Apartment owners who live in blocks with flammable cladding could witness a significant drop in property prices, NSW Labor has warned.

Opposition Better Regulation spokeswoman Yasmin Catley raised concerns homeowners could be affected by a similar house price collapse to Britain, where a resident of a complex clad in panels like those on London's Grenfell Tower recently had her £475,000 ($867,000) home valued at £50,000 ($91,000).

The burnt-out shell of the Grenfell Tower apartment building in London, following a fire that left more than 80 people dead. Credit:AP

Ms Catley said affected homeowners in NSW could also face huge costs to replace combustible cladding.

“Besides a threat to life and property, the cladding debacle overseen by [the Berejiklian] government stands to have a massive financial impact on property owners.