Property Council NSW Deputy Executive Director Anita Hugo said the report understated the significant impact of additional government taxes and charges on development feasibility.
"Only this week we heard the Managing Director of the nation's biggest home builder tell property and political leaders that infrastructure levies are costing an average of $150,000 per block.
"New taxes on development introduced last year are squeezing margins to the point where banks cannot confidently lend - meaning that projects can't get off the ground.
"Modelling from Savills backs this up, showing that taxes and charges make up on average around a third of the total cost of greenfield development across Sydney.
"Industry has sent a clear message that feasibility is a problem, and yet this disappointing report appears to give the NSW Government a free pass on development taxes and charges," she said.
Ms Hugo said suspending taxes and charges, and speeding up the planning system, were the only levers available to Government to have any immediate impact on housing delivery.
"The Productivity Commissioner's report is right to say that construction costs and interest rates are also impacting feasibility - but these are factors outside the Government's control.
"The report talks about a concierge system to speed up planning, but we've been there before with the Planning Delivery Unit and yet we're facing the same if not worse delays – what we need is real follow-through to get housing projects moving.
"We will carefully examine the Productivity Commission's modelling but the message from industry is clear – rising costs are making housing unfeasible to deliver and you can't tax your way into building more homes. That kind of logic just doesn't stack up," she said.
Savills National Director, Property Consultancy, Stephanie Ballango also rejected the report's claim that suspending key infrastructure contributions for the five-year period of the Housing Accord would not boost housing supply.
"Our modelling shows that a range of local and state government taxes and charges make up anything from 15 to 40 per cent of the total cost of greenfield development right across Sydney.
"The modelling shows that, combined with compressed planning timeframes, temporary suspension of rates and charges can have significant positive impact on feasibility, unlocking the potential for many more homes than business as usual.
"Importantly, our research shows that suspending key infrastructure taxes and charges during the Housing Accord period is one lever that can be pulled, however solving the housing crisis requires a multi-pronged approach," Ms Ballango said.
