Victorian home builders and buyers to be hit by another insurance premium hike, HIA warns

The Housing Industry Association (HIA) has warned that the announced 65% increase in Domestic Building Insurance premiums for new single and multi-unit dwellings in Victoria will be another blow to the already struggling home building industry and further undermine housing affordability in the state.

HIA Executive Director Victoria, Keith Ryan, said the increase, which takes effect from August 6, comes on top of a substantial 43% increase last September and will mean new home buyers face even more fees and charges.

“The typical home in Melbourne already paying more than 40 per cent of the cost of a new house and land package in taxes, fees and charges – which is locking thousands of Victorians out of home ownership,” Mr Ryan said.

He gave examples of how the premium increases would affect new home buyers, with premiums for a new single dwelling with a contract value of $300,000 set to rise from $2,635 to $4,348, and for a new home costing $500,000, premiums will increase from $3,872 to $6,388.

“Home builders are already struggling from increased building materials and labour costs and will be further tested by this latest increase which ultimately will be borne by home buyers,” Mr Ryan said.

He expressed disappointment that the increases were not accompanied by any changes to the insurance benefits for home buyers.

Mr Ryan said that at a time when the Victorian government is looking to significantly boost housing supply and deliver 800,000 new homes over the coming ten years, the industry and consumers need all parts of government working together to lower home building costs.

While acknowledging the pressure on the Victorian Managed Insurance Authority (VMIA) due to its exposure to builder insolvencies and increased costs in recent years, Mr Ryan said such large premium increases unfairly impose the burden of responding to these claims on home builders and their clients.

“Today’s announcement is unfortunately yet another reminder to consumers and home builders that the housing crisis in Victoria cannot be solved while government agencies continue to impose more costs and taxes on home building in Victoria,” he concluded.