Home building premiums to jump 65% in Victoria
Following a number of construction insolvencies over the past year, domestic building insurance premiums in Victoria are set to climb thousands of dollars from 6 August 2024.
The Housing Industry Association (HIA) has noted that domestic building insurance in the state is blowing out, with the latest hike of 65 per cent coming on top of the “substantial” 43 per cent increase that came into play in September 2023.
According to HIA executive director for Victoria, Keith Ryan, the announcement “will be yet another blow for Victorian home builders and their clients and further undermine housing affordability”.
As a result of the announcement, which was revealed by the Victorian Managed Insurance Authority (VMIA) on Thursday, 13 June, new home buyers “face more fees and charges”.
Ryan pointed out that “for example, premiums for a new single dwelling with a contract value of $300,000 will rise from $2,635 to $4,348. For a new home costing $500,000, they will increase from $3,872 to $6,388”.
He remarked: “The typical home in Melbourne [is] 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.”
The director said builders are already grappling with increased building material and labour costs, and are set to be “further tested” by the latest hike, which he conceded will ultimately be borne by home buyers.
He said it is just as disappointing that price increases “are not accompanied by any changes to the insurance benefits for home buyers”.
“While it is acknowledged that pressure on the VMIA continues to rise due to its exposure to builder insolvencies and increased costs in recent years, such large premium increases unfairly impose the burden of responding to these claims on home builders and their clients.”
According to Ryan, the latest hike 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”.