APARTMENT DEFECT CRISIS SLAMS APARTMENT SALES

Defect crisis slams apartment sales

Buyer fears about high-rise apartment fires and construction risks are causing sale times to blow out by more than 60 per cent compared with a year ago

Defect crisis slams apartment sales

By Houses and Holes in Australian Property

September 16, 2019 | 11 comments

Why would anyone buy an apartment today? Via the AFR:

Buyer fears about high-rise apartment fires and construction risks are causing sale times to blow out by more than 60 per cent compared with a year ago, creating bottlenecks for sellers.

Lenders are also making it tougher for borrowers to buy apartments by blacklisting some postcodes, increasing deposits and lowering valuations for off-the-plan purchases.

…“Buyers are telling me they do not want to buy into anything new,” says Patrick Bright, a Sydney-based buyer’s agent. “They do not want to buy into a problem.”

Who can blame them? This is one key reason why we see the apartment bust getting worse despite wider rising property prices and the impact of the latter being very muted for economic activity:

This will see unemployment rise and risk some serious developer shakeouts:

Raising the question: how far can house prices rise without an economy?

Opal Tower

Photo: The Guardian; Opal Tower

SOURCE: https://www.macrobusiness.com.au/2019/09/defect-crisis-slams-apartment-sales/

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FLAMMABLE CLADDING BUILDINGS KEPT SECRET

The problem is, the more uncertainty around flammable cladding remains, the harder it will be for the overall apartment market to recover … ‘

Flammable cladding buildings kept secret

By Unconventional Economist in Australian Property

September 16, 2019 | 23 comments

The New South Wales Government has instructed councils to keep flammable cladding locations secret in order to thwart potential terrorists from setting these buildings alight, as well as to protect apartment values. From The Guardian:

In NSW, a taskforce has spent two years auditing 185,000 building records to understand how widespread flammable cladding is.

Laws have been introduced requiring the owners of some buildings with external cladding to place themselves on registers accessible to local councils and the state government by February.

Members of the public and the Greens MP David Shoebridge have sought access to those registers through the state’s equivalent of freedom of information laws.

But Guardian Australia has obtained an internal missive sent by the NSW government to local councils last month warning them the cladding information is “highly sensitive” and advising them the release of the documents may be contrary to the public interest.

Councils were advised to “consult” the planning department before making decisions, and were given examples of three common reasons to reject requests: the potential to affect property prices; to derail the taskforce’s work; or to create a risk of “terror” and arson…

Shoebridge, who lodged the City of Ryde request, said there was little doubt the properties identified would take a temporary hit in value.

But he said the release of the documents was critical to improving the response to cladding, and criticised the government for attempting to “gag” councils by raising the prospect of terrorism.

“The state government is making unsupported and exaggerated claims about terrorism and arson threats in a thinly veiled attempt to scare councils away from releasing information about combustible cladding,” Shoebridge said.

“People living in these buildings have a right to know if they’re at risk. Anyone thinking of renting an apartment or buying an apartment also has a right to know and it’s about time the state government understood that.”

For any ‘market’ to function properly, it needs proper disclosure of information. But by using the guise of terrorism, the New South Wales Government thinks it can keep such price sensitive information from being disclosed, thus keeping potential buyers in the dark and preventing apartment values from dropping.

The problem is, the more uncertainty around flammable cladding remains, the harder it will be for the overall apartment market to recover, since all recent high-rise apartments will be perceived to be at risk, rather than only those that are actually covered in such cladding.

It seems the New South Wales Government is more interested in masking the flammable cladding problems than finding actual solutions.

Image may contain: skyscraper and night

SOURCE: https://www.macrobusiness.com.au/2019/09/flammable-cladding-buildings-kept-secret/

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NSW new Building Laws to crack down on dodgy builders and put a stop to Phoenixing

IS this ‘Phoenix scams in ashes’ about Beryl’s plans to clean up the mess created by the government? …

Deregulation, planning law changes to suit deve-lopers, rezoning for higher density, exempt and complying development, Certifiers employed by deve-lopers …

WHAT about compliance by deve-lopers and builders complying with the Australian Building Code … even if it doesn’t fit with their profit margins?

As they employ the Architects, Engineers and others …

State’s new building laws to crack down on dodgy builders and put a stop to phoenixing

Dodgy apartment developers who deliberately liquidate their companies to rip-off buyers and contractors are at the centre of tough new laws that will make “phoenixing” not worthwhile and are expected to put some of the worst offenders out of business.

Janet Fife-Yeomans,

September 8, 2019

DAILYTELEGRAPH.COM.AU0:59Shocking revelations uncovered about Opal Tower

Just as almost 100 apartments were deemed safe to be occupied, a whistleblower has revealed explosive footage that again…

Dodgy apartment developers who deliberately liquidate companies to rip-off buyers and contractors are being targeted­ in a state government crackdown.

Planned legal changes which will make “phoenixing” not worthwhile are expected to put some of the worst offenders out of business.

There are also plans to force, for the first time, architects and engineers to comply with the Australian Building Code, which lays down minimum safety requirements.

“If anyone may be in doubt about our government’s intent to get on top of the current crisis­ facing the industry, let there be no misunderstanding,” Better Regulation and Innovation­ Minister Kevin Anderson said.

“The NSW government intends to lead the nation on building reforms and ultimately deliver a framework that is considered among the best in the global construction industry.”

A photo of cracking in what appears to be concrete in the Opal Tower.
A photo of cracking in what appears to be concrete in the Opal Tower.
A photo shows the damage after a broken section of concrete is removed.
A photo shows the damage after a broken section of concrete is removed.

The reforms follow the crisis­ in confidence in the construction industry after the evacuation of the Opal Tower and Mascot Towers over cracking and other defects.

Mr Anderson said it would be the biggest shake-up to the industry in the state’s history “to improve the transparency, accountability and quality of work within the sector”.

The business of “phoenixing” — which strips a company of assets so it cannot be sued if anything goes wrong — is rife in Sydney’s apartment building explosion.

Better Regulation and Innovation­ Minister Kevin Anderson has vowed to turn the industry around.
Better Regulation and Innovation­ Minister Kevin Anderson has vowed to turn the industry around.

The government plans legislation to “disincentivise” it and make the companies wish they had held on to the assets, a source said.

Mr Anderson said it was a “once-in-a-lifetime opportunity to transform the building and construction industry”.

“Working in collaboration with everyone that has skin in the game, we can create an environment­ where future generations are confident in the quality of construction, the security of their investments and the prospect of great places to live,” he said.

Visible cracks in the parking lot at Mascot Towers. Picture: Monique Harmer
Visible cracks in the parking lot at Mascot Towers. Picture: Monique Harmer

The reforms come after a government options paper released­ last year, which was designed to stamp out conflicts of interest between building certifiers and developers, went down like a lead balloon with the industry.

Proposals for a cab rank scheme, whereby a certifier would be allocated on a “next in line” basis, and a time limit scheme, requiring certifiers to take a three-year break from a client after a certain period­, were not supported. Local councils said they did not want to be responsible for building certifiers again. Sources said that the public outrage prompted by the Opal and Mascot fiascos had made it easier this time to pull the industry into line.

Premier Gladys Berejiklian­ is said to want the issue sorted by the end of the year, with the legislation to be introduced into parliament in late October or early November­.

Better Regulation and Innovation­ Minister Kevin Anderson has vowed to turn the industry around.

SOURCE: https://www.dailytelegraph.com.au/news/nsw/states-new-building-laws-to-crack-down-on-dodgy-builders-and-put-a-stop-to-phoenixing/news-story/ac7a418fd77ce58d7a7b35dcd4c47409?utm_source=DailyTelegraph&utm_content=SocialFlow&utm_campaign=EditorialSF&utm_medium=Facebook&fbclid=IwAR14zZZbjiphqLbifr3OEbDOPQM752wpyw5RRmSXhBbfQrwjAdkYZqekVS4

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HOW MUCH MORE IRREFUTABLE EVIDENCE FROM OWNERS OF DEFECTIVE APARTMENTS IS NEEDED?

Business man and woman playing wood jenga game blocks in office studio.

Photo: The Fifth Estate

CAAN came across a report published in The Fifth Estate

‘Building crisis: we need an injection of good evidence’

Image may contain: sky and outdoor

CAAN Photo: Some of the Godzillas of Meadowbank

A few things appear to stand out from this interpretation of what is happening in the building industry.

SURE it’s an opinion, and they are entitled to express it, but we believe it is just that!

IS this piece designed to sow the seeds of doubt about other studies?

They are critical in pointing to the lack of evidence provided yet provide little or none themselves …

IS this piece cleverly worded so as to make it ‘defensible’;  in that it is only alerting the community to the lack of data, the lack of definitions, and lack of defining what Standards ought to prevail?

At CAAN we would like to know what the average person would think on reading this piece, would they think it rings a bell, that it’s a bit like hearing from those fellow travelers of the cabal of backroom deniers on climate change?

‘how can it be so when the data is so inconsistent, the science isn’t proven’, and so on

WHAT about reading and referring to what Engineers Australia have said about apartment construction?

‘Engineers Australia Report says NSW has country’s worst building certification system’

Posted 20 Jun 2015

And that ‘the building system in New South Wales has broken down’. 

The warning came in a report compiled by the Engineers Australia multi-disciplinary Committee.  Some of the key findings were that NSW had Australia’s worst building certification system and 85 per cent of strata units were defective on completion.

https://www.abc.net.au/news/2015-06-20/nsw-engineers-issue-fire-warning-for-apartments/6561092

WHAT about calling it what it is rather than casting doubt on clear and present collapse in confidence but also in the frequency and volume of real defects, not perceptions or something that hasn’t been defined, or sits in some data base?

The problems in apartment construction are significant for a host of reasons, few of these in this piece seem to have received even a mention.

WHAT about mentioning some of the history behind all of the issues, like the wholesale pulling apart of the approvals and inspection system, of the implementation of self- regulation and certification, the importation of building products that aren’t subject to testing … the list goes on!

OR maybe this piece was meant to be superficial, is it just that?

Also could it be a tad arrogant of them?

-tell those with water and mould issues remaining … not rectified!

No photo description available.

CAAN Photo: Permanent water marks on concrete walls of basement carpark; when it rains it is like a waterfall; the floor is patterned with circling cracks throughout and large cracks to the walls of both carpark levels. Lane Cove electorate apartment development


-tell those with stuck doors, unfinished surfaces and shoddy finishes still unrepaired
-tell those with poor drainage and other pumping problems that remain unfixed
-tell all those hundreds of occupants of apartments stuck with owning a lemon that through no fault of their own they now could not sell their most important investment
-tell all those owners who have lost tenants because the apartment they once rented is now uninhabitable owing to major defects
-tell all the owners now faced with massive costs to repair their apartment block … while the developers and construction companies walk away
-tell the hundreds of owners that governments and various regulators have abandoned consumer protections, and have allowed minimal inspection and compliance regimes to prevail despite years of sufficient evidence being provided that clearly showed the system was and is…

IN CRISIS

To simply pull apart the idea there only maybe a problem, that we lack the definitions, the data, or don’t have a so-called defining Standards to measure the issues against … are these Professors deep in the Egyptian River?

PS …
Would they have views as expressed if they were owners of apartments that failed on any reasonable assessment being of an acceptable standard?

IT’s not about just a few apartments …

-we are literally talking about thousands of apartments in Sydney alone
-we are seeing significant albeit lesser numbers of defective apartments in other capital cities
-the truth is the number of apartments is not even mentioned in the piece by these academics 
-are we talking about thousands of apartments nationally that have been found to be significantly below standard? The answer is likely, ‘most definitely’
-indeed are these defects insignificant? For the most part they seem not, we do have an iceberg here, and whilst the media seize upon stories of woe, luckily for the perpetrators of poor performance the media quickly move onto the next story

Image may contain: sky, cloud and outdoor

CAAN Photo: ‘Ryde Garden’ by Chinese Country Garden; the first O’Farrell Govt High-rise Precinct; an experiment in community consultation with a community panel sworn to secrecy in 2012.

WHERE in the piece did they acknowledge foreign entities have entered Australia’s domestic housing market, and we are now seeing how there is an un-willingness to uphold compliance matters that has led to apartment buildings failing to obtain occupancy certification … and we don’t necessarily have a crisis?

They must be kidding

Above all it is the lack of accountability and consumer protections afforded owners of apartments particularly those in buildings of more than 3 floors … apartment owners in buildings of more than three floors do not have the coverage of Home Owners Warranty Insurance  …

https://caanhousinginequalitywithaussieslockedout.com/2018/12/31/6337/

To infer a situation that is costing owners millions of dollars is not necessarily a crisis is:


-a diminishing response from sideline commentators that seem to exploit their apparent positions of authority

-whilst acknowledging there is a problem it seems they are timid when it comes to actually focusing on poor performance, and the failure of those involved to deliver dwellings that don’t fail in so many instances.

Image may contain: outdoor

PHOTO: The fire rapidly spread up the side of the Neo200 building. (Supplied: MFB)

SOURCE: https://www.thefifthestate.com.au/columns/spinifex/building-crisis-we-need-an-injection-of-good-evidence/

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Australia’s high-rise faults fuelled by fraud

Image may contain: skyscraper, sky and outdoor

CAAN Photo: Inner West

Companies involved in the certification of building products state that they often come across fraudulent certificates; some duplicated in China; others frequently made aware of dubious certificates!

Australia’s high-rise faults fuelled by fraud

By Unconventional Economist in Australian Property

September 6, 2019 | 6 comments

Companies involved in the certification of building products state that they often come across fraudulent certificates.

John Prasad from Approval Mark says its certificates have been duplicated in China, while John Thorpe from CertMark Inter­national says it is frequently made aware of dubious certificates.

Australian Institute of Building Surveyors CEO Brett Mace says the federal government should implement a national register for all building products. From The Australian:

Key certifiers used to determine whether building products are compliant say they are still being inundated by dodgy certificates for unsafe products, which are being imported into the country from overseas.

Fraudulent documentation was one of the many issues raised at the 2015 Senate inquiry into non-conforming building products, where it was heard that widespread fraud was being used to certify unsafe materials.

The news comes amid growing concern over building safety as NSW is rocked by apartment blocks with severe defects and as combustible aluminium poly­eth­e­lene…

Fraudulent certificates. Dodgy certifiers. Phoenixing building companies.

One can only imagine how deep Australia’s high-rise building crisis runs and how many of the apartments built during the last decade’s unprecedented boom are containing hidden faults:

Australia will be wearing the costs of this mess for decades.

Image may contain: outdoor

CAAN Photo: Inner West

SOURCE: https://www.macrobusiness.com.au/2019/09/australias-high-rise-faults-fuelled-by-fraud/

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UPDATE ON AUSTRALIAN CONSTRUCTION STANDARDS

SAI GLOBAL … About

Formed in 1922; formation of ACESA

1988 ACESA becomes Australian Standards

2002 SAI Global formed

Find out more:

https://www.saiglobal.com/en-au/about_sai_global/our_business/company_overview/

FOLLOWING on from the Report we shared previously …

BARING PRIVATE EQUITY ASIA Finally Grabs SAI GLOBAL to Own ‘AUSTRALIAN STANDARDS’!

DECEMBER 27, 2018 / CAA4NSW 

WITH the Baring Private Equity Asia grab of SAI Global the “Australian Public” including Trades lost free acccess to Australian Standards at 9 Libraries;  access was previously free prior to midway 2016!

AND WHY CONSTRUCTION STANDARDS SHOULD BE FREE!

EXTRACT from ‘Why construction standards need to be free’

‘For years, experts have said that cost and lack of access to the hundreds of standards contained in Australia’s National Construction Code has been a problem.

Many of those standards refer to many other standards, and each one costs hundreds of dollars to access, says executive director of the Australian Construction Industry Forum (ACIF) James Cameron. …

For example, the Design for Access and Mobility (AS1428) set of standards is referenced by the NCC but is also widely referenced by the wider community. But it costs $628, far beyond the reach of someone wanting to ensure their premises provide compliant access to people with a disability,” said Mr Cameron.

Small- and medium-sized companies are particularly disadvantaged. Some industry associations, such as ACIF member Master Electricians Australia, license key standards to provide them to their members.  But many tradespeople and professionals working for small- and medium-sized businesses don’t access all of the referenced standards because of the cumulative cost’, he said.

PREFERABLY THEY WOULD BE FREE!

‘When the National Construction Code was made free, he said, the take up increased ten-fold.

“This is a win for practitioners in the industry, and the well-being of the Australian public.”

THE MONOPOLY HELD BY SAI GLOBAL ON PUBLICATION AND DISTRIBUTION OF AUSTRALIAN STANDARDS ENDED EARLIER IN 2019

IN MAY 2019 STANDARDS AUSTRALIA ANNOUNCED A NEW DISTRIBUTION AGREEMENT WITH DIGITAL FIRM TECHSTREET.

USERS WILL BE ABLE TO ACCESS THROUGH A WEBSTORE AND SUBSCRIPTION SERVICE TO TECHSTREET ENTERPRISE, THEIR STANDARDS MANAGEMENT PLATFORM

IT REMAINS TO BE SEEN WHETHER THEY WILL BE MORE AFFORDABLE

Jeroen Prinsen, VP and head of Australasia and South East Asia for Clarivate Analytics, which owns Techstreet, declined to name a ballpark price for the products. But he said customers would be able to purchase single standard documents and that there would be discounts on the retail price for large-volume orders.’

THE CASE FOR PROVIDING ACCESS TO STANDARDS AT THE LOWEST COST POSSIBLE IS CLEAR: IT WILL IMPROVE COMPLIANCE

‘For example, members of the Australian Institute of Architects (AIA) can access the 250-odd standards most relevant for project design as part of their membership subscription to the organisation.

However, for smaller studios or solo architects, the cost of AIA membership and of purchasing access to standards is prohibitive … ‘ …

Fundamentally, having to pay to access mandatory standards is like being given a driver’s licence but having to pay to access the details of each road rule

The government should not be forcing people to pay to get access to the law, said Mr Mihaly.

An industry source in the construction space reiterated the barrier posed by the high price of standards for many small builders, trades and consultants.

Many people in the industry say the ideal situation would be to make the standards freely available but don’t feel confident it will happen any time soon.

Instead, we could see a marketplace where the various standards distributors still keep the cost of individual standards high to maintain their bottom-line.

Some sectors of the industry have been lobbying for Standards Australia to maintain a centralised hub for purchasing of standards and for dealing with user complaints and other issues, which is supplier neutral, the source said.

They would also like to see Standards Australia establish a process for dealing with matters around distributor pricing and changes to pricing, as well as fail-safes to prevent distributors from carving up or dominating the market.

Expensive standards are also a problem for consumers, according to another industry source.

“Consider the legal liability around purchasing a strata apartment for example. A consumer is legally expected to have done due diligence ahead of purchase, which includes accessing any relevant and available standards.

“With literally hundreds of standards applicable to a typical building construction, how can a purchaser possibly afford to check? Yet if they don’t check … [a later] dispute may not be resolved in their favour.”

Standards Australia has said it will submit feedback from its consultation process around standards distribution to its members and councillors in November, and is aiming to implement them in January, next year.’

Comments

7 Responses to “Why construction standards need to be free”

  • Cheralynne Morrison-Evans says:6 September 2019 at 2:22 pmA fantastic article of significant importance! How on earth can you expect builders, tradies, designers to be compliant when they don’t know the information (as things often change over time) and also don’t have access to finding any answers. The cost of the standards is an absolute disgrace and how on earth did SAI Global end up with all of the control.
    This needs to change and change soon.
    keep up with the push for change.
    Cheers, ChezReply
  • Simon says:6 September 2019 at 12:28 pmI tried to access relevant Australia standards to undertake some work on safe engineering practices in regard to rigging for a community theatre group and discovered how aggressively standards access has been removed from the public by SAI Global. At the time I enquired even the NSW state library had lost their access to the standards. They were once available in hard copy in public and TAFE / University libraries. These have all been removed. SAI Global said the account was being abused at the state library and it was closed.The only way I found to in theory being able to read the relevant standards was ordering hard copies from the national library which would be delivered to my local library physically. Then I could read them for a short time in the library and then they would be sent back to Canberra.Physically sending printed documents from Canberra – in 2019…I gave up in the end… It just became too difficult. I would have needed to refer back to the standards to complete the work – and I was not prepared to get the documents couriered from Canberra every time I need to check a clause…The purchase costs are ridiculously high (and 90% of this has historically gone to SAI global – only 10% has gone to Standards Australia) and the wealth of wisdom in the standards is effectively lost to the community as a whole. It would have cost thousands to buy the standards required and was out of the question for me or the community group in question to afford them.I was talking to a friend who had a long career in the law and he said it may be unconstitutional to remove public access to standards as if they are by referenced as obligatory by statute effectively forming part of a law then it is a basic tenet of law that you must be able to read it to comply with it – You cannot be charged for this.Of course to test this would likely take a fair bit of legal outlay… And fighting an aggressive private equity firm who ultimately hold the copyright of Australian Standards … How did we get here?But there is no doubt in my mind restricting access to the wisdom embodied in standards is a poor outcome for all of us. I really think they should be considered a public good. With committees funded by govt and publicly published. What value does a publishing firm add in the age of technically trivial online distribution? Why does the publishing firm receive almost all the monies for having some documents on a web server? I would be interested to see the split in the new agreement.Their employment across all spheres of human life could bring many, many benefits in so many ways.Reply
  • Steven Horn says:6 September 2019 at 11:57 amAs a building designer I get tradies asking what to do with certain issues. I try to put the codes on the plans for most things like access for the disabled or other problems like waterproofing, Fire prevention anything in relation to the building. I can’t afford to have all the codes, so I can’t show everything. I don’t know any tradie with a code book, some may have the AS. 1684 or even the old Tradac book the older guys. If they were free or even $10 a lot more guys or girls would have them with codes being updated from time to time we can’t be buying the updated codes either. The BCA is free online why not the codes it talks about. Thanks for the article well done. SteveReply
  • Liz G says:6 September 2019 at 11:44 amFrom designing my residence and driveway, to Quality Control onsite … I’ve had no end of trouble finding the standards. Only a few libraries have access to them. The draftsman, and tradies, had little familiarity. The apprentices were clueless. Of course the standards should all be free, and easily accessible online. Including forecast changes. (One standard changed after my build was underway; luckiky it was certufied just before the change occurred.) The forecast change should have been known at the detailing of specs, and signing of the contract. The cost increase could have been significant.Reply
  • Daniel Wurm says:6 September 2019 at 10:26 amYes! I would estimate that less than 5% of tradies have access to the standards relevant to their trade. No wonder there is a complete lack of knowledge of building standards, and our buildings are falling apart!Reply
  • Lynda says:6 September 2019 at 9:21 amThank you for this thoughtful and timely article. I have long believed that all Australian Standards should be free and that the taxpayer revenue benefit of selling standards is annulled by the fact that taxpayers have to pay for the standards – so it’s a case of cutting off the bottom of the blanket and sewing it on the top. Where I work in Local Government we have to pay for many Australian Standards and ratepayers ultimately pay for these. Or worse, we try to do without them and assume we know what we’re doing.Reply
  • Michael Mobbs says:6 September 2019 at 5:50 amTerrific article; thank you.A citizen is presumed to know the law.But if the citizen must pay high fees to buy a copy of the law at an unaffordable price then non-compliance with the law is encouraged.To give a monopoly over the sale of the law is to create an environment ripe for market abuse; and so that’s what’s happened with construction laws.Thank you again for this, Michael

SOURCE: https://www.thefifthestate.com.au/innovation/building-construction/why-construction-standards-need-to-be-free/?utm_source=The+Fifth+Estate+-+newsletter&utm_campaign=f6cbd24f29-1+november+2018_COPY_01&utm_medium=email&utm_term=0_5009254e4c-f6cbd24f29-44064757&ct=t(EMAIL_CAMPAIGN_1_COPY_01)&mc_cid=f6cbd24f29&mc_eid=a9cd38b621

SYDNEY SUGARCUBE APARTMENT OWNERS LOCKED OUT AS DEVELOPER ADVERTISES ‘THE SWEET LIFE’

ARE these foreign developers able to just swagger into our markets, and set up shop?

 
-without proving who they are?
-what they have done?
-that they are legitimate businesses?
-that they aren’t involved in dubious practices?
-that they will meet their obligations and guarantees?

THE ANSWERS to these questions seem obvious, is it the case 

-they don’t have to meet any requirements or standards?
-we don’t require anything of them?

INDEED it appears our governments have let us down yet again …

IT looks like they foster foreign money over protections for our citizens?

IT will be interesting to see how far local authorities will give in to the foreign interests, how far will they dilute the requirements initially placed upon this development?

Related Article: https://caanhousinginequalitywithaussieslockedout.com/2019/07/19/sydney-sugarcube-apartment-tower-abandoned-after-toxic-land-concerns/

SEARCH CAAN Website for ‘Sugarcube’ to find more!

Sydney Sugarcube apartment owners locked out as developer advertises ‘the sweet life’

By Nick Sas

5 SEPTEMBER 2019

Nick Rehac outside his apartment block with a dog

PHOTO: Nick Rehac bought his apartment last year for $1 million but is still barred from living in it. (ABC News: Jason Om)

RELATED STORY: Nick bought his apartment for $1 million but he’s not allowed to move in

RELATED STORY: The Sydney suburb full of apartments with no-one living in them

RELATED STORY: How to avoid living in a ‘lemon’ — what you need to know before buying an apartment

RELATED STORY: Thinking about buying a new apartment? Don’t do it

The owners of a Sydney apartment complex locked out because of toxic land concerns look set to be barred from entering their homes until at least the end of the year.

Key points:

  • The Sugarcube apartments were completed in May last year, but the City of Sydney has barred owners from moving in
  • The developer Golden Rain is still advertising the apartments online as “the sweet life”
  • Golden Rain, which does not have a website, claims to have completed 30 projects across Asia

In what one owner described as “a disgrace”, the City of Sydney and developer Golden Rain are locked in an ongoing battle over the $46.5 million, 109-apartment “Sugarcube” development in the inner-west suburb of Erskineville.

It was revealed in July that the City of Sydney was refusing to allow owners to move in over concerns the developer has not cleaned up toxic land underneath it, despite the apartments being completed in May last year.

Two months after the revelations, the developer and the City of Sydney are still locked in the dispute with experts telling the ABC the situation is unlikely to be resolved by the end of the year.

One owner, who declined to be named, told the ABC he expected the sunset clause on his one-bedroom $715,000 apartment — which he bought off-the-plan in 2015 — to be extended past its December 31, 2019 expiry.

“I don’t think we’ll be able to settle any time soon,” he said.

It comes as the developer continues to advertise the apartments online, using the slogan “the sweet life”.

The development is promoted as offering “exceptional living” in a “truly inspirational setting”.

The website declares construction has “commenced”, despite the apartments being completed in May 2018.

square geometric apartments surrounded by fences

PHOTO: The Sugarcube apartment complex was built on an old industrial estate. (ABC News: Jason Om)

Another owner, Nick Rehac, who bought his $1 million apartment last year, told the ABC he had no correspondence from the developers or the City of Sydney.

“We’ve been waiting, waiting, waiting and heard nothing,” he said.

“It’s a disgrace. People keep ringing me and asking me to do something [take legal action] but I have no money for it, nothing.”

The ABC understands some owners have engaged lawyers, however no legal action is before the courts.

According to the City of Sydney, the building was approved on strict conditions in September 2015 because the site — once an industrial area — was contaminated groundwater with heavy metals, hydrocarbons and asbestos.

It said the developer, Golden Rain, went ahead with construction without meeting all the conditions set out in a remediation plan to clean up the site.

The City provided an update to apartment owners in the development late last month.

It said it was awaiting a “detailed plan” from the developer as to how the site can be acceptably managed going forward.

Welcome to Sydney’s ghost towers

Welcome to Sydney's ghost towers

Record apartment rental vacancies and a softening housing market are creating an odd phenomenon — apartments with no-one in them.

It also advised residents to seek legal advice if they were “concerned about the ongoing issue”.

Golden Rain, through an advisor, told the ABC it was working on the detailed plan that required the input of “a range of stakeholders, including environmental consultants, auditors and insurers”.

The company said it did not know when the development would be given the green light for owners to move in.

“It will depend on the time it takes to reach an agreement with council as well as the time required for documentation and formal approval,” the spokesperson said.

“While we know the delays have been frustrating for our purchasers, we are taking every possible step to satisfy council’s requirements.”

Golden Rain claims to have completed 30 projects across Asia, but the Erskineville development is its only project in Sydney. The company does not have a website.

The Sugarcube apartment situation comes as NSW is in the midst of a building industry inquiry, with apartment owners in Mascot Towers and 15 owners in Opal Tower in Sydney’s Olympic park still locked out of their homes because of defects.

banner image

Photo: Golden Rain

SOURCE:
https://www.abc.net.au/news/2019-09-05/sugarcube-apartment-sydney-owners-still-locked-out/11477478

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APARTMENTS COULD BE THE CRACK IN THE HOUSING MARKET RECOVERY

WE keep saying … despite some cowboys among Certifiers/Surveyors … it is the developer’s project, and as borne out in the recent Four Corners programme ‘Cracking Up’ …

DEVELOPERS cut costs through ‘Design and Construct’

EXTRACT:  ‘CRACKING UP’

ROSS TAYLOR, BUILDING DEFECTS CONSULTANT: The process starts not as commonly thought, with it being the turning up at the site and doing a bad job. Shonky tradie sort of thing. That’s a common misunderstanding. In fact the process of these defects being generated starts right at the beginning.

*With the developer.

*SEAN NICHOLLS: Industry trouble shooter Ross Taylor says a common practice by developers is to use big name architects just at the concept stage to give the project sales appeal.

*ROSS TAYLOR: Developers, when they develop a strategy for selling their, they have to get the sales off the plan straight away. Once they’ve got the pre-sales and the bank then allows the money to flow, they then cut the name architect and then go to an unregistered architect or draftsman just to map out the basics to go to tender.

*That’s the start of the defects.

*SEAN NICHOLLS: In the industry, it’s known as the design and construct model … and it’s at the core of the defects issue.

*ROSS TAYLOR: The builder who has no training in design by the way, now takes responsibility for the design done to date, and completing the last half of the detail. Now he’s doing that on a tight budget. And so what frequently happens is he gets the sub-contractor to finish the designs. The way they see fit. The sub-contractor doesn’t have time to complete that design and so he gets his tradies to turn up on the job, to finish the design off on the go. That’s the design and construct model that’s operating in most of these high-rise buildings and is at the heart of the problems that we see today.

https://www.abc.net.au/4corners/cracking-up/11431474

HOW credible is this coming from the Property Council of Australia?

“The majority of buildings in Australia are safe and we have some of the best regulation in the world,”

FOLLOWING the deregulation, sell-off of Australian Standards overseas and the cutting of ‘Red Tape’ that the Morrison Government boasts of …

Apartments could be the crack in the housing market recovery

By business reporter Daniel Ziffer

5 SEPTEMBER 2019

Row of apartment buildings with treetops in foreground along a street in Brisbane.

PHOTO: As the property market appears to be picking up, new apartments are plagued by bad press. (ABC News: Liz Pickering)

RELATED STORY: Sydney and Melbourne house prices surge to boost national average, but regions still lagging

RELATED STORY: Construction recession deepens and spreads across all sectors

Spring is more than floral blooms, football finals and trying to find where you stored your thongs — for house-hunters it represents a strong opportunity to buy a home.

Key points:

  • The price of homes in Australia’s capital cities lifted by an average of 1 per cent in August
  • Apartment building approvals fell 18.4 per cent in July, while approvals for homes fell 3.3 per cent
  • One expert says the cost of fixing building defects and the property value lost could total as much as $1 trillion

The popular season for owners attempting to sell means an increased volume of stock available, but there may be a crack in the market.

Structural defects in high-rise apartment blocks — including cracking in Sydney’s Opal Tower and flammable cladding, raising fire risks on others around the nation — have forced the evacuation of residents and triggered awareness about loopholes letting down owners and renters.

With no simple solution in sight and the issue traversing the responsibility of state and federal governments, insurers, surveyors and builders, analysts are weighing the impact.

*“This could be many billions, even a trillion dollars, worth of damage if you take the value collapse as well actually cost of repair,” said Digital Finance Analytics principal Martin North.

“We need to understand that this is going to be a very important issue over a long period of time.

“Many thousands of buildings are impacted, not only of course those being currently built, and there were 270,000 to 300,000 [units] now, but also those that were sold over the last 20 years.”

Industry figures are warning of another problem attached to the publicity — owners aware of structural defects in their buildings are less likely to seek publicity to force the issues to be fixed, because it will cause a collapse in the value of their investment.

This means the full impact of the crisis is unlikely to be known for some time.

House price slide turning around

While Australia is made up of many different housing markets driven by different conditions, national house prices were on a rocket rise before peaking around two years ago, and then slipping.

Now, the slide might be over — the price of homes in capital cities lifted an average of 1 per cent in August, according to real estate data firm CoreLogic, boosted by a 1.6 per cent jump in Sydney and a 1.4 per cent rise in Melbourne.

Prices in five of the eight state and territory capitals went up, although Darwin (-1.2 per cent), Perth (-0.5 per cent) and Adelaide (-0.2 per cent) prices continued to fall.

“It does look like the downturn is turning the other way,” said CoreLogic’s head of Australian research Cameron Kusher.

However, he added a note of caution — the figures are only one month’s worth and people should not get “carried away” by the turnaround.

“I wouldn’t expect we’re going to continue to see a 1.6 per cent increase each month going forward, but I do expect we are going to see values increase,” he said.

Steep fall in building approvals continues

While apartments appear to have had smaller price falls than houses, CoreLogic’s figures do not fully pick up falls in the value of off-the-plan apartments.

Australian Bureau of Statistics figures from July show what could be impact of some of the scandals, as well as an oversupply of units — building approvals for new homes fell 3.3 per cent, but approvals of other dwellings, including apartments, were down a steeper 18.4 per cent in the month and 44 per cent over the year.

“We’re going to see, I think, a significant loss of demand in the high-rise sector specifically,” said Digital Finance Analytics’ Martin North.

“We know that more people are now ‘not’ wanting to ‘complete’ on high rise buildings that they actually committed to buy off-the-plan.

“Those rates of default have doubled compared to where they were … in some [areas] property values in the unit sector are down 30 per cent now from where they were and we know there’s more ahead.”

There have been some positive developments for the property market in recent months, however — the Reserve Bank has cut its cash rate twice, which can flow through to mortgage rates, and more cuts are expected.

Meanwhile, the Australian Prudential Regulation Authority has lowered the buffer used to stress test loans.

Previously, banks had to assess whether borrowers could service a mortgage if interest rates jumped above 7 per cent. That level has now been lowered to within 2 or 2.5 per cent above the current rate, meaning people can borrow more.

Property Council denies damage to apartment market

Property Council of Victoria executive director Cressida Wall stressed the need for buyers to exercise diligence when purchasing properties, but denied the scandals were hampering the apartment market.

“Overall, the clearance rates for apartments have been rising since November last year and, while there may be individual circumstances, the majority of buyers factor this in as one of the considerations that they have when making one of the biggest purchases of their life,” she said.

*Contributing to the reputational damage is a loss of confidence in those approving projects.

For example, in 17 years as a building surveyor, Kamran Zand Basiri approved almost 6,000 houses and flats — with a peak of up to 800 a year according to court documents.

The Victorian Building Authority has spent years prosecuting him and suspended his license under new powers last month. Mr Basiri is fighting the suspension.

*The Property Council is calling for a national solution.

“The majority of buildings in Australia are safe and we have some of the best regulation in the world,” Ms Wall said.

“What’s required is a national approach to make sure that safety is maintained and enhanced.

“The time to act is now there are people buying houses and apartments every weekend and there needs to be swift action from all governments on this issue.”

However, Martin North does not see any quick solutions for apartment sellers, or buyers, with no government or industry group wanting to pick up the bill.

“I think this is going to be one of the biggest most critical issues for the economy over the next couple years. The high-rise sector is in for a very bumpy ride for a long period of time,” he said.

And he offered some advice for would-be buyers.

“If you want to buy unit, buy an old one — 20, 30, 40 years old. Don’t buy a new one.”

Contact Daniel Ziffer

SOURCE: https://www.abc.net.au/news/2019-09-05/apartments-could-prove-the-crack-in-the-housing-market-recovery/11478834

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AUSTRALIA’s HIGH-RISE APARTMENT CRASH TURNS NASTY

IT’s pay back time … big time too for those communities rezoned to get outa the way for ‘Growing Sydney’ … but it will never be enough recompense … Beryl …

THIS couldn’t happen to a ‘nicer bunch’ of punks, could it?

Let’s hope they too suffer like their clients, and the communities they have robbed, and are curled up in the foetal position … rocking back and forth …

From the comments …

‘When even well-established developers are turning in defect ridden rubbish in supposed “high-end” residential buildings, with delays of 6-9 months for hand-over … even after telling residents they would be ready in 2 months…

When the new residents are then faced with months and months of rectification if not complete re-builds

When the new owners are terrified about the shoddy state of their “new” homes being public knowledge and accordingly gilding the lily in their Body Corp reports … ‘

WELL … who would buy an apartment in Australia?

Even those from our big neighbour to the North may be having second thoughts?

Australia’s high-rise apartment crash turns nasty

By Unconventional Economist in Australian Property

September 2, 2019 |  comment

On Friday, the Australian Bureau of Statistics (ABS) released its dwelling approvals data for July, which revealed that dwelling approvals nationally have crashed by 33% in trend terms from the March 2015 peak, driven by a mammoth 51% decline in unit and apartment approvals:

Today, I want to focus on the high-rise apartment segment, which is driving the bust and is also the subject of deep concerns around quality.

The next chart shows the picture at the national level in annual terms, which shows that high-rise apartment approvals have crashed by 49% since peaking in October 2015:

As shown above, there were 39,557 high-rise apartments approved across the nation in the year to May 2019, well down from the peak of 78,089 in the year to October 2015.

Detached house and townhouse approvals are also falling; albeit at a much slower rate.

Below are the same charts at the state and territory level:

The high-rise apartment approvals crash has been driven by NSW (-50%), VIC (-55%) and QLD (-68%), which have all fallen massively from peak. ACT’s high-rise approvals are also now crashing (-48%).

The below chart shows the high-rise bust across the major markets:

The crash is broad-based and turning nasty.

Image may contain: sky, tree and outdoor

SOURCE: https://www.macrobusiness.com.au/2019/09/australias-high-rise-apartment-crash-turns-nasty/

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PHOTOS Reveal how Mascot Towers Crisis could have been avoided!

The supplier of the photos claim heavy digging took place next to what is now considered Mascot Towers ‘red zone’. Source:Supplied

Photos reveal how Mascot Towers crisis could have been avoided

A resident still unable to return to the troubled Mascot Towers has revealed photos that show residents complained but were ignored.

Phoebe Loomes@dollyybird

news.com.au

AUGUST 5, 2019

Mascot Towers: Residents given four hours to pack belongings

A change in the risk assessment of the car park has allowed evacuated residents to re-enter temporarily.

A frustrated apartment owner from the troubled Mascot Towers complex has shared photos from the past two years he claims provide evidence as to how drilling and construction at a neighbouring worksite contributed to the towers’ deterioration.

The owner told news.com.au that since construction began at a tower next door, residents made complaints to the strata company and Bayside Council about flooding and their building “shaking” but were “completely ignored”.

Mascot Towers, in Mascot in Sydney’s inner south, was evacuated on June 14, with residents being sent an emergency email telling them to get out. The evacuation was caused by “rapid deterioration” in multiple parts of the building.

Initial estimates that residents, some owners and some renters would be able to move back into the troubled building in a month have been thrown out, and owners are being told there is now “no timeline”, with the building being assessed on a month-to-month basis.

Many residents made desperate, supervised dashes into the building to try to remove all their possessions in the weeks following the evacuation, with others who can no longer lease their investment properties telling news.com.au they are considering bankruptcy.

Aland’s Peak Towers on Church Ave sits next to Mascot Towers. Various owners from Mascot Towers have suggested to news.com.au that shaking could be felt in their apartments during Peak Towers’ construction in 2018.

A neighbouring steel factory has previously claimed the construction of the Aland building also caused their factory, which is more than 40 years old, to crack and deteriorate.

Documents show numerous complaints were made by neighbouring residents during the construction of the Aland development to Bayside Council.

The apartment owner told news.com.au he was frustrated by the “lack of progress and absence of any form of reasonable communication”, and he was concerned developers of the next-door building were not taking their views seriously.

RELATED: Mascot Towers residents get four hours to pack up their lives

RELATED: Shocking photos of ‘major cracking’ in Mascot Towers

RELATED: Tenants from Mascot Towers ‘insulted’ by lack of information

He said the troubled residential tower complex had problems from “day one”, but “major problems” arose during construction of Aland’s development.

Photos provided to news.com.au show the worksite at Peak Towers with drilling equipment positioned nearby in an area now marked as a dangerous “red zone” by engineers.

The red zone was so named to indicate the areas of most concern when engineers assessed the structural damage at Mascot Towers.

The supplier of the photos claims heavy digging took place next to what is now considered Mascot Towers 'red zone'.

The supplier of the photos claims heavy digging took place next to what is now considered Mascot Towers ‘red zone’.Source:Supplied

Approximately 18 months into the Aland development.

Approximately 18 months into the Aland development.Source:Supplied

“When the Aland development started digging on their site, a number of residents, including myself, complained directly to Strata Choice about the damage and the ‘shaking’ of Mascot Towers, and Strata Choice did absolutely nothing,” the owner told news.com.au.

“The building at Mascot Towers was literally shaking when Aland were digging, and for Aland to claim it had no ‘impact’ was simply a baseless falsehood.”

The owner also claims residents complained “many times” to Bayside Council, who “ignored” them.

A spokesperson for Strata Choice said “Strata Choice did receive complaints of noise and inconvenience from time to time from residents.

“As Strata managers we are not responsible for day-to-day onsite operations at the building. We referred these complaints to the building manager and to the best of our knowledge, the building manager dealt with these appropriately.”

A Bayside Council spokesperson told news.com.au they were aware of complaints being received by council from residents regarding noise from builders at Aland’s development working out of hours, for which the builder was issued a fine. The spokesperson says Bayside Council is still looking into the matter.

Documents show Bayside Council issued fines to the construction site for operating outside of hours, with numerous complaints tendered from residents complaining of loud machinery operating as early as 3.30am.

The owner suspects the water table was disturbed during construction. He said 18 months into work next door, Mascot Towers’ carpark began to flood. The flooding had been a continual problem up until the residents were evacuated in June.

“Ever since work commenced on the Aland development, the basement carpark has been inundated with water, which has been causing structural damage to Mascot Towers,” he said.

“You have to remember that, yes, Mascot Towers had problems from day one, however it is only since the Aland development started that the Mascot Towers problems have become critical.”

A recent photo of flooding in the Aland building's carpark, where ‘spear pumps’ are reportedly being used to clear water from the basement.

A recent photo of flooding in the Aland building’s carpark, where ‘spear pumps’ are reportedly being used to clear water from the basement.Source:Supplied

Another recent photo from inside the basement of the Aland building.

Another recent photo from inside the basement of the Aland building.Source:Supplied

A photo of the flooded carpark at Mascot Towers at the time of the construction of the building next door.

A photo of the flooded carpark at Mascot Towers at the time of the construction of the building next door.Source:Supplied

The neighbouring building site, which used horizontal props during construction after digging down next to Mascot Towers.

The neighbouring building site, which used horizontal props during construction after digging down next to Mascot Towers.Source:Supplied

Aland Developments has strongly denied their Peak Towers construction in Mascot caused any damage to neighbouring buildings, saying they have a history of reputable construction practices.

“I am very proud of Aland’s strong track record as a high-quality building and development company, and I am confident Aland has met all design and construction requirements in its new development at Mascot,” Andrew Hrsto, the managing director of Aland Developments, told news.com.au in a statement in June.

The building management company that looked after Mascot Towers wrote to residents seeking evidence of cracking and other damage in the middle of 2018, according to The Australian Financial Review.

The management company, Building Management Australia, told residents at the time it was putting together evidence to pursue Aland’s insurers for damage to the building.

Meanwhile, residents of Opal Tower have launched a class action against Sydney Olympic Park Authority, the government body who owns the land the tower sits on.

Many residents of Opal Tower have not seen inside their apartments since they were evacuated on Christmas Eve.

“I don’t blame anybody for taking legal action to defend their own rights,” Premier Gladys Berejiklian told reporters on Tuesday.

“This is an unfortunate set of circumstances. We inherited the system we have today, and we’re aiming to fix it by the end of the year through legislation.”

CAAN: How far back is Premier Berejiklian referrring to? With the O’Farrell Government being elected in 2011 – of which Ms Berejiklian was a Cabinet Member, an MP, Treasurer … followed by the release of both the Green Paper and the White Paper in 2012 leading up to the Planning Law changes in NSW which led to higher density of high-rise Precincts, and also medium-density housing, rezoning and exempt and complying development, cutting Red Tape, deregulation etc which has meant the loss of community rights, heritage homes, environment protections … this all tied in with the Australian Govt growth through high immigration and visa manipulation.

Ms Berejiklian said the Government would be announcing a new state building commissioner whose job it will be to hold all levels of the construction industry to account.

“(The commissioner) will ensure moving forward that everybody in the industry not only is aware of their responsibilities but delivers on those responsibilities to the nth degree,” she said.

“There is a crisis on our building sites across the nation,” NSW Labor Senator Deborah O’Neil said in a speech on Monday, addressing an issue she said was likely to affect homeowners across Australia.

“Every Australian should feel safe in their own home. This epidemic of dodgy development isn’t confined to Sydney alone,” Senator O’Neil said.

“The Government needs to show leadership and to send a clear message to those who would endanger lives by cutting corners, cutting costs.”

The senator warned Australians shouldn’t accept a “Third World set of practices here in building”.

SOURCE: https://www.news.com.au/national/nsw-act/news/photos-reveal-how-mascot-towers-crisis-could-have-been-avoided/news-story/78ece02c974291694e25dbe7d6bee141

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