Specifically, the introduction of mandatory latent defects insurance under the Property Developers Act 2024 is projected to add between 3% to 5% to the cost of new housing in Canberra. This increase translates to an additional $15,000 to $35,000 on the price of a standard home, exacerbating the existing affordability challenges in the region.
Latent defects insurance, which covers structural issues post-construction, is relatively uncommon in Australia. Developers may encounter difficulties obtaining such coverage due to its limited availability and high costs.
The Property Council advocates for a balanced approach that ensures consumer protection without compromising affordability. They also call for the adoption of proportionate liability legislation in the ACT, a framework already implemented in other states, to distribute legal and insurance responsibilities more equitably across the supply chain.
For real estate professionals, these developments underscore the need to stay informed about regulatory changes and their potential impact on the housing market. Advising clients on the implications of rising insurance costs and exploring strategies to mitigate these expenses will be crucial in maintaining housing affordability and market stability.
