Sell now to escape “plague”, property expert warns

A leading property expert is urging the owners of modern apartments  to sell them and avoid “Australian real estate’s equivalent of the bubonic plague”.

Simon Pressley, head of research at market research firm Propertyology, says a looming crisis caused by the mass production of sub-standard apartment blocks over the past two decades represents the “single biggest threat” in Australian real estate history.

Pressley says the national construction industry is “critically ill”, arguing: “If you’re the owner of an apartment within a medium to high-density building that was constructed within the past 20 years, you’ve contracted Australian real estate’s equivalent of the bubonic plague.

“There’s no vaccine for this horrible disease and the best treatment is most likely to sell sooner rather than later.

“Same-same, mass-produced Lego buildings, appalling governance within the Australian construction industry, embarrassingly poor-quality workmanship, and approximately 40 per cent of the purchase price of a new property representing assorted taxes is a toxic combination.”

A 2012 UNSW study found 85 percent of strata unit owners reported at least one significant defect in their modern builds, three in four of them remaining unfixed at the time. Issues identified included water leaks, cracks and water seeping in from outside the building. 

However, Chief Economist at REA Group, Nerida Conisbee, told there was no need for homeowners and investors to panic.

“You have to understand that the property (structural integrity) issue as a proportion of the total number of buildings undertaken over the past decade is tiny,” she said.

“If you are worried, get in touch with the developer and ask for answers. The best developers are very responsive.

“The big, reputable developers are devoted to the process and dealing with the issues, they don’t want to destroy their industry. Why sell if there are no structural issues and, there’s no the great desire to sell?”

Pressley argues a lack of quality control within the construction sector over the past two decades has resulted in a “deplorable quality of workmanship” which could cost billions to rectify.

“The governance within Australia’s construction industry is as poor as what the Banking Royal Commission exposed for the financial services sector with an entire generation of housing supply corrupted by greed, vested interests, and little regard for quality control, safety and consumer best interests,” he said.

“The sector has totally lost the trust of the buying public with state and local governments as much to blame as any stakeholder within the construction industry.”

The Propertyology research shows Sydney, Canberra and Darwin have all constructed more apartments than houses over the past 16 years, with Wollongong, the Gold Coast, Melbourne and Brisbane close behind in the rush to build new units.

Pressley is urging the government to initiate a federal department responsible of designing a comprehensive building star-rating system.

“Regardless of when it was built, every Australian apartment complex should be issued with its own rating and these made available to the public via an online register. This is critical in restoring confidence among future real estate buyers,” he said.

“As for any Australian contemplating buying a property now or in future years, be absolutely crystal clear that your structural integrity risk and financial performance risk are exponentially higher should you chose to purchase any medium to high-density apartment that was built during the past 20 years.”

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