As we move through 2025, the Australian residential building landscape continues to evolve rapidly across all states and territories. HIA members are navigating the challenges of workforce shortages, shifting regulatory environments, and economic headwinds, so it’s essential to stay informed – and insured.

Here, HIA Insurance Services (HIAIS) and AON joined forces to produce their new State of the Nation report. This national snapshot, with key insights and commentary from HIAIS State Managers, reveals what’s changing and how it affects your business.

New South Wales

With signs of easing interest rates, confidence among residential builders in NSW is on the rise. The number of new home applications has increased, suggesting positive momentum for the remainder of 2025. However, builders still face significant issues.

Housing affordability remains a critical issue. Builders are absorbing approximately $576,000 in government-imposed taxes, fees and regulatory charges per new build – a sobering figure that eats into both margins and buyer appetite.

Meanwhile, the Home Warranty Insurance market is seeing a surge in new entrants – both builders and trades due to contract values being pushed above the $20,000 threshold by material cost inflation. These new market players need education and guidance to comply with HWI requirements, while existing participants require ongoing advocacy to maintain business viability.

In the current environment where regulatory change, rising costs and a shortage in labour are becoming the new norm, insurance is not just a safety net – it is a lever for businesses to reduce and mitigate risk across their business.

Luke Calderon, NSW and ACT State Manager, HIAIS

Victoria

Victoria is undergoing significant regulatory transformations. The Building Legislation Amendment (Buyer Protections) Bill has passed both houses, paving the way for major overhauls to builder regulation and insurance.

Key developments include:

• a first-resort insurance scheme to replace the current last-resort Domestic Building Insurance (DBI) scheme
• consolidation of regulatory, insurance and dispute resolution under a single authority: the new Building and Plumbing Commission
• the Victorian Building Authority (VBA) gains broader powers to issue rectification orders up to 10 years post-occupancy.

Importantly, DBI thresholds will rise from $16,000 to $20,000, and the VBA will soon be the sole issuer of insurance policies, marking the exit of private providers such as Assetinsure.

Queensland

In Queensland, growth in the residential building insurance market is being shaped by natural disasters, economic volatility and shifting land availability. One key concern is the accumulation of risk from high-density land releases, especially in emerging developments.

Builders are also seeing a rise in demand for Professional Indemnity Insurance (PI) in Design and Construct (D&C) contracts. While not yet mandatory, PI is increasingly seen as essential protection against claims of professional negligence or design errors.

South Australia & Northern Territory

South Australia leads the nation in construction activity, spurred by government initiatives such as the Housing Roadmap and the stamp duty exemption for first home builders. The Rent-to-Buy scheme is also gaining traction, adding new pressure to builders managing multi-unit projects.

Insurance needs in the region are diversifying. Builders are increasingly seeking Professional Indemnity for D&C, Cyber Insurance, and Management Liability coverage in response to emerging risks from digital systems, WHS regulations, and talent shortages.

In the NT, federal funding is stimulating development, with $25 million allocated to deliver 400 homes, and $7 million already committed for infrastructure in Katherine East.

Western Australia

WA’s construction sector is in growth mode, but a chronic labour shortage is weighing on delivery capacity. To combat this, the State Government has launched the ‘Build a Life in WA’ relocation incentive, offering $10,000 for qualified trades and professionals, and allocated $21.6 million to expand apprenticeship programs.

These labour pressures are directly impacting insurance outcomes. Premiums are rising due to elevated wage bills and greater insolvency risks, while extended build times are causing coverage gaps.

Cyber security has also emerged as a critical issue, with construction businesses increasingly vulnerable to data breaches and digital fines.

Australian Capital Territory

From 1 January 2025, the ACT will increase the minimum Home Warranty Insurance cover from $85,000 to $200,000. Additionally, the timeframe for lodging claims has been extended from 90 to 180 days. While enhancing consumer protection, these changes will increase premiums, making it vital for builders to reassess their policies.

Builders working across NSW and ACT face additional challenges. Proposed reforms to psychological injury claims in NSW may increase workers’ compensation premiums and create new administrative burdens for managing cross-border staff. Meanwhile, delays in ACT building approvals continue to disrupt project timelines and financial forecasts.

Builders face increasing regulation and changes in the ACT region, and they must understand how these may impact their business.

Luke Calderon, NSW and ACT State Manager, HIAIS

Partnering for a stronger future

Across Australia, builders are grappling with a complex mix of regulations, economic pressures, labour challenges and insurance shifts. In this environment, insurance is more than compliance; it’s strategic business protection.

HIAIS works with builders to navigate risk, secure coverage, and strengthen resilience. As your partner in the construction industry, we’re here to ensure you not only survive but thrive in the face of challenges.

First published on 29 July 2025