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National Review of Home Builders
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Dwelling starts 2001/02 |
Dwelling starts 2001/02 |
Underlying demand 2002-2007 |
Underlying demand 2002-2007 |
|
|
NSW |
44,900 |
28.9% |
43,700 |
30.9% |
|
Vic |
44,800 |
28.8% |
33,600 |
23.8% |
|
Qld |
32,000 |
20.6% |
35,000 |
24.8% |
|
WA |
19,250 |
12.4% |
18,500 |
13.1% |
|
SA |
9,550 |
6.2% |
6,100 |
4.3% |
|
Tas |
1,600 |
1.0% |
1,000 |
0.7% |
|
ACT and NT |
3,300 |
2.1% |
3,400 |
2.4% |
|
Australia |
155,400 |
100% |
141,000 |
100% |
Chart 3: Registered building practitioners
|
Date |
Total |
|
|
NSW |
March 2002 |
158,824 |
|
Vic |
June 2001 |
19,588 |
|
Qld |
June 2001 |
47,718 |
|
WA |
Dec 2001 |
5,069 |
|
SA |
June 2001 |
21,135 |
|
Tas |
No register |
N/A |
|
ACT |
June 2001 |
6,147 |
|
NT |
No register |
N/A |
Chart 4: Warranty and insurance
|
Builder's Statutory Warranty |
First Resort Warranty Insurance |
Last Resort Warranty Insurance |
|
|
Non-Completion of dwelling |
Yes |
Yes |
Yes, But only if builder is DID* |
|
Building defects (workmanship and materials) |
Yes |
Yes |
Yes, But only is builder is DID* |
|
Contract termination or breaches (other than defects) |
Yes |
Yes (Qld) ??? (others) |
No |
* DID = Dead, insolvent or disappeared
Chart 5: HBWI schemes - Australia
|
Regulatory framework |
Insurance claims |
Monopoly provider |
Contestable market |
|
Mandatory |
First resort |
Queensland |
Tasmania NT (proposed) NSW (previously) Victoria (previously |
|
Mandatory |
Last resort |
NT, Monopoly provider by default, not intention |
Western Australia South Australia ACT NSW (new) Victoria (new) |
Chart 6: HBWI schemes - International
|
Regulatory framework |
Monopoly provider |
Contestable market |
|
Mandatory scheme |
Ontario (Canada) Quebec (Canada) |
British Columbia (Canada) Louisiana and New Jersey (USA) |
|
Voluntary scheme |
United Kingdom Germany All other States in Canada All other States in USA |
Chart 7: HBWI market characteristics -
comparison of Australian HBWI
with other types of markets
|
Product market features |
Typical markets |
HBWI market |
|
Demand |
Unregulated |
Mandated |
|
Beneficiary |
Buyer |
Third Party |
|
Access |
Open |
Restriced |
|
Supply |
Unregulated |
Unregulated* |
|
Price |
Unregulated |
Unregulated* |
|
Content |
Partly regulated |
Regulated |
|
Warranty |
Short |
Medium - long |
|
Knowledge |
Medium - high |
Low |
|
Risk |
Low - medium |
Medium - high |
* Except Queensland which restricts supply to BSA and caps its premiums
Chart 8: HBWI - Private Insurers
Chart 9: HBWI - Government Insurers
Chart 10: HBWI - free market case study
Chart 11: HBWI policies and premiums
|
Number of policies post February 2002 (estimate) |
Annual premiums post February 2002 (estimates) |
|
|
NSW |
96,000 |
$74.0m |
|
Vic |
75,000 |
$43.5m |
|
Qld |
58,000 |
$25.0m |
|
WA |
4,000 |
$2.6m |
|
SA |
22,000 |
$6.9m |
|
Tas |
13,000 |
$2.5m |
|
ACT and NT |
5,000 |
$2.5m |
|
Australia |
273,000 |
$157.0m |
Chart 12: HBWI average premiums
|
Average rates 2000-01 |
Average rates post February 2002 (estimates) |
|
|
First resort schemes |
||
|
NSW |
$221 |
$770 |
|
Vic |
$231 |
$580 |
|
Qld |
$365 |
$431 |
|
Tas |
$230 |
$660 |
|
Last resort schemes |
||
|
WA |
$166 |
$315 |
|
SA |
$134 |
$195 |
|
ACT |
$180 |
$545 |
Chart 13: HBWI premium trends average annual premiums, 1996-97 - 2002-03
Chart 14: HBWI claims - frequency and average costs 1996-97 - 1999-2000
|
Non-completion claims |
Defect claims |
|||
|
Frequency |
Average cost |
Frequency |
Average cost |
|
|
NSW* |
High |
High |
Medium |
High |
|
Vic* |
High |
Low |
High |
Low |
|
Qld* |
Medium |
Very low |
Medium |
Low |
|
Tas* |
High |
High |
Very high |
Low |
|
WA^ |
Low |
High |
Low |
Medium |
|
SA^ |
Medium |
Low |
Low |
Low |
* First resort schemes
^ Last resort schemes
Note: Queensland data excludes subsidence to put it on par with other States.
Chart 15: HBWI claims frequency claims lodged as percentage of all policies, 1996-97 - 2001-02
Chart 16: General insurance losses worldwide, 1970-2001
Chart 17: Home building process - missing links*
* These are gaps which existed in most though not all States and Territories in early 2002.
Chart 18: Basic analytical model
Chart 19: Suggested home building reforms
Return to: National Review of Home Builders - Contents
© Commonwealth of Australia 2000
Ministerial Council on Consumer Affairs
www.consumer.gov.au