Page 17 - Climate Control News Magazine August 2019

Building Crisis
BUYER IMPACT FAR REACHING
The current building crisis has seriously impacted the market, according to RiskWise Property Research CEO Doron Peleg.
As experts believe thousands of high-rise buildings could be at risk of cracking due to systemic issues in the building and construction industry, as well as recent fears of combustible cladding, the effect could be far reaching, he said.
“Due to cracks showing in high rises such as Sydney’s Mascot and Opal towers, the uncertainty that more will become apparent in other buildings and the need to replace cladding in thousands of buildings, all of which could amount to billions and billions of dollars, its highly likely the demand for units will well
and truly drop,” Peleg said. “Also, these high-profile issues have created huge
reputational damage across the entire industry.
“We already have
significantly reduced levels
of demand due to
restrictions on foreign
investors, credit
restrictions, banks refusing
to loan to self-managed super funds and local investors looking elsewhere.”
Peleg said overall demand for off-the-plan dwellings could shift from units to house-and- land packages.
RiskWise Property Research CEO, Doron Peleg.
“THE FOCUS ON MINIMUM STANDARDS INSTEAD OF BEST PRACTICE IN THE NATIONAL CONSTRUCTION CODE WAS ALSO RAISED AS A CONCERN.” – DR NICOLE JOHNSTON OF DEAKIN UNIVERSITY.
“But the number of defects relating to fire safety are also alarming. Fire is a direct threat to life and fire safety measures installed need to be independently checked and verified to en- sure compliance.”
Industry stakeholders, apartment owners and residents were also interviewed for the project, including those who volunteered on owners cor- poration committees.
“Water penetration and fire protection defects were the most commonly cited problems from their perspective,” Dr Johnston said.
“A number of concerns were also raised about the relationship between the National Con- struction Code and the Australian Standards, where there is some disconnect in re- quirements, and industry identified a
need for better consistency.
“The focus on minimum standards in- stead of best practice in the National Construction Code was also raised as a concern, as well as the private certifica- tion system, where community expecta- tions were seen to be out of step with legal requirements.
“Many industry representatives sug- gested that human error played a signifi- cant part in building defects and the mis- use of building products, lack of training,
and lack of licensing were all common factors contributing to the defect problems.
“Mould that has arisen due to water penetra- tion defects is often present and has the poten- tial to lead to serious health implications for resi- dents. Plus the lack of care by tradies in properly managing mould often leads to spores embed- ding or remaining in lots,” she said.
Dr Johnston said it should be reasonable to ex- pect that homes are constructed in a manner that, at the very least, is stable, safe, sheltered and fit for purpose.
“Unfortunately, new residential buildings in Australia appear to be plagued with defects, and while the building itself can be fractured by these defects, it is the residents living there who face the impacts,” she said.
“Building defects are considered inevitable by the building industry, so it is essential to gain a better understanding of the nature of defects in residential multi-owned properties in order to respond effectively.
“Government intervention that starts with in- depth stakeholder and end-user consultation is urgently required in order to stem the flow of these defects.”
Mascot Towers in Sydney.
Consistency
key to resolving
construction crisis
STATE AND TERRITORY governments must take a nationally consistent and collaborative approach to resolving the building and con- struction sector crisis.
The Insurance Council of Australia (ICA) said all states and territories must accept and urgently im- plement all 24 recommendations in the Shergold- Weir Building Confidence report, which revealed significant systemic deficiencies within the build- ing industry and with compliance and regulation.
ICA general manager for risk and disaster planning Karl Sullivan said the state-by-state approach to solving building industry issues was too disjointed and inefficient.
“The building certification regime in many jurisdictions is flawed,” he said. “This is a na- tional issue and requires national consistency, which is the public position the Insurance Council took when cladding issues arose fol- lowing the Grenfell Tower tragedy.
“Recent events show the construction industry’s problems go far deeper
than the use of f lammable
cladding and other non-
compliant materials. “Current risk-manage- ment regimes in construc- tion are clearly failing to prevent avoidable and sig- nificant losses. Partial and piecemeal fixes by govern- ments are not going to re- store public and insurer
Master Builders CEO, Denita Wawn
confidence in the construction sector.”
Sullivan said failure to adopt a consistent ap- proach to detecting and rectifying flammable cladding was causing insurers to reassess the pricing and availability of professional indemni- ty (PI) insurance for building certifiers and other
building professionals.
He said the ICA and its members had been con-
sulting state governments on cladding and other building industry issues for more than two years. As part of this process the ICA has developed a Residual Hazard Identification Protocol to help building owners and experts evaluate the risks posed by the use of flammable cladding and oth-
er non-conforming building products.
Master Builders CEO, Denita Wawn, said un- affordable premium increases for building certi- fier professional indemnity renewals has led to
projects across the country being delayed.
“The problem is already causing delays to building projects across the country and will only get worse as more insurers withdraw from
the market,” she said. ✺
CLIMATE CONTROL NEWS AUGUST 2019
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