Why the house price slump won't give you cheaper insurance

Aussie property values have fallen for the seventh month in a row, with the average home $63,400 cheaper now than in March. The downturn is expected to continue into next year, but home insurance premiums will only keep rising.

News of Australia's seventh month of declining house prices was delivered on Monday by research firm Cotality.

It was followed one day later by another interest rate hike and warnings from banks that the property downturn would continue into 2027.

The slump is the most dramatic in 40 years and the unprecedented series of events has got Aussies looking for a silver lining.

With the value of a property having some influence on how much it costs to insure, some Reddit users have been asking a question:

If property values are going down, shouldn't home and contents insurance premiums fall as well?

Home insurance becoming more expensive

Despite such hopes, insurance premiums are going in the opposite direction.

Consumer advocacy group CHOICE regularly analyses quotes for home and contents insurance from across Australia.

"Looking at just the first half of this year, we've seen them go up about 5.5%," says Daniel Graham, senior data analyst in CHOICE's insurance and utilities team.

"Over 2025, the average quote went up by 4.1%, so they've already smashed last year's increase."

Why home insurance premiums won't go down

A property's value and how much it costs to insure might seem aligned, but actually aren't.

"The factors going into the pricing for each of those things are very different," says Graham.

"For example, your insurer doesn't care how close you are to a good school."

While a home's value does have some bearing on the size of an insurance premium, other considerations carry greater weight.

"It's got to do more with what it would cost to rebuild your property from scratch," explains Ceyda Erem, insurance expert at Finder.

She says a whole range of factors that don't affect the value of existing properties are driving up premiums.

"The cost of living is hitting the construction industry, so things like labour and materials have all gone up in recent years."

"If your property is becoming more expensive to rebuild, your premium is going to be high as a result of that."

How to get cheaper home insurance

So if a sluggish property market won't give you a cheaper premium, what will?

Experts point to actions you can take yourself:

1. Shop around

Erem says lots of people stick with the same insurance provider for decades.

Not comparing with other options will see your premium creep above market rates over time without you realising.

"Revisit the policy that you took out ten years ago, don't just let it auto-renew," Erem recommends.

Compare what your current provider's charging you now with what they charge new customers.

If you're paying more for the same policy, negotiate or take your business elsewhere.

2. Increase your excess

Raising the excess on your policy will mean you'll have to pay more out of your own pocket when something goes wrong.

But it also means insurers get to spend less out of their own pocket and they'll reward you for this with a cheaper premium.

"If you are financially comfortable, increasing your excess can help reduce your premium a little bit," says Erem.

3. Strip unneeded extras

Erem also recommends reconsidering any extra bits of cover included in your policy.

"Review all those optional extras to see if they're needed and whether you can strip them back," she says, adding that this will further lower your premium.

4. Switch to annual billing

If you can afford to, Graham recommends paying your insurance annually.

"A lot of insurers charge you more to pay by the month," he explains. "As much as 20% more than the base annual premium... so pay your premium annually if you can."

How to prepare your home insurance for summer

A destructive storm, flood or fire can suddenly leave you relying on an insurance payout to get your life back on track.

As summer approaches and the risk of such events grows, Graham advises checking that you're appropriately protected.

"It's important to know what your insurer covers," he says, pointing to how bushfire cover in particular can be less reliable than you might think.

"Your insurer will cover you if your house burns down but... may exclude some niche things."

"Things like smoke damage from a fire that's not on your property or damage from soot, ash and sparks from fires that are a certain distance away."

"Read your product disclosure statement and know what your policy covers and doesn't cover," he says.

"If there's something you do want cover for, shop around and get a policy that suits your needs before it's too late."

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