Australia’s shoddily built apartments

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By Leith van Onselen

In late May, ABC’s 7.30 Report ran a segment on the cheap combustible cladding that has covered potentially thousands of buildings across Australia, that last November sent a Docklands building into a towering inferno:

LEIGH SALES, PRESENTER: When a cigarette was left on a balcony table in Melbourne’s Docklands precinct last year, it took fewer than 15 minutes for 13 storeys to go up in flames. The problem was the cheap cladding that covered the entire apartment building. It didn’t meet Australian standards and should never have been used. But since that fire, it’s emerged that potentially thousands of buildings in Australia could be covered with the same material…

MICHAEL O’CONNOR, CONSTRUCTION, FORESTRY, MINING & ENERGY UNION: This product is rife. It’s used in buildings throughout Australia. All the information we’re receiving, Brisbane, Perth, Melbourne, every capital city, we believe this product is used in many buildings and particularly in high rise buildings…

Then in June, Engineers Australia released a report claiming that 85% of strata units built in New South Wales were defective on completion, and arguing that a major fire in a Sydney high-rise is inevitable.

And in September, ABC News noted a report from the University of New South Wales, which confirmed that 85% of apartment buildings built since 2000 in New South Wales were defective, with common problems including shifting foundations, water leaks, wall cracks and tiling faults.

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Now Fairfax Media has run a story about a 3 year-old apartment block in Melbourne where flammable cladding has been been detected and owners now face possible eviction and expensive repair bills:

Owners of the 78 units also face hundreds of thousands of dollars in a repair bills after being issued with a show-cause notice asking them why they should be allowed to continue living in the eight-storey building.

The flammable cladding was detected at Harvest Apartments at 144-150 Clarendon Street in Southbank during a major audit of central city buildings by Victoria’s building regulator…

[Municipal building surveyor Steven Baxas] said there were “questions about the validity of the building permit issued for the construction of the building”…

Owners at Harvest Apartments are reportedly “very upset” about paying to fix defects in a building less than three-years old…

Australia’s new found fondness for apartments has been touted as not only a solution for housing affordability, but also as a way to save the environment by reducing sprawl, as well as saving the economy by filling the construction void as the mining investment boom unwinds.

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Across the east coast capitals, in particular, apartments have sprung-up like wildfire, as illustrated in the next chart:

ScreenHunter_10310 Nov. 12 17.01

But rather than building world-class homes suitable for families, instead we have built are a bunch of ugly, expensive, and shoddily built apartment blocks, where $400,000-plus doesn’t just buy you a tiny shoebox, but also potentially your own private crematorium.

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At least it will add to GDP, given the cost of repairing/rebuilding these blocks [/sarc].

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About the author
Leith van Onselen is Chief Economist at the MB Fund and MB Super. He is also a co-founder of MacroBusiness. Leith has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.