The ongoing probe into serious defects in four blocks of new apartments in the Lachlan Line’s complex at Macquarie Park adds to the litany of faulty new builds blighting the real estate market in NSW and nationwide. Against the backdrop of the savage rental crisis, the young and vulnerable are in danger of swapping one set of problems for another in the form of shiny new apartments. 

While it’s understandable that the promise of freedom from the rental market is hugely appealing to this cohort, hopeful home buyers must be wary of not falling into the grievously damaging trap of buying off the plan.

The truth is the Australian Dream may be out of reach for many, but it doesn’t mean that if given the choice, we wouldn’t  gladly swap our two bedroom apartments for a house with a yard. Those who choose to buy apartments do so primarily because they’re the only type of property within their reach.. 

Yet they’d be wise not to follow in the footsteps of the defect-riddled Opal Tower residents or the Mascot Tower residents who were ‘lucky’ enough to have their strata debts and mortgages cancelled in order to restart their lives elsewhere, but only after nearly 4 years of struggling with the powers that be.. Those without a mortgage however, weren’t that lucky and were left with pennies to the dollar of the purchase price paid. 

Affordability with caveats

In their rush to get onto the property ladder buyers are getting sucked into buying lemons. In NSW alone almost four in 10 new apartment buildings have serious defects, costing an average $331,829 per building to fix. New research by the Strata Community Association NSW reveals that waterproofing is the most common major defect followed by fire safety. Close to one in 10 buildings also had structural and enclosure issues such as defects in the roof or the facade.

According to NSW Fair Trading rising complaints numbering in the thousands point to poor quality construction, loss or damage to consumers’ property, misleading or deceptive conduct, and unlicensed tradies. Between 2019 and 2021, NSW Fair Trading received an average of 11,000 complaints per year on defective building work, incomplete work and unsatisfactory performance. 

Thanks to spiralling inflation, the cost of materials and labour has seen the collapse of thousands of construction companies. ASIC figures show that the number of failed businesses in construction has surged by 75 percent in the last year, with an average of two companies folding every day, the highest level of insolvency in construction in a decade. 

What this means is that consumers are held hostage to an industry in crisis. For those buying houses, IF they are even able to contract a company, they are beholden to it to get the job done no matter how satisfied they are with the work itself. Many who pay a premium for new builds often end up on the hook for costly rectification work, and if they’re especially unlucky, protracted court battles.

Buyers flock to heritage properties


As the market absorbs these lessons on the risks of buying new, well preserved older properties will continue to rise in value. Built in an era where craftsmanship standards were higher, many of these vintage gems are located in established neighbourhoods with a strong sense of community and potential for steady appreciation. And unlike cookie-cutter new apartments, older apartments tend to be in smaller blocks with less costly strata fee overheads for facilities that one one wants or uses. Older houses offer opportunities for renovation due to bigger land blocks, more space and more flexible layouts, with high ceilings and period details always remaining in fashion and highly prized. 

Where to next

Unfortunately there is no happy ending for those who have been saddled with the burden of a defective and unsaleable property. With a swathe of ruined lives left in their wake it remains to be seen if property developers will ever answer for this shameful form of property catfishing. In NSW the Building Commissioner may broker a deal between owners and developers, but the government’s track record of holding developers and builders accountable doesn’t engender much hope.

A discontinuation of private certification, where builders and developers pay for their projects to be signed off on, a clear direct conflict of interest, would be a far more effective way to stop these developments from ever getting to the stage where structural engineers are calling for immediate remedial works as they assess buildings in danger of collapse. As a buyers agent who is assessing buildings for their clients on a daily basis, I can promise you that Opal Towers and the more recent Macquarie Park scandal are only the tip of the iceberg reported in the press. 

And while it takes new properties 7-10 years to align with market value, the ‘defects and liability’ period for new homes extends to a pitiful 13 weeks, a fact which most buyers aren’t even aware of.  Between the greed of the developers and the complicity of the government, property buyers must fend for themselves in their search for a place to call home. 

 

This article was penned by Michelle May, Principal of Michelle May Buyers Agents, and republished by Architecture & Design,