Housing developers have slammed the state government for imposing new taxes in the middle of a housing crisis, which modelling says threatens to take greenfield and apartment developments off the table in the Lower Hunter.
The Property Council came out swinging following the release of its research that showed in the Lower Hunter, government charges made up 15 per cent of greenfield development costs and 7 per cent of infill development costs.
Two charges that only recently came into effect have been singled out: the Housing Productivity Contribution (HPC) and the Hunter Water Development Servicing Plans (DSPs).
In the Lower Hunter, the HPC adds up to $8000 per lot to construction costs, while the water DSP can be more than $25,000.
The funds from both taxes go towards building public infrastructure to support growing communities, such as roads, parks, hospitals, and schools.
The Property Council acknowledged developers should contribute to public infrastructure, and already do through council contributions, but has questioned the timing of the taxes.
The HPC came into effect in October 2023, and the water DSP is being phased in over three years from mid-2024.
Modelling by global real estate firm Savills showed no greenfield or new apartment developments in the region were financially viable with HPC and DSP charges and a typical development assessment time of 18 months applied.
Property Council Hunter and Central Coast regional director Amy De Lore called for the two charges to be suspended until the National Housing Accord period ended in 2029.
"It just doesn't make sense to impose additional charges at this time, the government wants to stimulate housing, but this is just another barrier at a time of already inflated costs," Ms De Lore said.
"High infrastructure costs and taxes, coupled with lengthy approval processes, are making it nearly impossible for developers to secure the financing needed to deliver new homes.
"Developers have an obligation to fund associated housing infrastructure, we don't dispute that. But we're questioning the wisdom of bringing these new charges into play at this really challenging time."
The NSW government set a target of 30,400 new homes in the Lower Hunter by 2029. But without change, only 18,500 are expected to be built, a shortfall of almost 12,000.
By suspending the HPC and water DSP charges, the Property Council says the Lower Hunter could get an additional 4500 in the next five years.
Although the estimated figure of 23,000 is still below the Housing Accord target, the report found "additional density around high-frequency public transport and increased greenfield supply could close the gap".
"Government has no control over construction costs and interest rates - so suspending taxes and charges, and speeding up the planning system, are the only levers it can pull to have any immediate impact on housing delivery," Ms De Lore said.
The water DSP was previously suspended to stimulate housing supply 2008 in response to the Global Financial Crisis.
However, NSW Planning Minister Paul Scully said the government had no plans to suspend the charge.
He defended imposing the taxes, which were introduced as part of a planning reform to consistently fund the infrastructure growth needed to support housing growth.
"Enabling infrastructure is necessary for housing as communities want houses that are connected by roads, have a local school kids can attend, a toilet that flushes and lights that turn on," Mr Scully said.
The Newcastle Herald asked Mr Scully if the two taxes were considered when the government set the state's new housing target.
Mr Scully did not answer the question directly, but pointed out that the government's analysis indicated that state government infrastructure contributions comprised just over 2.5 per cent of current build costs, while the NSW Productivity and Equality Commissioner's recent examination of the issue did not recommend contributions be scrapped or suspended.
Ms De Lore said the Property Council's research took into account the full range of taxes and charges that contributed to development costs, including council charges, GST, land taxes and transfer duties.
"Within that mix, state infrastructure charges are the cost that the government has the most capacity to control," she said.
Ms De Lore also said the Property Council's report was backed up by anecdotal evidence from the industry, which had shown little interest in the government's plan to build high-density housing around train stations, including nine in Newcastle and Lake Macquarie.
"We're hearing that councils aren't yet seeing the level of interest in new apartment builds that the government anticipated and there's no doubt feasibility is an issue," Ms De Lore said.
