THE COST OF BUILDING DEFECTS
Economic Modeling OF THE COST OF building defects in apartments ACROSS AUSTRALIA
Equity Economics has produced new modeling to estimate the total costs likely to result from building defects in apartments built in the last ten years. To do this we relied on publicly available information, used conservative costings and, where data was limited, applied a range to reflect the high level of uncertainty.
Our analysis highlights that the cost to Australia will be substantial. We estimate the cost to building owners and State, Territory and Federal Governments of addressing the structural and safety defects in these buildings will approximate $6.2 billion ($5.2-$7.2 billion).
This is a conservative estimate that excludes several potential costs including: legal costs; jurisdiction wide building audit schemes; and increases in insurance. In addition, it excludes the cost of defects for apartments built before 2009. The confidence interval around this estimate reflects that the scale of defects is not known and must be estimated using the available data.
For a discussion of the modeling results, a sensitivity analysis and the rationale for the modeling inputs see here.
This work was funded by The Shape Agency and published by the CFMEU.