WORST IN 20 YEARS! How you can avoid the fate of millions of property owners whose dreams are falling apart around them.

Here is a developing story that I’ve been following for a while.

I’ve been waiting to see if the authorities would take it seriously or not.

From an Australian point of view, it appears only one state here has tried to address the issue head on.

But you should not regard this as a specific Australian problem – it is a growing global problem.

So, what is the issue at hand here? Take a look at the following colorful headline:

I’ve been aware of this problem since 2016.

And it’s just such a typical by-product of where we are in the current 18.6-year Real Estate Cycle.

Let’s look now at this issue. As I said, I can assure you this is happening regardless of where you live.

Behind the emotion and vitriol, what’s really happening to address this?

And how can you avoid the fate of so many innocent buyers?

Read on.

This example I use to illustrate the problem will be from Australia simply because that’s the data I have at hand, but this is a global phenomenon make no mistake.

Because the 18.6-year Real Estate Cycle is global.

The utter stupidity of governments to close down economic life during the covid lockdowns severely interrupted many important long-term trends, such as migration and home building.

This disrupted the economy, and in the rush to reopen, it generated an equal but opposite force by trying to quickly return things back to their prior trends.

The reverberations of this are still being felt. Immigration, however, was a very western oriented trend as many families and trained professionals used this time to migrate to places where the prospects for themselves and their families were vastly superior to many less developed countries.

However, this comes at a cost, and the burden placed upon traditional property development companies proved too much for some.

Rising interest rates, cost inflation, scarce resources in terms of building material and labor, and most important of all an ever-rising price for land, has seen the industry virtually brought to its knees.

Had those in charge cared to look, though, the warning signs had been present since 2016 of an industry under-supervised (government compliance agencies had been privatized to save money). This ultimately led to fewer inspections, less paperwork and incomplete documentation.

All intended to allow corners to be cut and costs to be reduced.

Take the state of New South Wales (NSW) as an example. Between 2016 and 2022 in NSW, over 50% of newly built apartments registered were reported to have at least one serious defect by their respective strata management.

One of the most famous cases was the Opal tower in 2019.

A ‘standalone regulator’ began operating in December 2023, fulfilling an NSW Labor election promise, and has already issued 16 building work rectification orders.

This commissioner has the legal power to directly target developers and order stop-work orders to get issues fixed and built to code. From the above article.

“You can’t drain the ocean in one go, you’ve got to do it in stages, so when we looked at it and said, ‘OK, where are we going to get the biggest impact?’ it was to focus on the developers,” he (Building Commissioner David Chandler) said.

“But no one should think now that as we come down through the next layers of the work that licence holders and those sorts of players are off the radar.”

Slowly but surely, the number of structural issues is declining and less reports from strata managers indicate serious structural faults.

So, some good news then on a serious issue. Well, if you own an apartment either as your principal place of residence or as an investment, don’t think that the war has been won yet.

Just because NSW has decided (or was forced) to act doesn’t mean that other states have also enacted a similar building commission with similar powers.

At the moment, every other state is “talking” about it, whatever that means.

In the meantime, building continues across the world.

Perhaps you’ve seen one of these yourself, either completed or being built.

This represents the pre-fabricated modular construction method favoured by many developers. Honestly, it’s not much different from building a house out of Lego. Each room is pre-built, transported on-site and then lifted by crane into place. Then you can fit-out the interior later.

This saves developers time in construction and can bring the per-unit price down too. A problem, however, arises when you cut corners on the materials being used.

Because if and when a fault develops in one prefab unit, it’s highly likely then that all of them have the same design or material fault. And thus, the entire apartment block risks being structurally unsound.

What kind of issues have owners had to deal with in the case where corners have been cut?

They include fire safety systems, structure and waterproofing – which was the most common problem, present in 42 per cent of the buildings assessed in NSW. Bad waterproofing leads to serious damage, leaks and dangerous mould. Here’s a typical example below.

And yet, people desperate to have somewhere -anywhere – to live, are either rolling the dice on buying into such projects off the plan or renting them.

I can tell you personally, where I reside in the nation’s capital of Canberra, that such issues are now being reported here too.

In fact, speaking to some of the owners of a particular apartment block not far from where I live, the structural issues now being uncovered have led to an unpleasant reality.

The strata management who oversees the body corporate of this block has advised owners to pay an additional $3000 in their next quarterly Body Corp bill in order to fund a class action against the developer.

The fact is they can’t sell these apartments at anything resembling true market value, pretty soon they may not even be allowed to live in them – what choice do they have?

And it’s the matter of choice that lies at the heart of today’s newsletter. Sadly, there is nothing good I can offer for all those thousands who are already suffering from these problems. But if you are about to, or are thinking of, buying an apartment for yourself, then I can help you with this piece of advice.

Newly built houses and apartments today are on average some of the worst in terms of build quality for the last 20 years. And I know this because I know my history; the history of the 18.6-year Real Estate Cycle.

By studying the land market and its unique timing, you have at your disposal one of the single best tools for timing the markets in existence. Now most people are searching for an edge when it comes to those big buying and selling decisions.

What is less well known, however, is that such knowledge can inform you when not to buy or sell. And these apartments are a classic example. We are at a time now in the cycle where the pressures exerted upon society by an ever-rising land price are almost at their greatest.

History shows that as margins get squeezed, developers must find ways to boost their profitability in order to bring stock to market. They can’t find cheap land so late in the cycle, so these reductions must come from other areas of the business.

I’m sure you can see precisely where they have chosen to find those savings now.

Only you can answer this; just how useful would our research have been if you did indeed own one of these units? Or if you are considering buying one? Perhaps it’s time to find out by becoming our latest Boom Bust Bulletin (BBB) member?

(In fact, our proprietary PSE property clock can help anyone involved in real estate, whether they are a homeowner, renter, developer or investor).

Each month you will receive the latest news and developments pertaining to the real estate cycle in your inbox.

By learning the history of the cycle, how it affects the economy and most importantly discovering why its timing has been repeatable for over 200 years, you shall develop your own unique market edge over 99% of the market.

All this for just $4USD a month – a takeaway coffee!

You can arguably say that “buyer beware” is a key principle and such buyers should have been more diligent. Well, that doesn’t address the absolute truth that we all need someplace to live.

You have to really dig deep right now to find any recent examples of structurally unsound designs in apartment blocks, it’s almost like it’s being deliberately concealed.

Knowing the cycle, trusting its inherent timing, can save a lifetime of pain. And it cuts both ways. As peak turns into bust later this decade, the markets globally will be flooded by cheap apartments offered by desperate sellers willing to take almost anything to get them out of their hands.

For those still on the outside looking in, it will look like the chance of a lifetime to finally get a place of their own at a once-off incredible discount.

As a BBB member, you’ll know better than to buy these cheap apartments. Particularly if they were built after 2016.

Sign up now.