28/02/2008

28 February 2008

Housing Faults Can Become Mortgage Busters

Home buyers flying blind on housing faults could find the unexpected and unbudgeted costs could ultimately become a mortgage buster, Archicentre, the building advisory service of the Royal Australian Institute of Architects said today.

An Archicentre Inspection in progress

Archicentre General Manager David Hallett said, the usual safety net of home buyers being able to add the cost of repairs or renovations onto their mortgage has disappeared as interest rate rises and family budgets have come under increasing pressure with rising costs of petrol, food, energy and water services. "In the current climate of interest rate rises there is no margin for error for home buyers. "The decision not to carry out a property inspection can make a major financial and social impact on buyers who in some cases run into serious debt problems. Often the unbudgeted repairs or maintenance are added to the mortgage compounding the affordability problem with a $30,000 repair cost turning into $50,000 over the life of a normal loan. "The fact that we have 300,000 families likely to lose their homes this year because of interest rate rises and 750,000 families coming under extreme mortgage pressure*, home buyers are increasingly becoming aware of the dangers of purchasing a property with faults. *Source: JP Morgan and Fujitsu Consulting

"With many investors and home owners facing financial difficulty in the current market, the QUICKIE makeover is a popular strategy for a quick sale where expensive structural, wiring or plumbing faults may be superficially covered up adding risk for home buyers entering into a sale without a property inspection."

Mr Hallett said that in the current property market an Archicentre pre-purchase property inspection can be a valuable tool for buyers identifying to negotiate a price taking the faults of the property into account.

"Archicentre is receiving an increase in calls from concerned home buyers after they have already signed the contract of sale. A conditional offer can be a way of ensuring that you are made aware of building faults before the sale contract becomes binding."

Archicentre's pre-purchase property inspection figures show that at least one in three homes sold have a range of problems that could add thousands of dollars to the cost of a property, especially if the faults discovered involved structural, plumbing, electrical, termites or illegal building.

Archicentre 2008 statistics compiled from pre-purchase home inspection figures
Victoria - Type of fault found -shown as a percentage of all houses inspected in each area
State-Wide 74,701 inspections

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Media Enquiries:
David Hallett General Manager Archicentre (03) 9819 4577 Mobile: 0439 439 115
Ron Smith Corporate Media Communications (03) 9818 5700 Mobile: 0417 329 201