Carbon tax may see investors pay more

By webmaster

Investors looking to build or buy new may have to fork out extra fees as a result of carbon tax, according to Queensland's peak building and construction industry association.

The price tag on building homes, that will grow as a result of the July 1 carbon tax to be introduced this year, will impact negatively on the building industry, according to Master Builders director of housing policy, Paul Bidwell.

“The rising cost of construction will impact both supply and demand: the cost of building will rise, having a knock on effect on demand. Of course, the cost impact will vary depending on the materials used, the size of the building, location and ultimately the customer.

“We know the government’s compensation package will offset some of the impact. Steel producers and other trade exposed, emissions intensive industries, along with around four million Australian households, are set to share billions of dollars in financial assistance for rising costs,” Mr Bidwell said.

The Centre for International Economics forecasts that building and construction costs will increase by up to 2.6 per cent.

Allen Consulting Group estimates an extra $3,800 to build its standard two storey, detached brick property.

However, how much of these costs will be passed on to investors is unclear.

“As 1 July draws closer, building businesses have had the tricky job of factoring in these additional costs for jobs that will run past the commencement date of the carbon tax,” Mr Bidwell said.

“You would think it is straightforward to pass on these additional costs; however, builders have been placed in a tough position. Unless they are very confident of their estimates and can attribute the cost increase directly to the carbon tax, they cannot increase contract prices with the explanation that the increase is to cover the carbon tax,” he said.

The long term adjustment implications of this tax are a concern for housing affordability, with the majority of ‘end-users’ of building services being businesses and property owners.

As a result, Master Builders is calling for the Government to consider assisting the housing sector with additional bonuses and top-ups.

“There is a strong case for specific government assistance to offset the inevitable increases to the cost of building, such as topping up the existing First Home Owners Grant and re-focusing it on new home building,” he said.

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