Apartment YIMBYs have very short memories

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In the years leading up to COVID, we witnessed dozens of reports on the ‘crisis’ of combustible and defective apartments across Australia’s major cities.

Building regulation consultant, Bronwyn Weir, claimed “thousands and thousands of apartments have serious defects in their buildings. [The problem] is enormous”.

“We have what is now you know, a systemic failure that is quite difficult to unravel”, she said.

“Some of these buildings could potentially be a write-off”.

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A Strata Community Association NSW study published in October 2021, nearly four out of every 10 new apartment complexes in NSW contained major flaws.

A NSW parliamentary inquiry also found that building defects are widespread.

Similar systemic problems were identified across Melbourne.

Last week we received more examples of widespread apartment defects when The Age reported that “inspections of 339 buildings that received government funding to remove flammable cladding found half had other faults and one-in-four had balcony defects”.

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“More than 550 balconies were found to be defective”.

“Cladding Safety Victoria is concerned that the situation in relation to defective balconies is widespread and has proliferated over at least two decades”.

“I believe the majority of issues are in the middle to low tier projects, largely in the apartment market. They have been built to an absolute minimum price and a minimum standard”, Association of Consulting Architects Victorian president Paul Viney said.

“I think we will continue to see significant numbers of building defects emerge”.

“The report said that 52% of the defective balconies were caused by water ingress, 19% had insufficient or no waterproofing and 10% were caused by lack of maintenance”.

A separate article in The Age reported that “Victoria is facing a crisis of leaky buildings, with construction experts blaming a lack of regulation of waterproofing”.

“Since 2016 the big issue grabbing media and government attention has been combustible cladding … however the next big issue without a doubt will be water leaks, waterproofing and mould”, said Joshua McDonald, a senior forensic engineer at Roscon.

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The proliferation of defective apartments was fuelled by 15 years of hyper immigration pre-pandemic, which required building tens-of-thousands of extra homes every single year, thus leading to speed over quality and compromised building standards:

Dwelling approvals - Australian capital cities

As shown above, most of the homes built across Australia’s capital cities over the past decade were units and apartments.

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Now the Albanese Government has opened the immigration floodgates, with a record 1.5 million net overseas migrants projected to arrive in Australia by 2026-27, most of whom will land in the major capital cities:

Net overseas migration

Source: 2023 Federal Budget

This has led to YIMBYs, some politicians, the media and the property industry demanding that Australia relax planning regulations so that hundreds of thousands of apartments can be built across the ‘missing middle’ of Australia’s capital cities.

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What is going to happen when we need to increase housing supply, at break neck speed, to accommodate record levels of immigration? Do we think standards will stay the same, get worse or get better?

These groups conveniently ignore that standards will be compromised so that apartments can be built as quickly as possible to house the ballooning population.

Australia’s cities will once again be plastered with more defective high-rise apartments to house the Albanese Government’s extreme immigration policy.

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About the author
Leith van Onselen is Chief Economist at the MB Fund and MB Super. He is also a co-founder of MacroBusiness. Leith has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.