We have all read articles recently that have focused on the integrity of density building in our lucky country. Last night’s episode on Four Corners was just another. We don’t normally like to give weight to the sensationalism in these stories, but as a lot of our clients have invested in apartments, we feel the need to add some commentary.
Construction rates, conformity of builds and most importantly building defects have been highlighted as the centrepiece for scrutiny. In an era where Australians are becoming increasingly geared towards apartment lifestyle, this can be a particularly contentious issue. But I’d like to shed light on the matter while bringing some real-world knowledge to the situation.
Building and construction of large high-density structures is a dynamic and fast-paced process, and the fact that intricate architecturally designed projects can be manifested in a matter of months is civil engineering poetry in motion.
Frasers Property’s One Central Park Project – Ultimo, Sydney.
Since the start of the decade, there has been 650,000 apartments built in what is known as “Australia’s Apartment building boom”. These structures have grown to happily house over 13% of the Australian population, equating to millions of residents today.
One of the most well-documented projects (and possibly the worst-case scenario of a high-rise construction) is the Opal Tower merely meters away from our head office in Sydney Olympic Park. The project attracted widespread scrutiny after building materials used proved to cause cracking within major structural elements of the project. While the widely-reported complex forced tenants and owners out for safety reasons, the media vigorously highlighted the potential financial impact, which now seems insignificant compared to expectations.
Owners of the new apartments during the first months of the year were told defects could destroy their asset values, with opportunistic buyers submitting half the original price as an offer for those wanting to offload. The result? According to RP Data, since defects were mediated and occupants returned to the building in early February, there has been one sale. An 81m2 internal, 2-bedroom apartment which sold for a massive $950,000 – a figure $208,000 higher than the original off-the-plan price. The impact of the defects were blown out of the water from the beginning…
But I have bought an off-the-plan property, what would happen to me if I find a defect?
Whether major or minor, all buildings have some form of defect. The process is that your property will be built along with the rest of the structure. When completed, you have the right to order a building inspection report and any subsequent defects that are found are legally rectifiable by the developer within your contractual period (usually 3-6 months from practical completion). Anything that is deemed as uninhabitable due to defects means that tenants or owners legally will not have to settle on the property until rectified. So, the notion that you are investing or moving into a boobytrap-ridden asset, with no power to do anything, is farcical to say the least.
The bottom line is that throughout the lifespan of the average Australian home, it is highly likely that a defect or issue will arise. Maintenance and repairs of a property are as natural as buying the asset itself. When you take a step back and assess the nature of the defects, you can begin to understand how over-sensationalised these articles has become. Ask yourself in real terms, do you know anyone that has never had a leaky roof at home, an electrical problem, a plumbing issue or some cracking in the driveway? Can you even say that about the family home you grew up in or the one you currently live in?
A harsh reality, and one that I came to grips with long ago, is that media use emotions to grab views. A vanilla report on the industry would more than likely govern a flop in ratings, so it is your job to ensure you don’t get caught up the emotive side of reporting to make your next investment decision. Blue Wealth prides itself on the reputable builders and developers that we partner with every day. We work with industry professionals in order to secure owner-occupier quality products. As a consequence, Blue Wealth clients remain unphased by recent reports and we are confident about the future of the property market.
The fact is, Australia’s rapidly growing population needs a building industry that keep up with the pace of our evolving capital cities. We need density projects and strategic planning if we are ever going to stand a chance of housing our future population in this great nation. Don’t let the media pray on your emotions and skew your investment prospects. Quality apartments remain a great housing option for Australians and will only become more property in the future.