Real estate agent reveals hundreds of thousands of dollars ‘wiped off’ unit values

A one-bedroom apartment in Sydney’s embattled Mascot Towers complex was on the market for $740,000. Today, it’s virtually worthless.

Owners of units within Mascot Towers have had hundreds of thousands of dollars wiped off their property values virtually overnight.

That’s according to MGM Properties principal real estate agent Michael Xylas, who has a one-bedroom unit in the troubled complex currently on the market for $740,000.

But he told news.com.au that property — and many others in the building — were now essentially worthless, at least in the short term.

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The building was evacuated on Friday night due to serious concerns regarding cracks in the primary support structure and facade masonry.

Mr Xylas said the situation had seriously affected the financial security of owners within the decade-old complex, located in the inner southern Sydney suburb of Mascot.

“We’ve got a unit for sale for $740,000 and we’ve had offers of in excess of $1.2 million previously for other apartments in the building — what are they worth today?” he said.

The scare is expected to slash property values. Picture: Damian Shaw

“I definitely think this will wipe a considerable amount of value off all those units one way or another, at least until a buyer can be satisfied there are no more unknowns.

“It’s a terrible situation … it must be very stressful. A lot of owners have mortgages and all of a sudden they can’t rent (their units) out, and some owners may now have to rent elsewhere.”

Mr Xylas said he was meeting with the owner of the property currently on the market today to discuss his options.

But he said he would recommend taking the apartment off the market “for now” until the owner knew exactly “how bad the damage is and what it’s going to cost him”, adding there was little chance of someone buying the property now “for a reasonable amount”.

“You want to know that what you’re buying is still going to be standing — it’s not too much to ask,” he said.

“No solicitor would advise their client to purchase any property without first checking the title and the building’s integrity — there’s no question about it, no one would be advising their client to proceed with a sale.”

Many residents have been forced to evacuate. Picture: Monique Harmer

Mr Xylas said “opportunists” had already tried to swoop in by making offers of just $10 and $100 for properties within Mascot Towers.

He said he expected the government to potentially introduce annual inspections of strata buildings by independent experts in the wake of the latest scare, which would help buyers “feel at ease” but which would also drive up strata levies for all buildings in Australia.

NO RIGHTS

Finance editor Ross Greenwood told the Today show that owners of Mascot Towers units were basically “on their own”, and called for the creation of “national standards” to protect buyers.

“Where are the rights for these people?” he said.

“There is zero you can do. Where is the State Government, where is Government anywhere? “Imagine trying to sell one of these apartments right now. There is not only financial loss and enormous amounts of stress … It is uninhabitable. Where do you live?

“As many people have said for a long, long time, you have more rights when you buy a toaster that is faulty than you do when you buy an apartment for half a million bucks or more.”

OWNERS’ DILEMMA

In NSW, defective buildings are covered by warranty for just six years after a development has been completed — meaning owners within Mascot Towers, which is 10 years old, could be left high and dry.

According to Owners Corporation Network spokesman Stephen Goddard, they are now facing potential bankruptcy after being “failed” by “successive parliaments”.

“There are more consumer protections for people who buy a refrigerator than those who bought an apartment in Mascot Towers,” he said.

Police have been spotted outside Mascot Towers. Picture: Monique Harmer

He said owners were now “looking down the barrel at special levies they may not be able to afford”, which could cost “anywhere between $100,000 and $300,000 per lot”.

“They could well default on their mortgage, the mortgagee won’t be able to sell their lot and they will have to commence bankruptcy proceedings — all because they wanted a piece of the Australian dream.”

CALL FOR CALM

Meanwhile, realestate.com.au chief economist Nerida Conisbee stressed that faults of this scale were still “pretty rare”, especially considering the high level of development which has occurred over the past decade.

She said Australian building standards were “top notch” on a global scale — but said more could be done to protect owners who find themselves in a similar “terrible situation”.

That could include extending the warranty period and introducing a levy to cover unexpected costs.

On a personal level, Ms Conisbee urged people thinking about buying off the plan to research the developer thoroughly and to consider other potential issues besides structural problems, including noise and planned developments in the area.

Around half of all Mascot Towers residents have been affected. Picture: Damian Shaw

HISTORY REPEATS?

The Mascot Towers saga comes just six months after residents in 51 units in Sydney Olympic Park’s Opal Tower were similarly forced to evacuate their homes on Christmas Eve after a disturbing “cracking” sound was heard.

In January, NSW Minister for Better Regulation Matt Kean announced a crackdown on “cowboy” certifiers across the state to address public concern about the building certification process.

Now around half of Mascot Towers residents will be prevented from returning home to collect personal items for at least a week.

Sixty-four of the 122 units are in the partly-accessible zone and tenants have been told they “may be accessed for a short period of time to collect personal effects only with escort by the building manager” by appointment from today.

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