Why owners should sell “bubonic plague” apartments

New research from Propertyology has advised owners of recently built apartments to consider cutting their losses and selling now before :

The analysis from respected property market research firm Propertyology said unit owners who were patiently waiting for prices to rebound were playing Russian Roulette with their financial futures amid a looming apartment crisis.

Propertyology Head of Research Simon Pressley said that the mass production of inferior units since the start of the century had created a tidal wave of woe for unit owners.

“The Australian construction industry is critically ill and 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,” Mr Pressley said. “There’s no vaccine for this horrible disease and the best treatment is most likely to sell sooner rather than later. ,” Mr Pressley said.

“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.”

The research confirmed that even during periods of strong market conditions such as the past five years, unit price growth significantly underperformed houses, including prices falling below 2014 levels in three capital cities…

“Propertyology expects this price growth differential will continue to widen for an indefinite period of time,” Mr Pressley said.

“What this means going forward is that if the median house price within a specific location increases by, say, 20 per cent over a five-year period, the value of an apartment is likely to decline.

“In fact, for the owner of a medium- to high-density apartment to achieve even a modest amount of growth in asset value, their local market would need to produce a property boom – and such a possibility currently seems many years off for most Australian capital cities.”

In addition to the concerning financial performance, most of these dwellings are laced with repair bills worth millions of dollars due to extreme structural integrity concerns, he said.

“The absence of good hygiene within the construction sector – that is, prudent quality control – over the past two decades has resulted in a deplorable quality of workmanship, primarily within Australia’s mass-produced dwellings in our biggest cities,” he said.

“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.

“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”…

“In the 1970s, there was a surge in construction of low density four to 10-pack apartment blocks,” Mr Pressley said.

“Twenty-nine per cent of new dwellings approved during the 1970s were for attached dwellings. Those rock-solid, yellow and red brick apartment complexes continue to live the test of time!”

The Propertyology research found that Sydney (65.7 per cent), Canberra (62.9 per cent) and Darwin (51.2 per cent) have constructed more apartments than houses over the past 16 years.

The cities with the next highest ratio of new apartments to new houses were Wollongong and Gold Coast (both 48 per cent) followed by Melbourne and Brisbane (44 per cent each), while the NSW Central Coast had 41 per cent…

Mr Pressley said that right across Australia, thousands of individual apartments will have performed well below the median value change for their own location.

The common denominator among the poorest performing assets is newer buildings, primarily because roughly 40 per cent of the purchase price for that first owner are taxes associated with new builds, he said.

He said the Federal Government needs to step in and commission a new independent department with the responsibility 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,” Mr Pressley 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.”

Hard to disagree. These apartments are a ticking time bomb and should be avoided like the plague.