Aside from the current COVID-19-induced recession, Australia’s new housing sector’s many recent challenges have included tightened lending policies, highly publicised construction issues and a federal election that threatened to alter taxation rules for investors.
But instead of focussing on the obstacles, experts have explained why now is a great time for new home builders to expand their value propositions and reach a whole new subset of consumers searching for quality, sustainability and affordability above all else.
Rising above past mistakes
Quality concerns about new builds in Australia have continued following disasters such as London’s Grenfell Tower inferno, Sydney’s “cracked” Opal Tower and a fierce blaze at a Spencer Street high-rise in Melbourne, all of which sparked fears about the use of combustible cladding in Australia and questions about construction standards among governments and new home buyers alike.
Therefore, it’s hardly surprising that 64% of new apartment buyers who took part in a realestate.com.au new home buyer survey said they worry about the quality of new apartments in Australia. For new house and land buyers, the figure was 57%.
Despite much adversity, there has never been a better time for new home builders to address quality concerns. Picture: Getty.
People worry about quality because we have seen relatively new buildings experience issues with cladding and foundations, according to executive manager of economic research at realestate.com.au, Cameron Kusher.
“[These issues] suggest the industry certainly hasn’t done as well as it could have done in the past to ensure quality standards,” Mr Kusher said.
“Additionally, the recent apartment boom has seen many new developers enter the market, so many buyers are not as familiar with their previous work and the quality of it,” he added.
But with almost all first home buyer incentives in Australia targeting newly-constructed homes, including the Federal Government’s new HomeBuilder scheme, focusing on the quality standards of new homes is more important than ever.
Mr Kusher said the time is ripe for developers to address quality concerns with potential buyers, particularly those builders with a proven track record for delivering a high quality product.
“Despite the ongoing adversity, this is a great opportunity for developers to separate themselves from the pack,” he said. “Buyers are likely to be more discerning and ask more questions [after recent crises], and a history of quality developments is likely to place a developer in good stead to attract a greater share of demand,” Mr Kusher said.
A population boom led to poor construction standards in the past
Mirvac’s head of residential, Stuart Penklis, said that the industry overall does a good job at delivering quality, but cases like the Opal Tower suggest there have been too many instances of unacceptable construction standards in the past, which can be linked to a rush to build affordable housing.
“With rapid population growth coming off the back of a shortage in housing, we ended up with an extended property boom,” Mr Penklis said. “That led to severe affordability issues fuelled by a sharp rise in the price of land, materials and labour. [As a result] a lot of poor-quality apartments were built and sold with little regard for quality.”
Cracks in the Opal Tower in Mascot resulted in residents being evacuated on Christmas eve 2018. Picture: Getty.
In response to the Opal Tower disaster, the New South Wales Government appointed a Building Commissioner to help protect consumers, while new legislation was later introduced to improve the design and construction of residential buildings.
Mr Penklis said the off-the-plan market has changed for the better, but concerned prospective buyers should still look to do their own research into the builder and developer.
“The reputation of the developer and builder are your best guarantee that the apartment you buy off the plan or brand new will be built to the standard you expect,” he said.
The realestate.com.au New Home Buyer Research survey of 2,008 new home buyers, conducted in December 2019-January 2020, showed that quality was, in fact, the number one consideration for off-the-plan buyers when it came to choosing a builder. For new apartment buyers, 61% said quality was a factor when choosing a builder, while 80% of new house and land buyers came back with the same response.
Meanwhile, 77% of both new apartment and house and land buyers said one of the top benefits to buying a newly-constructed over an established home was having better quality assurance including confidence in build quality, less likelihood of major repairs and better quality features for their budget.
Builders could “do a better job” at communicating with buyers
Intrapac Property’s chief operating officer, Max Shifman, said while most recent quality concerns about new homes have stemmed from issues with big apartment developments, the industry, across the board, “could do a better job at communicating to buyers its dedication and commitment to delivering quality housing”.
“It’s very hard for consumers, who aren’t building dwellings on a day-in-day-out basis, to really understand or appreciate that there are differences that can be created when you’re delivering new housing, and the quality differences that can result in,” Mr Shifman said.
The process for buying off-the-plan can be more difficult than for buying an established property. Picture: Getty.
The off-the-plan buying process can be more difficult for buyers to understand compared to buying an established property, added Roche Group’s head of property sales, David Ross Mckenna.
“All new developments are exciting and can be majorly overwhelming for many, largely to people not understanding plans, or the bigger picture,” Mr Mckenna said.
“Most customers we speak with have never bought a new build property before, customers usually want to touch and feel what they are buying.”
Mr Mckenna said that the relationship between a potential buyer and a builder is the key to successfully navigating the buying process and being satisfied with the end result.
“Understanding the builder’s history and direction will allow the customer to understand if the builder has the strengths the customer is looking for within their new home,” he said.
Research is key to achieving a quality result
There is no single mark or reference point for ‘quality’ as different builders and buyers focus on different aspects that they think are the most important, Mr Shifman explained.
“There are so many different perspectives on what quality actually means,” he said. “I don’t know if there is a single mark of quality you can point to – people need to decide what is important to them and ultimately the quality items are for themselves.”
Premium fittings, sustainability, construction materials – there are many ways to measure quality. Picture: Eugene Hyland.
Few new home buyers are able to write a blank cheque towards the construction of a new home, and therefore buyers working to a budget need to decide where to compromise and where to spend extra to ensure they have a premium product, he said.
“Some people will focus on material, others sustainability, and for others, it’s the actual space and how it operates,” Mr Shifman explained.
Mr Kusher said thorough research is the best way to ensure you get the level of quality you’re after.
“I think it’s a good idea to spend some time at display villages,” Mr Kusher said. “That way you get to actually walk through a number of completed homes and talk to developers.
“You should also ask the builder for some examples of homes they have built previously and go and look at them to see how they are looking after completion. While there are no display villages for units, there are display suites and you should visit many of them.
“Ask about previous developments and go and look at them, and also research who the builder of the apartment project is and what their track record is like.”
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