The litany of defects, poor building standards and regulatory failures has serious implications for apartment owners, occupiers and buyers alike. Fears of a loss of confidence in the sector have unfortunately come true. Our research suggests a lack of reliable information about building defects is a critical factor in the crisis.
About a year ago, we started a research project with six industry partners in New South Wales entitled Cracks in the Compact City: Tackling Defects in Multi-Unit Strata Housing. The context is compact city planning policies and a rapid shift towards apartment living in Australian cities.
The urban development strategies of NSW and other states rely on higher-density cities with many more multi-unit strata title dwellings. The human and economic impacts of the building defects crisis could undermine these strategies.
Even with our resources, obtaining data on the extent and nature of defects in NSW apartment buildings has been a challenge. Individual buyers and owners must face even greater obstacles.
This lack of access to information poses a clear challenge to the principle of “buyer beware” that underpins property sales. The imbalance it creates between buyers and sellers is a prime example of what economists call “information asymmetry”.