The New South Wales Labor opposition has warned that flammable cladding could slash apartment prices by a “whopping” 90 per cent.
Cladding was blamed for the ferociousness of a deadly fire at London’s Grenfell Tower public housing block in June last year, which killed 71 residents.
A British property owner who lived in a housing complex with the same cladding last week said the asking price of her £475,000 ($871,650) flat had collapsed to just £50,000, The Guardian reported.
If a similar crash was repeated in Sydney, Shadow Minister for Better Regulation Yasmin Catley said apartment prices could drop by an average of almost $700,000, based on the median price.
“Losing up to 90 per cent of the value of a property would spell financial doom for home owners and investors alike,” Ms Catley said in a statement on Sunday.
A NSW government taskforce last month identified 412 buildings as requiring further assessment as a high priority, based on cladding-related fire risks.
Of those 412 buildings, 170 were residential and 53 were higher than eight storeys.
Minister for Better Regulation Matt Kean on Sunday announced reforms to help owners force a builder to pay for rectification work.
Unsafe external wall cladding will now be classified as a major defect under the reform, giving residents more time to have it fixed.
“This means anyone who buys a unit or townhouse with unsafe external cladding has the right to get repairs done by the responsible builder for up to six years after the building is completed,” Mr Kean said in a statement.
“Now, with this change to the Home Building Regulation, if cladding on a building causes or is likely to cause a threat to the safety of any occupants in the case of a fire, it is considered to be a major defect.”
Ms Catley said the government was “playing catch-up” by “pushing follow-up work on hundreds of affected buildings onto councils”.
She said innocent home owners could be faced with prohibitive costs to fix flammable cladding.
NSW Fair Trading Commissioner Rose Webb last month called on public submissions to consider a ban on certain types of external cladding.
Submissions close on Monday.