Rising insurance premiums and proposed regulatory changes are placing increased financial pressure on homeowners, with an industry body warning of a potential compounding effect on housing affordability – particularly in the Australian Capital Territory (ACT).
The Property Council of Australia has voiced concern that planned regulatory reforms in the ACT could inadvertently add to housing costs.
Speaking during the ACT Legislative Assembly’s Inquiry into Insurance Costs, the council highlighted the implications of introducing mandatory latent defects insurance under the forthcoming Property Developers Act 2024.
Ashlee Berry, executive director for the Property Council in the ACT and Capital Region, said the proposed requirement could lead to price increases of between 3% and 5% for new housing developments in Canberra. Based on current pricing, this could amount to an additional $15,000 to $35,000 per home.
On a national scale, insurance costs are rising for a significant portion of homeowners. According to a survey conducted by Finder in November 2024, 69% of respondents reported increases in their home and contents premiums over the previous year. The survey represents about 6.4 million insured households. A further 9% said they were unsure if their premiums had changed.
Berry acknowledged the importance of consumer protections but urged policymakers to weigh the affordability impact alongside regulatory aims.
“In principle, we support strong consumer protections – but these must be balanced with affordability,” she said. “We’re concerned the government is adopting policies that sound good but risk becoming a hidden housing tax at the worst possible time.”
Latent defects insurance, which covers structural faults after a building’s completion, is relatively uncommon in Australia and can be costly for developers to obtain. The Property Council warned that mandating such insurance in a limited market could result in unintended financial consequences for buyers.
In addition, the council is advocating for the adoption of proportionate liability laws – a legal framework used in other Australian jurisdictions – to distribute accountability across all parties involved in a building project.
Under current ACT law, liability can fall disproportionately on the final entity in the construction chain, often the developer.
Berry said this kind of structure increases legal and insurance burdens, which can eventually be passed onto homebuyers.
“If we’re serious about delivering more homes, we need a regulatory system that supports investment and shared responsibility – not one that adds cost and uncertainty,” she said.
