From towering infernos to leaking homes

Advertisement

By Leith van Onselen

Over the past few years, there has been multiple reports decrying Australia’s poorly designed and built apartments.

Last year, there were several reports (here, here and here) about how cheap combustible cladding had been used to cover potentially thousands of buildings across Australia, which in November 2014 sent a Docklands building into a towering inferno.

The problem is so bad that Engineers Australia released a report in 2015 claiming that 85% of strata units built in New South Wales were defective on completion, whereas the Metropolitan Fire Brigade in Melbourne identified up to 50 Melbourne city towers as being high fire risks.

Back in February 2016, it was reported that some multi-storey buildings recently constructed across the ACT are so shoddy that they would be cheaper to demolish and rebuild than to repair.

Advertisement

Then in September, The SMH reported that a new 400-page review by former treasury secretary Michael Lambert found practices for ensuring apartment fire safety were “totally ineffectual” and had caused unsafe buildings to be approved.

Poor quality housing is not confined to the apartments space, however, with experts last month warning that Australia’s detached homes are also so poorly constructed that they could become “solar ovens” that cook their inhabitants on hot summer days.

Then in January a new fiasco has hit, with widespread leaking and flooding being reported amongst many new Melbourne housing developments.

Advertisement

On Friday, The ABC published a report on the “dark side of the apartment boom”, whereby defects have become widespread leaving owners with costly repair bills and/or drawn-out legal battles with builders:

In Sydney, one resident showed Background Briefing a dam in his living room that he had installed while he waited out a long legal process.

Apartment owners can spend years fighting through the courts to recoup repair costs, only to find out that the developer or builder has gone bankrupt or has been placed into administration…

No-one knows for sure how many apartments are defective or leaky, but some figures indicate most new buildings have some kind of problem.

“Nobody keeps records of this stuff,” said Bill Randolph, the director of the City Futures Research Centre at the University of New South Wales.

“Quite a lot of the defects don’t get anywhere, they don’t get to the court, or owners just pay up and get on with it because they can’t be bothered to cover the cost of taking a builder to court”…

Concerns over the quality of new apartment buildings is not confined to NSW.

Victoria’s Building Authority has labelled waterproofing a “possible systemic issue” and announced that it is conducting an inquiry in response to reports about “leaky building syndrome”.

Phil Dwyer — a veteran builder based in Victoria, and the president of the Builders Collective of Australia, which represents small builders — said he had seen apartments that would make hair stand on end.

“Just imagine the black blotching of of mould about 15 to 1,600 millimetres above the floor, the plaster you can put your finger through, the carpet has actually grown grass on it,” he said.

“We are of the opinion at that the moment that our industry is in crisis … there is no doubt that the next 10, 20 years is going to see such a decline in the integrity of the building industry that it won’t be funny.”

He said he decided to stop building apartments, because developers did not offer him enough money to do a proper job.

“Up until about September last year we’ve knocked back 17 apartment buildings,” he said. “And that’s just one little builder here in Melbourne.”

New Zealand has experienced a similar systemic problem of leaky homes built in the mid-late 1990s, affecting between 22,000 to 89,000 dwellings, which has cost the New Zealand economy an estimated $11.3 billion (in 2008 dollars) in repair and transaction costs.

Advertisement

Given the magnitude of Australia’s apartment boom, Australia’s clean-up bill could also be enormous.

unconventionaleconomist@hotmail.com

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.