Australians are being warned to ditch their modern apartments, with a market researcher labelling them the bubonic plague of Australian property.
Deregulation and poor-quality workmanship over the last two decades have resulted in shoddily built apartments, some with major structural cracks forcing residents to evacuate, flammable cladding, and balconies with water seeping through them.
Photo: AFP / FILE
New Zealand has faced similar problems, with leaky buildings, and more recently a concrete panel falling off an Auckland apartment building.
Simon Pressley the head of research at Australian company Propertyology says that's creating a disease which is affecting values, and he thinks owners should consider cutting their losses now before prices fall even further.
He says the Australian property market was a concern to him 10 years ago when a large volume of apartments were being approved.
“It’s a combination, we’ve built way too many apartments ... but the quality is alarming, there are up to a million owners of apartments in Australia that could suffer some pain.”
He says apartment ownership is a significant financial risk and some owners should consider selling.
“Anything built within the last 20 years are laced with major repair bills and no recourse, there’s no developer they can go back to unless they discover these faults inside six years of construction, in most cases these things don’t come to the surface until after that.
“So there’s no insurer they can call upon and we’re talking individual buildings that have got repair bills in the tens of millions of dollars.”
Some buildings have significant safety problems, he says.
“There’s been a few buildings already that the defects are such that all residents have been evacuated and there’s no way of knowing when they’ll be allowed to return.
“There are major structural faults in buildings that are 50 to 100 storeys high.”
Those people, he says, are still paying mortgages on homes they can’t live in while seeing their values drop and are liable for huge repair bills.
He believes the authorities will have to get involved in this unfolding situation.
"Someone’s going to have to because we’re not talking about a handful of people.”
He said the problem is in seven out of eight of Australia capital cities as well as some of the larger regional centres.
“Collectively you’re talking about a million households … none of them have any financial recall, this is going to unfold, sadly, for decades.”
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