard.
“Housing is an essential item, like food, and therefore should not include the GST,” Mr Reardon said.
“And at the very least, not until we reach the 1.2 million homes goal.
“The quickest way to lower the cost of developing new housing is to remove the cost of GST.”
Oxford Economics senior economist Michael Dyer said while some of the increase in home construction spending in the past year would relate to “growth in costs on the labour side”, bigger and higher quality homes being built could also be a factor.
Mr Dyer pointed to part of the rise for Queensland being a wave of $2m apartment builds appearing in luxury projects on the Gold Coast.
Highrise construction of new apartments on the Gold Coast and build-to-rent complexes in Victoria are likely to have helped set a record spend for housing construction in 2025.
Victoria might also be seeing increases due to the highest prevalence of build-to-rent complexes in the country, with such buildings typically fitted out to a fairly high standard.
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