This week in the podcast Sue Williams is in Darwin on an assignment, and finds that not only is Darwin the hottest city in Australia temperature-wise (probably … apart from Alice … and maybe Coober Pedy) it has the hottest property market with house prices going up an astonishing amount and apartments not far behind.
Then we delve into the woes of the Toplace developers – or maybe their off-the-plan purchasers – as defects are found, repairs that might be fine but look suspiciously like band-aid fixes are revealed, and court cases are publicised.
LISTEN HERE
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Is there a solution to the whole developer and defects conundrum? Sue reminds me that I am going to be MC-ing a Strata Matters owners day for the Owners Corporation Network (OCN) supported by City of Sydney, at which Better Regulation Minister Kevin Anderson will give the keynote address and Building Commissioner David Chandler and other Fair Trading bigwigs will be in attendance.
It should be a terrific day – all I have to do is remember which of them I have insulted over the past couple of years and how deeply I’ll need to apologise. There are more details on the seminar here.
And finally we reflect on our newsletter piece from last week on lift notices warning against throwing things off balconies, and follow a link sent by a reader to a story from Scotland about what must be the worst case of “things thrown off a building” we’ve encountered.
Actually, it’s a bit mad and quite poignant really, and you can read about it HERE. Oh, and FYI, “aufguss” (see notice above) is a kind of herbal infusion they put in saunas to aid relaxation and health.
TRANSCRIPT IN FULL
Jimmy 0:00
Things are a bit strange in the Flat Chat Wrap makeshift studio today; my usual partner in crime, Sue Williams isn’t here. In fact, she’s in Darwin and we’ll be talking to her later, about why that city in the Northern Territory, is the boomtown of Australia when it comes to property. We’re also going to be talking about a developer who is responsible for more than 1000 apartments, either newly built or in the process of being built, who’s suddenly come under a very bright spotlight. A microscope, you might say, and people have been complaining about the build quality in their blocks. I’m Jimmy Thomson, I write the Flat Chat column for the Australian Financial Review and this is the Flat Chat Wrap.
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Jimmy
As I said just a few moments ago, Sue isn’t here with us today in person. She’s up in Darwin and I caught up with her before she disappeared into Arnhem Land on her assignment. If there is a deterioration in sound, the fact that we’re talking via zoom should explain most of why things sound a little different this week. Here’s Sue. Hi, Sue!
Sue 1:35
Hi Jimmy!
Jimmy 1:36
You’re in Darwin?
Sue 1:37
Yes, I am. I came up here today. I’m up here doing a story and gosh, it’s so hot! It’s fantastic!
Jimmy 1:46
Alright, so talking about hot, Darwin is the property boomtown of Australia at the moment.
Sue 1:53
Yeah, it’s kind of like the epicenter really, especially for apartments, which is nice, because I remember a few years ago, apartment prices in Darwin, absolutely crashed through the floor. A friend of ours bought an apartment up here and thought it would be a fantastic investment and in fact, it turned out to be one of the worst things he’d ever bought, but had he hung on; over the last year, apartments have done incredibly well up here.
Jimmy 2:18
But you know, that was during the GFC and everybody suffered to some extent, but Darwin suffered especially badly. They seem to be affected up there, to some extent, the same way that they are in WA, with the boom and bust, with their mines and whatnot.
Sue 2:35
Yeah, because they’re so dependent on resources, so it depends so much on resource prices. I think in Darwin more recently, the public sector has become a really big investor in the economy. It seems to be a bit more resilient, and it’s really picked up now. I think it’s kind of done quite well out of COVID, because there are so many people up here from interstate, and they’re all trying to escape from COVID and they think that the Northern Territory is pretty safe, because they’ve had so few active cases of COVID. As well, the Northern Territory promises a really kind of easy lifestyle. I mean, for some people, it would be a bit quiet, but for others, you know, it’s a perfect lifestyle. I was talking to someone tonight who’s just relocating here from Adelaide, and they were saying, “it’s so lovely and warm here; it’s freezing cold in Adelaide” and Adelaide is just a bit too busy for them. It’s kind of hard to imagine when you’re from Sydney or Melbourne, but I guess Darwin, the pace of life is much more slow and, you know, people just kind of enjoy themselves. I mean, I went to a bar this afternoon, and spent a very pleasant couple of hours there with some friends and then I went for dinner at another friend’s place. It was actually really convivial and enjoyable and relaxed, and everyone’s in a really good mood because the weather’s so warm, and it’s the start of the tourist season here, so everywhere is packed. As you know, rents have gone up hugely here as well. The vacancy rate in some parts of rural Northern Territory is zero! I mean, a vacancy rate of zero! That’s so hard if you want to go and rent something really?
Jimmy 4:23
Well, I dug out some figures this afternoon. Property prices (and we’re talking about house prices in Darwin), in the past year, have gone up 50%
Sue 4:34
Yeah, that’s incredible, isn’t it, really?
Jimmy 4:37
And apartment prices…
Sue 4:38
Apparently, not far behind?
Jimmy 4:40
43%. That’s just crazy money, isn’t it?
Sue 4:45
It really is and I think rents have gone up quite a lot as well, haven’t they?
Jimmy 4:50
Well, I didn’t look at rents. I was just astonished at the prices.
Sue 4:56
Rents for apartments have gone up by over 6%
Jimmy 5:00
Oh, that’s a bit disappointing, isn’t it?
Sue 5:03
Sorry, I’ve got it wrong. The medium unit rent has gone up by 10.3%.
Jimmy 5:08
Yeah, that’s more like it.
Sue 5:10
That’s not bad, is it; 10.3%?
Jimmy 5:12
Well, it’s not bad unless you’re a tenant.
Sue 5:15
Well, absolutely. I think the problem is, because so many people are moving up here, there’s huge pressure on rental places; just with very low vacancy rates. As you mentioned earlier to me today, before I left; you were saying about how Airbnb is really active again now, because domestic tourism is so huge. Look, it was hard for me to find a hotel room up here and so lots of apartments now, have gone back into Airbnb. It’s making the squeeze even tighter.
Jimmy 5:51
Yeah, it would do. The one thing about Darwin that always struck me is you really feel like you’re on the edge of Asia, don’t you?
Sue 5:59
Yeah, you do, you really do. I mean, you’re looking out from Darwin; you’re looking out over the Timor sea and it’s incredibly blue. It just feels so tropical here; it’s just so green and lush and you go down to the Mindil Beach markets tonight, and it’s just teeming with fantastic Asian food stores. Gosh, it’s incredible. You can buy some food there and just sit on the sand. You don’t want to go in the water, because of the crocodiles, obviously. You sit on the sand, a very safe distance from the edge and then eat and watch the sunset. It’s absolutely glorious, watching the sunset over the water. Really, really beautiful.
Jimmy 6:43
Sounds very nice. Okay, so Darwin is… Probably, if you’re thinking of investing in Darwin, you’re already too late, because I would think that would have to be unsustainable, those prices, wouldn’t you?
Sue 6:59
Certainly that rate of growth, but then again, prices are probably still rising. Even if they rise by even half that rate, or even a quarter of that rate, that’s still a pretty good investment. You kind of wonder if, with COVID, whether these lifestyle changes are going to become permanent. All the people from interstate, particularly the Victorians coming up here at the moment. Maybe they they will stay. Maybe they will really like it here and they’ll stay, so Darwin could become a real boomtown again.
Jimmy 7:30
Right, like Adelaide, with sunshine. Actually, Adelaide’s not too bad. Adelaide’s a great place, actually. I like Adelaide, a lot.
Sue 7:41
It is a great time to visit Darwin though, because it’s the start of the dry season. The weather’s really warm and balmy. I mean, the taxi driver I got from the airport was complaining, because he said it was 25 degrees early in the morning. He said oh, it was so cold, he had to put a coat on! You think, wow! Then, it went up to 35 degrees. It is a lovely temperature. It’s not so great around Christmas time, of course, when it’s really hot and steamy.
Jimmy 8:13
Or, just before the build-up, when you can sense the storms are coming, but they’re not here, yet.
Sue 8:21
But, if you’re in a nice apartment with a balcony… There are so many apartments here that have been built over the last 10 years. Really, really, incredible high-rise places and they look a bit out of place. Darwin is still a little town in lots of ways, but it’s got these massive, great towers all along the waterfront; along Mitchell street now and Palmerston, Fannie Bay; everywhere, really. They’ve all got fabulous views of the water. You could do worse, you really could.
Jimmy 8:52
Apart from the crocodiles. I don’t go in the water anyway, so it doesn’t bother me.
Sue 8:58
And over the last few years, Darwin has really improved because, you know, it’s hard being surrounded by water and you can’t actually go in it, but obviously on the waterfront now, they have these two artificial pools, surrounded by sand. One’s a wave pool and one’s just a regular swimming pool. They’re really, really nice. Tonight, people were sitting out on the sand, underneath the shade of the trees and other people were swimming, their kids were playing in the wave pool. It’s a really lovely area and that has really helped Darwin I think, because it’s nice to be able to go in the water.
Jimmy 9:34
And no signs of these apartment blocks falling down?
Sue 9:38
Not yet, no!
Jimmy 9:40
That’s good to know!
Sue 9:41
I don’t know what the inspection regime is like up here; it’s possibly a little less rigorous than down south.
Jimmy 9:48
Yeah, but if you do it too badly, they just feed you to the crocodiles. Talking about inspections… We’re going to take a quick break and when we come back, we’re going to chat about (what seems like), another big scandal in buildings. That’s after this.
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Jimmy
Well, I hate to drag you back to the mundane goings-on in Sydney, but it seems like there’s a developer getting (let’s say), a level of scrutiny with which they may not be entirely comfortable.
Sue 10:25
Well, that’s certainly right, yeah. It does seem to be really galvanizing everybody’s attention, isn’t it really?
Jimmy 10:33
You alerted me to a story (and we’ll put links to this in the show notes). But, you alerted me to a story about a developer in Parramatta. He’s being taken to the tribunal about some alleged defects. I actually found the wrong story about the same developer with a five block development in Castle Hill, and somebody (they’re calling them a whistleblower)… It sounds to me like I would call them, an extremely worried house purchaser or apartment purchaser. They had sent all these pictures to the ABC of cracks in the building and this is a development of 960 apartments.
Sue 11:24
Wow!
Jimmy 11:25
You know, we all got very anxious about Opal Towers; that was only 390 units. This is 960 apartments and you’ve now seen the pictures. They’re pretty awful, aren’t they?
Sue 11:38
They are. I think they were given by a whistleblower to the ABC, weren’t they? The ABC are showing them on their website, and they do look extraordinarily awful.
Jimmy 11:49
Well, they’re big cracks…
Sue 11:51
We have to be careful, because you know, we obviously don’t know whether these are significant or not, but certainly to the naked eye, it doesn’t look great.
Jimmy 12:01
Well, it’s a huge, long crack somewhere in the; I think it’s in the basement and the carpark of the buildings, somewhere down there. They’ve been kind of joined up with inch-thick metal plates; about a dozen of these huge metal plates. They really do look like band aids, don’t they?
Sue 12:23
I mean, it doesn’t look a very tidy solution. Maybe that’s possibly what people do with big cracks in buildings?
Jimmy 12:34
I was thinking about this; I thought we have to be careful about what we’re saying, because we are not engineers and we are not builders. But, neither are the journalists from the ABC and the developers invited them to come in and have a look at this. I guess, they probably didn’t have much choice. Well, the other choice was to say “nothing to see here; there is no problem.”
Sue 13:01
I think with both apartment developments; the one in Castle Hill and then the one in Parramatta along the river side. It seems that now the certifiers are getting involved and the Building Commissioner and Fair Trading. Obviously with the one in Castle Hill, they’ve actually… No, I think the one in Parramatta, they’ve started Supreme Court Action, haven’t they?
Jimmy 13:22
Yeah, it’s a bit further on. They’ve got their certificate; they’ve moved in and they’re now trying to get any defects fixed. The one in Castle Hill is a bit different. Now, they are on their third certifier. So the first certifier that they had, just went out of business, the second certifier quit, and they’re now on their third certifier and the very bland sort of Fair Trading reports are the certifier is doing their job now, in checking the building. But, I have a feeling (this is just my theory, and I may be wrong), this whistleblower is looking at this development and thinking “I really need them to never get a Certificate of Occupancy, because if they don’t get that, I can get my deposit back and if they do get it, I can look forward to the next few years, spending time in and out of courts and tribunals trying to get all this stuff fixed.”
Sue 14:28
Oh gosh, yes, absolutely. There’s always that backstory and the backstory is always one of real depression and misery and anxiety and worry, I mean, an apartment purchase is going to be one of the biggest purchases any of us are ever going to make in our lives. It’s just awful when things start to go wrong or look as if they are going wrong. We all do feel terribly helpless. Let’s hope that this situation gets sorted out soon.
Jimmy 14:57
I think we’re in a transition phase. David Chandler coming in last year to rectify deficiencies in apartments, while they’re being built. What we’re seeing is the tail end of apartments that apparently (allegedly), have defects that have been taken to court and to the tribunal and the beginning of apartments where he and his team have gone in and said “okay, you need to fix this, or you’re not getting an Occupation Certificate.” This Castle Hill development, kind of feels like it’s in the middle. They didn’t get it finished quickly enough, so they got Fair Trading coming around. All Fair Trading is saying is “we’ve got our eye on you. We are watching. We’re aware; we’re going to be checking.” I think those bandaid metal… I mean, I’ve never seen anything like that in a building, ever.
Sue 15:53
Absolutely and as you say, the size of the building is a huge worry, too.
Jimmy 15:57
Yeah. I mean, that’s a lot of people and a lot of people, the majority of whom, probably have no idea of what their rights are, in terms of getting their money back if things go seriously wrong.
Sue 16:09
Yep, quite possibly. Even those apartments along the riverside in Parramatta that they were being hailed, as opening up Parramatta to a much bigger population, because great to have apartments along the riverside. Great use of the Parramatta River and there’s beautiful grassy banks along there. It’s a really lovely place to live. As soon as they went up, you started thinking ‘well, why weren’t there apartments around there before?’ It’s a terrible situation that so much doubt is being cast over their structural integrity now.
Jimmy 16:45
Well, you don’t know how bad things are there, or whether it’s just.. I mean, there’s a certain element in the new regime of checking these things, that people are suddenly becoming aware of the possibility that there might be defects in their building. It’s not necessarily that things are worse than they used to be. They might even be better than they used to be, but people are just more aware.
Sue 17:09
Absolutely. Because isn’t the OCN, the Owners Corporation Network; don’t they have another seminar up soon about apartments?
Jimmy 17:19
You know they do! You know perfectly well. It’s on, I think, July 20. Again, we’ll put the details on the website. You know, that old saying ‘what goes around comes around;’ David Chandler is going to be there. Kevin Anderson is going to be there (their Fair Trading minister), and a couple of people from Fair Trading. I think at least three of those four people, I have insulted at some point in the past and I’m hosting the thing!
Sue 17:52
Goodness me! You’re going to have an interesting time!
Jimmy 17:53
I think we’ll start the session with, you know, Welcome to Country and an apology to everyone taking part. It will be worth the ticket price. So yeah, that’s something for us all to look forward to. I shall be mending fences, as opposed to my usual thing of burning bridges. Sue, thanks for taking time out. I know you just flew up there today. You must be exhausted.
Sue 18:11
Yes, but I’ve still got one more story to write.
Jimmy 18:34
Oh, my God!
Sue 18:35
I’m just gonna do that before I go to bed. So yes, but it’s a great pleasure to talk to you, Jimmy. I miss you.
Jimmy 18:42
Oh, I miss you too and we always have so much fun in these things; spending the first half hour trying to get the bloody computers to work.
Sue 18:51
We finally made it.
Jimmy 18:52
We did. Alright, talk to you soon. Bye Sue.
Sue 18:56
Cheers, Jimmy.
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Jimmy 19:03
And that was Sue Williams, who is now, as I record this, on her way to Arnhem Land. The fact that she wasn’t here, means that the podcast is a little bit shorter this week. Before I go, I just want to mention something that I mentioned in the introduction to the weekly newsletter, which was a thing about notices in lifts. That got a very interesting reaction from one of our regular readers, Richard d’Apice, who sent me a cutting, or a link, to a newspaper story from Scotland about two men who basically threw a silver off a roof and ended up in court. Interesting outcome from that particular case. And there’s a link to that on the show notes, along with everything else that we’ve been discussing today. Sue will be back to talk to us again next week, with any luck. Until then, thanks for listening. Bye.
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Jimmy
Thanks for listening to the Flat Chat Wrap podcast. You’ll find links to the stories and other references on our website www.flatchat.com.au And if you haven’t already done so, you can subscribe to this podcast completely free on Apple podcasts, Google podcasts, Spotify, Stitcher, or your favorite pod-catcher. Just search for Flat Chat Wrap with a W, click on subscribe, and you’ll get this podcast every week without even trying. Thanks again. Talk to you again next week.
