Leading Sydney buyers agent Michelle May says build quality scandals like Opal Tower and the Lachlan's Line apartment blocks are just the "tip of the iceberg."
In 2018, residents of the Opal Tower apartment block in Western Sydney had to evacuate because of structural problems, only now reaching settlements to have strata and mortgage debts cancelled.
More recently, the 900 unit 'Lachlan's Line' apartment block in Macquarie Park was declared at risk of collapse last month, with the developer ordered to address structural problems.
Ms May says these are merely the most high profile instances of an increasingly widespread issue.
"As a buyers agent who is assessing buildings for their clients on a daily basis, I can promise you that Opal Towers and the more recent Macquarie Park scandal are only the tip of the iceberg reported in the press," Ms May told Savings.com.au.
"Many who pay a premium for new builds often end up on the hook for costly rectification work, and if they’re especially unlucky, protracted court battles."
A NSW Government study from November last year found 53% of strata buildings registered from 2016-2022 had serious structural defects.
Serious defects can refer to waterproofing, fire safety, or structure, as well as issues with keys or enclosure.
First home buyers beware
Despite lower consumer sentiment and high interest rates, demand for property stayed strong throughout last year.
Extremely tight rental markets are one factor often pointed to to explain this: tenants who are struggling with their rent might be increasingly deciding to bite the bullet and start paying off a mortgage of their own.
However, Ms May says prospective first home buyers need to avoid falling into the "grievously damaging trap of buying properties that are too new or off the plan."
"The young and vulnerable are in danger of swapping one set of problems for another in the form of shiny new apartments," she said.
With the construction industry itself struggling with the cost of materials and labour, as well as high interest rates hurting customers' borrowing power, Ms May said developers are increasingly cutting corners.
This is amid the backdrop of widely publicised housing shortages, with both state and federal governments announcing ambitious targets for residential construction in the coming years.
Since December, the newly established Building Commission of NSW has taken control of regulation, with Minister for Building, Anoulack Chanthivong, saying it would restore "trust and integrity" in the industry.
"Buying a home is the great Australian dream; Building Commission NSW will help make sure it doesn’t turn into a nightmare," Mr Chanthivong said.
The Building Commission has been kept busy since, already expanding from about 24 staff to over 400 in the short time it has been operational, and has already issued many rectification orders.
Ms May though said she was pessimistic about it substantially improving long term outcomes for home buyers.
"The Building Commissioner may broker a deal between owners and developers, but the government’s track record of holding developers and builders accountable doesn’t engender much hope," she said.
This comes as ABS lending indicator data shows lending for new homes is at half the volume of just over two years ago, with 51,570 loans issued in 2023 for the construction of new homes.
This level is now at the lowest level since records began in 2002.
“The focus needs to be on how we get more slabs poured that will result in the keys getting in the front doors of buyers’ and indeed renters’ pockets quicker,” said Jocelyn Martin, managing director of the Housing Industry Association.
Picture by shraga kopstein on Unsplash
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