Mandatory latent defects insurance may add up to $35,000 to new home prices in Canberra
The Property Council of Australia has raised concerns that increasing insurance premiums and what it calls ill-designed regulations could worsen housing affordability in the Australian Capital Territory.
Speaking to the ACT legislative assembly’s inquiry into insurance costs, Property Council ACT & Capital Region executive director Ashlee Berry (pictured above) said proposed changes under the Property Developers Act 2024 — specifically, the introduction of mandatory latent defects insurance — could add as much as 3 to 5% to the cost of new housing in Canberra.
“In principle, we support strong consumer protections – but these must be balanced with affordability,” Berry said.
According to the council, that rise would translate into an added $15,000 to $35,000 on the price of a standard home in the region. Housing affordability in Australia has deteriorated significantly, with the Real Estate Institute of Australia reporting record-low levels during the September quarter of 2024.
Latent defects insurance, which provides cover for structural issues after construction is completed, is still relatively uncommon in the Australian market. Developers may face substantial challenges in obtaining such cover due to limited availability and high costs.
“The ACT is in danger of navigating a housing crisis with one hand tied behind its back,” Berry said. “Regulatory changes like this, introduced without a ready market or complementary reforms to liability, could make things worse.”
The organisation is also calling for the adoption of proportionate liability legislation in the ACT — a framework already implemented in other states. Such laws aim to distribute legal and insurance responsibilities across the supply chain based on actual fault, rather than leaving the entire burden with developers.
“The current ‘last person standing’ model puts all the burden on the final party – typically the developer – regardless of where responsibility lies,” Berry said. “It’s outdated, it’s unfair, and it drives up costs for everyone involved – especially homebuyers.”
With the ACT targeting a significant increase in housing supply, alongside ongoing reforms in the building sector and persistent construction cost pressures, the Property Council argued that the government must modernise its approach to insurance and liability.
“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,” Berry said.
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