Little-known infrastructure tax sending Brisbane property prices soaring

Research from Queensland University of Technology has discovered a little-known infrastructure tax that, when the cost is passed on by developers, can potentially add more than $130,00 to the price of a new home.

QUT property economics lecturer Dr Lyndall Bryant said house prices in Brisbane increased an average of $3.95 for every $1 of infrastructure charges levied to property developers.

He said in fast-growing areas governments don't have the funds to build all the infrastructure new housing estates need and existing communities refuse to pay for it by way of higher rates and taxes. The infrastructure charges are levied at the time of developmental approval.

"Property developers claim it is uneconomical for them to pay these charges and pass them on to homebuyers, making new houses unaffordable for many," he said.

"In Queensland the maximum infrastructure charge for a new three or more bedroom house was set at $28,000 in 2011. My research found that the 'over-passing' ratio for new house prices is 469%, and 356% for existing houses.

"Applying the 2011 maximum infrastructure charge, this suggests the price of a new house increases by as much as $131,320 and the price of an existing house by $99,680. This means that this one government charge could add nearly $1,000 a month to the average 30 year mortgage."

The study covered infrastructure charges on 27,752 house and 13,739 lot prices in Brisbane from 2005 - 2011.

"This study suggests the current policy of infrastructure charges is an inefficient tax that adversely affects housing affordability, with homeowners ultimately paying many times the actual cost of the urban infrastructure, with the banks being the winners, benefitting from the increases to mortgage payments," he said.

"The rate of over-passing of the charges, which were effectively a tax, was far higher in Australia than had been observed in the United States."