Unit buyer confidence low but help is on the way

At a time of year when we start to ponder what the next 12 months might hold, three reports outline the challenges that the apartment sector faces, the current attitudes of potential unit buyers and a decent serving of hope for the future.

The first is a joint report from the Office of the Building Commissioner and Strata Community Association (SCA) NSW, the strata industry professional umbrella group.

It claims that between 2016 and 2022, more than half of all strata buildings in NSW had serious defects, with an estimated $79 million being spent by owners corporations to rectify them.

The survey, completed by more than 600 strata managers, found the most commonly reported defects were waterproofing (42 per cent), fire safety systems (24 per cent), building enclosures, whatever that means, (19 per cent), structural issues (15 per cent), key services such as plumbing and lifts (14 per cent), and non-compliant cladding (8 per cent).

However, the study revealed decreased problems with waterproofing, structural defects, and non-compliant cladding, while fire safety, enclosure, and key services complaints went up. 

In other words, the major problems are getting smaller and the small problems are coming to the fore, perhaps as a direct consequence.  

The most common barriers to effectively dealing with serious defects were reported as delays and lack of engagement from builders or developers and the upfront costs involved in launching a defects claim.

Unsurprisingly, the figures for strata managers being in cahoots with developers and obstructing defect claims doesn’t appear on the radar. Maybe it doesn’t happen. You can read a summary of the survey elsewhere on the Flat Chat website. 

Meanwhile, from the “no surprises” department, global data analysis giants Equifax, says 60 per cent of apartment buyers would pay an average of six per cent more for a new unit if they knew the developer was trustworthy.

However, Equifax, which provides the facts and figures for Building Commissioner David Chandler’s iCirt gold star scheme, found fewer than one in four NSW residents were even aware that the scheme even exists.

The survey also shows that nearly two-thirds of NSW residents admit that they are concerned that the low level of supply with high demand will negatively impact building quality in Australia  builders cutting corners to deliver homes faster.

Premier Chris Minns’ and Commissioner Chandler’s assurances that quality will not be sacrificed in the pursuit of quantity have so far fallen on too many deaf ears.

The most encouraging news to come out this week is that David Chandler has had his building defects inspection army increased tenfold, from 40 to 400.

Now, according to Building Commission policy director Angus Abadee, speaking in a recent Flat Chat Wrap podcast, this doesn’t mean there are now 360 more inspectors crawling over building sites in hard hats, armed with clipboards and spirit levels.

Instead, there’s a massively increased team of researchers and analysts working out who should be the prime suspects for defect detection by cross-referencing developers, builders, architects, certifiers and surveyors who are known to have been a problem in the past.

Thus far the Commission claims a 90 per cent hit rate in targeting and exposing defects at the construction stage, and applying pressure to have them rectified.

One of the problems Mr Abadee identified in the podcast was developers of low-rise buildings moving up to medium rise blocks without fully appreciating the different and more extreme challenges that presented. With that in mind, the Building Commission is looking to upskill willing developers, as much as it’s aiming to weed out the crooks, incompetents and phoenixers.

There are links to all these reports and the Abadee podcast on the Flat Chat website, flatchat.com.au.

This column first appeared in the Australian Financial Review