Who: “Abolishing the carbon tax will take $5,000 off the price of the average new home.” Tony Abbott.

The claim: The carbon tax has increased the cost of an average new home by $5,000 and removing the tax will decrease the price by $5,000.

The facts: The claim is based on a July 2011 report from the Housing Industry Association (HIA); “research by the HIA has concluded that the price of an average house and land package will go up by over $5,000 as a result of the tax.”

With changes to the carbon pricing package in 2012 the HIA re-estimated the cost; “HIA estimates that when the tax is fully implemented, the cost increase for an average new house due to the carbon tax will be in the range of 0.8 per cent up to 1.7 per cent.” Assuming an average house and land package of $400,000, this would increase the price by between $3,200 to $6,800.

According to the ABS in the first year since the introduction of the carbon price ‘new dwelling purchase by owner-occupiers’ have increased by 0.31 per cent.

Discussion of evidence: HIA has made a number of attempts to estimate the impact of the carbon price on the price of a new house and have come up with estimated of between $3,200 and $6,800. An increase of $5,000, as claimed by Mr Abbott, on a $400,000 house and land package assumes an increase because of the carbon price of 1.25 per cent.

With the carbon price introduced in July 2012 we now have a years’ worth of data from the ABS showing the amount that prices for ‘new dwelling purchase by owner-occupiers’ have increased was only 0.31 per cent. It is important to note that this includes all price increases not just those associated with the carbon price.

It is also important to note the 0.31 per cent is an increase in the price of a new house and does not include the land that is included in the HIA calculations. If we assume that a $400,000 house and land package includes a $150,000 house and $250,000 of land then a $5,000 increase assumes an increase in ‘new dwelling purchased by owner-occupiers’ of 3.33 per cent.

Mr Abbott is likely to have overestimated the cost of the carbon price on a new house by more than a factor of 10. Assuming all the price increase over the last 12 months was due to the carbon price and that 40 per cent of the house and land package was the house then the increase due to the carbon price has been $465 not $5,000.