Eye-watering price for half-built house
More and more home builders are collapsing across Australia as soaring materials and labour costs cripple the companies working desperately to meet the country’s surging demand for houses.
Data from the Australian Securities and Investments Commission shows a gathering pace of construction insolvencies in the past three years, with 2196 builders going bust in the past financial year through to April 7, a 34 per cent increase from the 1635 insolvencies recorded in the 2023 year.
For the nine-month period from July 1, 2023 to March 31, 2024, construction firms accounted for nearly 28 per cent of all insolvencies.
And the brutal landscape is swallowing up companies that have been in business for decades, illustrated by this month’s shocking collapse of renowned Perth builder Collier Homes, which fell into liquidation after 60 years in business.
Ray White real estate agent Andrew Boman said he had started to notice the construction industry’s growing crisis in the middle of 2021.
“It has become more prevalent,” said this week.
“More builders are going broke and the cost of living has had an effect on that and what they can do.
“We are seeing it in certain suburbs more than others because some suburbs in Brisbane are more established so there is less construction going on, but on the most part, yes.”
The insolvencies rippling through the sector has cast a shadow over the property dreams of regular Australians.
“Clients that I’ve spoken with, who are looking at their next stage of housing, are definitely nervous about going down the rebuild path because of so much uncertainty around build costs and builders and companies generally,” he said.
“So if I’m a Mum and Dad or a family and my house is too small, I’ve outgrown my three-bed and an option was, ‘well, hey I love the position I’m in, but I can’t find any house big enough to go and purchase that is already established, so let’s knock down the house down we’re in at the moment and go and build a new house’.
Eye-watering price for half-built house
“But that is a lot less prevalent now because of how much uncertainty there is out there in the building industry.
“All that sentiment from the market has led people to be very cautious about going down that road.”
The scars of home builder collapses can be seen in cities across the country.
Mr Boman spoke a day after selling a half-finished home at suburban Brisbane for $1,372,500.
The home, at 115 Dunbar Street in Brisbane’s Mount Gravatt, was being built by top-shelf builder Porter Davis, but the company went under in 2023 and Mr Boman’s clients were left with a home in a blue-chip location but still with work to do.
But the home still sold, with Mr Boman securing 120 buyers over a three-week auction campaign with 34 registered bidders.
“It’s evident that we are still very much undersupplied in housing,” he said.
“There is still an appetite for people who want to do projects, who are in a position to do that.”
ASIC confirmed in April Collier Homes would shut down, with Robert Conry Brauer and Linda Methven Smith, from McGrath Nicol, appointed liquidators.
The company was created in 1959 by Raymond McCarthy.
In a post on the company’s website before the ASIC announcement, there was a reference to industry challenges since the Covid-19 pandemic struck.
“We try hard to please our customers during these challenging times,” the post read
“The post-Covid stimuli were well-intentioned, however they created massive supply chain shortages, delays and labour constraints — all translating to unpredictable cost escalation.”
Collier’s fall follows a steady stream of construction failures this year.
In January, Melbourne builder Alpha Building Group entered liquidation with $3.5m in debts.
The collapse left at least 10 homeowners with unfinished houses across the Victorian capital city.
In the same month, Queensland builder Insignia Homes fell into liquidation with debts of more than $6m.
The company’s fall left at least eight homebuyers with unfinished projects across Southeast Queensland.