Why the government wants you to think there’s no home defects crisis
This North Sydney apartment building has the same defects now as it had when minister Anoulack Chanthivong called it out in 2023.
By Max Maddison and Anthony Segaert
This North Sydney apartment building has had defects throughout since before 2023.Credit: Dominic Lorrimer
NSW has two housing problems: we aren’t building enough new homes, and a large chunk of the ones we are building contain serious defects. But the state government wants to talk about only one of those problems.
As the Herald’s Shoddy Sydney series has revealed, the defects crisis that inaugural Building Commissioner David Chandler was employed to fix in 2019 has not yet been solved. In fact, the fissures may run deeper than previously thought, with concerns that fraudulent construction qualifications may be rampant across the industry.
It’s not something the government wants to acknowledge. Premier Chris Minns, Building Minister Anoulack Chanthivong and Building Commissioner James Sherrard have all sought to calm concern about the current situation.
“The industry certainly had big problems, without question,” Sherrard said. “I think there’s an evolution to the construction industry nationwide that needed time, needed technology, it needed better regulation.”
Minns, while acknowledging some issues remained, this week said the government was “not far off” where it wanted to be.
But some things don’t change quickly. In 2023, Chandler and Chanthivong stood in the middle of a mould-covered, defect-riddled apartment block in North Sydney, announcing a fresh crackdown on problematic builds.
“We will hold every developer accountable,” the minister told TV cameras in front of a living room that had been ripped up to deal with long-term mould and structural issues.
But two years since then, nothing has changed in North Sydney. The developer liquidated its company and legal battles are ongoing.
The Building Commission’s strata defects survey in November 2023 found 53 per cent of buildings had serious defects. This was a 14 percentage point increase on two years prior. We don’t know if things are improving or deteriorating because there hasn’t been another since. But, before he retired last year, Chandler insisted there was a “deep denial about the quality of home construction”.
As evidence of improvements, Chanthivong points to a decline in the number of waterproofing defects and claims inspectors are finding fewer significant defects. And if this is all the available evidence, surely this doesn’t warrant a self-congratulatory job well done?
What emerges from these efforts to paint a rosy picture is the underlying communications strategy: restoring confidence in the build-to-sell apartment market has become the No.1 priority.
The strategy of downplaying is a decisive break with Chandler’s strategy of naming and shaming shoddy builders. Developers learnt the hard way as they faced a barrage of negative news reports or LinkedIn posts, Chandler’s idiosyncratic mode of regulatory public relations.
Chandler’s successor, Sherrard, even publicly discusses the change to a prosecution-focused model.
“In actual fact, we’ve stepped up our internal build compliance … without question. But we’re not denigrating market confidence,” he told the Herald. “I’m not publicly naming and shaming, and that’s probably the only difference [to Chandler]. What I am doing is more effectively prosecuting.”
Yelling from the rooftops about Sydney’s defects crisis undermines consumer confidence in new builds. The mid-tier apartments underpinning Minns’ housing supply reform agenda need up to 70 per cent pre-sales to obtain construction financing from banks. Some builders are struggling to crack 20 per cent, sources say.
But besides developers, who benefits from this approach?
These apartments are priced for buyers on Main Street. These are precisely the kind of people who are struggling to crack into the housing market and can’t afford it if something goes awry. Confidence in apartments will return when defects become less systemic – trying to artificially restore confidence will only create issues down the track.
Of course, building more housing should be a government priority. But these homes should be free of serious defects – pumping your life savings into an apartment with expensive defects is not the Australian dream, but it has become a terrifying reality for too many.
The development industry is a goliath of a stakeholder. Those affected by defects are a fragmented constituency.
As the Herald’s Shoddy Sydney series has outlined, the defects issue is bleeding into strata. With secretive owners corporations hiding defects to ensure property values are not impacted, the cascading effect of defective buildings will be felt for decades to come.
The only advice Chandler had for his successor was to “put the customer first and work hard to make home purchasers confident that you have their back”. By failing to acknowledge the extent of the defects crisis, Sherrard risks losing the public’s fragile confidence.
Downplaying the state’s defect crisis won’t solve the housing supply problem. It will just make things worse.