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What will the carbon tax do to property prices?

There’s been plenty of debate about the carbon tax and a few industry bodies have come out suggesting it will hit our construction and property industries and push up the price of new homes.

I’m obviously not an expert in this. Heck I don’t pretend to fully understand the way taxing carbon pollution will work. But I do know that all those factories that make bricks and tiles and other building materials have big chimneys and road transport that uses fuel transports materials to building sites.

This means an increase in the cost of new homes and renovations.

Both the Housing Industry Association and the Master Builders Association estimate that construction costs for an average new home will increase between $5,000 and $9,000.

The HIA anticipates that the tax could add around $13,000 or more to family mortgage repayments over the life of a 25-year loan.

I’ve heard others suggest that these figures are a little exaggerated, and they’re probably right.

While increasing the cost of new construction will underpin the value of established properties, any further costs making housing less affordable, particularly at a time when interest rates may rise, is not good for our housing markets.

And don’t forget that some industries face the risk of job losses, as Australian building product manufacturers will need to compete against imports from countries that do not tax carbon.

We are in for some interesting times.



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Michael is a director of Metropole Property Strategists who help their clients grow, protect and pass on their wealth through independent, unbiased property advice and advocacy. He's once again been voted Australia's leading property investment adviser and his opinions are regularly featured in the media. Visit Metropole.com.au


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