Am I required to replace a non code compliant balustrade?
We would have to talk to your building department to answer that question.  For something like this there may be a serious safety issue.  If a small child got hurt or someone got knocked over you would be liable if you didn't fix it and knew about it...

It is customary in the US to get the replacement cost of something that isn't code built into the price of the house.  If it costs $1000 to fix then I would expect to pay about 1K less for the house.  Also in the US (and I am pretty sure Australia) that you must disclose the issue to other potential buyers once one inspection finds the issue.  Meaning too that if you buy the house and potentially want to sell you have to tell everyone looking at your house about the issue.

Also you might need to think out of the box.  I don't have a picture of your balcony but if it is pretty close to 1 meter - then how about a decorative top plate on top of your current setup?  This would be cheap, easy, and a DIY.