Australia's federal housing minister Tanya Plibersek has warned that state governments and local councils risk pricing first-home buyers out of the market by milking the property industry for too much tax.

Plibersek told The Australian yesterday big infrastructure levies were strangling land development and, partly as a result, the nation was not producing enough new housing blocks to meet population growth.

The Henry review into taxation was considering reforms to slash costs, she said.

The Australian