Home builders are being swamped by government taxes and fees with research showing more than 40 per cent of the average new house price goes into local, State and Federal government coffers.
A study commissioned by Australia's biggest residential building organisation, the Housing Industry Association, estimates taxes, charges, fees and levies make up 41 per cent of the purchase price for an average new home in Perth.
According to the study, given the average house and land package in Perth of $555,000, new homebuyers would have to pay more than $225,000 in tax and other government imposts.
HIA WA executive director John Dastlik said taxes from all three tiers of government were the biggest issue contributing to housing affordability problems in Perth.
"As well as inflating the purchase price of a home, these taxes become built into a mortgage and add hundreds of thousands of dollars in interest to the life of a loan. It's a double whammy for homeowners."
The report, which compared eight Australian cities, found Perth ranked second behind Sydney where taxes and levies contributed 44 per cent to the price of a new house. In Brisbane and Melbourne the figure was 38 per cent.
Mr Dastlik said fewer people able to afford to build new homes meant over-demand in the rental market, pushing up rents and worsening Perth's housing shortage.
The report, compiled by the Centre for International Economics, found the Federal Government's GST added about $43,000 to the cost of a new home in Perth and State Government stamp duty added a further $20,000.
Mr Dastlik said these taxes combined with local government levies, building approvals, utility connection fees, developer contribution levies, compulsory insurances and other imposts were crippling the new housing sector.
"The industry is calling on all levels of government to have a serious debate on reforming taxation, to ensure that many of these negative and retrograde taxes can be reduced or removed," he said.
A State Government spokeswoman said stamp duty was not charged to new homebuyers buying homes under $500,000.
"A key priority of the State Government is to keep transfer duty rates as low as possible across the board," she said.
Housing Minister Bill Marmion questioned the reliability of the data but said taxes and fees were being discussed at the ministerial roundtable on affordable housing.
He said because the HIA had not supplied a full breakdown of government charges, it was hard to judge their veracity.
"We would be very interested to see the full breakdowns so that the roundtable can discuss them in detail," Mr Marmion said.