Empowering apartment buyers to avoid building defects by reducing information asymmetries in the apartment development process

Abstract

Purpose – A rapid growth in multi-owned apartment (MOAs) developments around the world has been accompanied by increasing concerns about the high incidence of building defects. Despite the significant economic, psychological and social impacts of defects on MOA building owners and occupiers, research into the organisational and non-technical causes of these defects remains limited and under-theorised. This paper addresses this research gap by reporting the results of a three-year research project in Sydney, Australia which investigated the extent and causes of defects in MOA buildings from an information asymmetry perspective. Design/methodology/approach – Informed by information asymmetry theory, the research is based on a thematic analysis of semi-structured interviews with 66 experts from across the MOA industry in Sydney, Australia. Findings – Findings produce a new typology of 16 information asymmetries which can lead to defects over the MOA development process. We find that almost most key actors involved in the MOA development process are incentivised to hide information about potential defects from MOA customers who are the most disempowered and vulnerable parties in the process. Originality/value – By mobilising information asymmetry theory, this research provides a novel conceptualisation of an important and intransigent problem and new practical insights into how to resolve it. By contributing a new typology of 16 types of information asymmetries in the MOA development process, a series of recommendations are made to ensure that the MOA market has the information to minimise MOA defects and better serve consumers’ interest.