Expert warns Australia could turn into slums in 20 years | 60 Minutes Australia

when it opened in August last year the Opel tower in Sydney was spooked as a marvel of construction a state-of-the-art residential skyscraper owners had spent millions on the 392 apartments were thrilled with their purchases but on Christmas Eve everything changed dangerous cracks appeared in the four-month-old building panicked residents were evacuated as headlines screamed it might topple at any moment then the blame game started tonight the night networks finance editor Ross Greenwood reports what went wrong with the Opel tower and how the consequences of this building catastrophe a Pyxis all the Opel Tower in Sydney's Olympic Park was marketed and sold as luxury living the best that money could buy people flocked to pay thousands even millions of dollars to invest into the dream now the the jewel if I could say of Sydney Olympic Park was opal Tower and it was set to be the best residential tower in Olympic parking and we were told one of the best in Sydney when you first walked into that building when you've seen your apartment finished be happy we're very excited about it it looked beautiful it's a luxury construction luxury buildings so this was the drink wasn't it because what we were buying into the alien dream and we had to turn out well unfortunately this has probably been the hardest thing that owners of this tower have gone through in their life Shadia skander and Andy never Li are two of the many owners now looking up at this building wondering how it could all go so wrong there's 392 a party each family each owner each resident has been affected because these are the events of Christmas Eve everyone has their own story which is heartbreaking police marched into the building with battering rams Santa didn't come to the Opel Tower last Christmas Eve I can't get back home I've got all my stuff inside chaos and fear beating to it after a loud cracking sound reverberating through the building sparking a mass evacuation or something snapped in the building and the doors got jammed the police had to break them up I got a call from my wife and she was heading home before I was and he said Shadia there the streets are all blocked off I can't get to the building that there are police and emergency services everywhere it once moved out emergency services are there train line is stopped it once evacuated from the area you know the building was emptied with the threat of that maybe falling over tell me about you thought out the joking I mean we were so up we'll gobsmacked absolutely gobsmacked something was seriously wrong with a building that had only been opened four months earlier the cracking first occurred in concrete panels of what's called a sky garden on the tenth floor he was caught on the CCTV cameras the towel is moving so it's developer Eco commenced emergency stabilizing works propping up ceilings and reinforcing walls to prevent further damage 60 minutes is the first media crew into this area so this is Ground Zero an Opel tower where the cracking occurred on the 10th floor right along this wall it has been covered up as part of the remediation work in this area now the residents of course are concerned until they're confident that this is generally shored up the building they don't want to move back in so what's this here so these are major industrial acro props there are 900 of these like 900 900 located through the building up to level 10 so you're saying people look up these in your apartment during the living rooms or in their bedrooms they'll go all the way up to level 10 so it's expected that we move in with these still installed did this look safe to you but people have got these in their apartments that's right major industrial props these props can hold between 60 and 100 tons each and although the residents have been promised the building won't collapse most have voted with their feet and have vacated the tower this was the dream unit to 2:08 correct what in Japan eight hundred and forty thousand dollars plus stamp duty of around thirty seven thousand coming and II never Lee put his life savings into this apartment Wow look at this view yeah it is impressive his tenants are now gone and they're not coming back you couldn't imagine that something like this could end up going so badly wrong well that's right it's our worst nightmare it's what you call the Australian Australian dream turned into the Australian nightmare what are you looking to Atilla for now I don't think it's worth anything seriously would you buy it would you buy into it [Music] what does that mean for your life savings well it's lost it's gone its evaporated we're up creek it's not a good creek to be up especially without a paddle yeah right now every owner in the opal tower thinks they're up the same Creek and while this is an extreme case around the country there's a huge and growing number of property owners who might be in exactly the same position as housing prices slump the debt bomb is already too big the fuses running the banks frankly just lent and lent and lent on the assumption the home prices will always go up Matt north is a banking and housing analyst any straight talk quartz controversy but he's unrepentant about his gloomy predictions for our housing market Martin the last time he spoke with 60 minutes you predicted in a worst-case scenario that property prices across Australia could fall by as much as 40 percent looking back do you think that was extreme no international issues flowing in over the top of what's happening locally I still think that we could see 40 percent plus Falls over two or three years you know it's not going to happen overnight 20 to 30 percent is my best guess for a local crisis without at that international context which would take us even it into more negative territory while housing prices fall mortgages don't and that's a problem for more than four and a half million households with a harm line so these darker areas are where the highest number of people with negatively live okay so negative equity let's explain is if these people in the dark blue areas in particular had to sell tomorrow they would get less for their house than what they are to the bank yeah you'd still owe the bank if you try to sell and that's a big deal more and more Australian households are now sliding into negative equity particularly in Sydney and Melbourne where real estate has already slumped by as much as 20 percent but numbers of households are we talking about with this negative equity okay nationally it's four hundred and fifty thousand households four hundred and fifty thousand households out of about the four point seven five million who have some sort of property and some ten percent one in ten people correct if they sold the house would not have enough money to repay their mortgage they have no way out their mortgage prisoners their prisons in their property it was overwhelming those get into a place of it was just going down trapped were you trapped yeah I felt trapped yeah Alysse ever confronted the negative equity nightmare a couple of years after purchasing her first home in the Melbourne suburb of Carnegie what did you pay for the property I paid six hundred thousand and how much of that six hundred thousand did you put in yourself I put in one hundred and forty thousand I put in a twenty percent deposit so four hundred and sixty thousand dollars a day you took on that's correct so Ross if you look up over there that's my the third balcony that was my yeah that was my home Wow when you moved in what were you feeling excited it felt mine it was like you just felt secure but this feeling of security didn't last long last year as the bills mounted Ellie came to the painful realization she would have to sell but then the pain got worse and I approached a number of real estate agents and they said to me just quite straightforwardly we can't blow your property up for more than four hundred and fifty thousand but hang on you paid six hundred thousand exactly and they wanted to say that they could sell it for four hundred and fifty thousand one hundred and fifty thousand dollar loss yeah that would have wiped out everything that you put into there put in a lien managed to avoid her negative equity crisis when real estate agent Deon Besser sold his property for five hundred and fifty thousand dollars yeah I'm glad that I could help still a loss but by no means a disaster so you've come back here what are your emotions looking at it now well it's sad and it's a it's a loss I've got to accept the loss but it's it's not home anymore Ellie's problems would have been compounded many times over if her apartment had proven to be defective like the Opel tower but don't imagine that whatever the problems are in this tower that it's an isolated case is opal the only one with issues no I think you'll find that there's a large number of projects where there are major defects occurring and so that how many buildings we're talking about are you 200 thousands and thousands my greatest fear is that there will be fatalities because of defects in buildings and the most likely area fatalities is in fire safety former New South Wales Treasury secretary Michael Lambert was asked to review building standards after this horrific fire in banks town in 2012 when two Chinese students were forced to jump for their lives we do have one deceased female and we have another female patient who's been transported to Liverpool hospital non-compliant alterations had turned their building into a fire trap but despite Michael Lambert's calls for sweeping reform nothing has changed so how many recommendations did you make to the state government I made 150 recommendations covering 10 major areas of reform and at this stage virtually none of them had been acted upon so in other words the conditions that caused the young women to jump off the banks town building has not necessarily been changed by the government since your report unfortunately that it's the case yes very unfortunately does it worry you that you see so many crying so many buildings on apartment blocks going up right now across Sydney across Australia of course because fundamentally with this booming and construction people are trying to get projects on the market very quickly and there's a high risk that they're cutting corners so if you were a potential buyer Martin drinking you'd buy under the Opel tail no I wouldn't actually buy in one of the new high-rise because I think there are too many risks on the price on the quality of construction and other factors too but this is a symbol of something much broader that we have so many properties across Australia which are being thrown up or have been thrown up with significant defects in them I think we've built a generation of properties that frankly could become slums in 20 or 30 years and that's a very significant issue not just for those individuals but for the broader economy [Music] so this is apartment 1005 it was completed a luxury apart in fact I'm walking through where the bathroom was right now and of course these are the walls that need to be stabilized the big question is for the resin well I can't live here now but would they be confident enough to live here in the future [Music] there is no doubt that people are going to suffer extreme financial loss extreme financial hardship because of this now we've had a real estate agent who is actually on our committee and he had an apartment that was up for sale prior to the events of Christmas Eve and I think it was up for sale at approximately say $100,000 he received an offer following the events of Christmas Eve for an offer around $400,000 now for us half price but not only that Ross the same person then said you know what as the story continues to unfold make I'm not even gonna even offer you a dollar - you've got more rights buying a toaster what could civil rights barring a testing you do buying a unit but a toasters worth 80 bucks an apartment with eight hundred forty thousand yeah that's right well you tell me explain it to me I don't know hello I'm Liz Hayes thanks for watching to keep up with the latest from 60 minutes Australia make sure you subscribe to our channel you can also download the 9 now app for full episodes and other exclusives 60 minutes content

Channel: 60 Minutes Australia

Views: 3,028,809

Rating: 4.370369 out of 5

Keywords: 60 Minutes, 60 Minutes Australia, Liz Hayes, Charles Wooley, Tara Brown, Liam Bartlett, Allison Langdon, Tom Steinfort, Ellen Fanning, Ray Martin, Peter Stefanovic, Jana Wendt, Jeff McMullen, Jennifer Byrne, Mike Munro, Richard Carleton, Peter Harvey, Michael Usher, George Negus, Ian Leslie, Gerald Stone, housing, investment, apartment, The Opal Tower, high rise buildings, building, construction, housing crisis, Australian housing crisis

Id: vRSdiq3sOTc

Length: 14min 9sec (849 seconds)

Published: Mon Feb 04 2019

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[u/BirdBuddi]

australian debt bomb: replay of USA 2008 debt crash, millions of mortgage holders (not home owners) owing more to banks than house is worth.

why the replay? why can't we avoid this on our globe?

edited to add: the banks just kept lending, knowing there will be a crash. so they know and they keep doing it for money, as much as they can get. so it's not an economy, it's a scam run by the banks, 'cause they know what they're doing.

edited to add 2: I'll never forget the image of george bush and henry paulson shaking hands after bush agreed to bail out the banks. don't know what's happening in australia right now between gov't. and banks...