Builders fall like dominoes, as NSW launches inspection blitz

Building companies continue to fall like dominoes, with three Western Australian companies going into liquidation and a Victorian home builder collapsing in just the past week.

NSW Fair Trading, meanwhile, launched a blitz on building sites on the mid-north coast, visiting 70 building sites, placing seven matters under investigation and issuing a stop work order on one apartment complex site.

In Western Australia, the local franchise of national builder GJ Gardner Homes joined Simsai Construction Group and regional family builder Watersfield — which traded as Major Residential Construction and Development – in liquidation.

In Victoria, Como Homes was ordered to wind up after facing court in relation to almost $1 million in unpaid debts.

Como Homes, which had 11 creditors aiming to have it wound up, was a residential builder based in Dandenong in Melbourne’s southeast that has been a registered business since 2017, according to the corporate regulator.

The demise of Como Homes followed hot on the heels of Melbourne-based Dome Building Projects falling into liquidation. Dome, which carried out high-end home building and renovation work in Melbourne’s inner-eastern suburbs, fell short on payment demands to a former director.

The building industry’s plight is no better in South Australia but there was at least a sliver of good news for some customers of two collapsed building companies.

The South Australian Government has said it will provide retrospective building indemnity insurance to customers affected by the collapse of 7 Star Construction and Felmeri Homes.

A government spokesperson told media the claims would be funded by the premium pool for building indemnity insurance.

The latest building industry casualty, RPH Australia, which was trading under the name GJ Gardner Perth West as it was part of the GJ Gardner network, is a major building franchisor with nearly 100 independent building companies and offices around Australia.

A spokesperson from the GJ Gardner Homes WA head office said the company’s demise had impacted 18 homes.

In a scenario mirroring that playing out around the country, many customers had been waiting years for the new home builds to be completed.

Major commercial construction company National Projects & Maintenance (NPM Group), which has offices around the country, collapsed in late October leaving millions in debts and 200 jobs lost.

Government housing supply commitment in peril

The Federal Government’s target of delivering 1.2 million new homes over five years from 2024 is now in grave doubt.

With the building industry in such a mess and labour still proving difficult to find, the chances of industry having the capability to eclipse the record five-year building spree from 2015 to 2020, when 1.05 million homes were completed, appear slim.

This was a period in which we saw the biggest influx of Chinese capital ever recorded and there were thousands of apartments built across our CBDs and close to universities. The Chinese capital has mostly evaporated and there is nothing as significant to replace it. 

Nerida Conisbee, Chief Economist, Ray White Group, described the government’s ambition as “impossible”.

She said that when building activity was at its peak there was the biggest influx of Chinese capital ever recorded.

“There were thousands of apartments built across our CBDs and close to universities but the Chinese capital has mostly evaporated and there is nothing as significant to replace it.”

She said the money to develop so many homes has to come from somewhere.

“We have seen a slight pick-up in offshore investment but nothing like we saw last decade.

“Build-to-rent is a growth area but the pipeline of development from this source remains a tiny proportion of what is required.

“Superannuation is frequently named as the solution but there remains a disconnect between our superannuation funds being invested in affordable housing and achieving a decent level of return. 

“Ultimately, most of the money will come from households, whether in the form of people buying homes to live in or to invest in but the problem right now is high interest rates are preventing many from being able to buy new homes - monetary policy is choking housing supply,” Ms Conisbee said.

She added that a second challenge was high construction costs.

“Although the surge in pricing has moderated as building material costs reduce, it will take some time for labour shortages to be eased.

“Unemployment is still very low and industries like construction are seeing some of the most significant shortages.

“There are also too few building companies, and again this will take time to resolve.”

Builder crackdown in NSW

Those labour shortages have prompted many builders to try and take short cuts.

Many companies have resorted to employing unregistered and unqualified workers to either save money, overcome labour shortages or a mix of both.

NSW Fair Trading Assistant Building Commissioner Matthew Whitton said developers and builders need to ensure they have the appropriate approvals and construction certificates to undertake the work.

He said they had visited sites in Sydney, Albury, the Hunter Valley, Newcastle, Port Macquarie, Tamworth, Wagga Wagga, Wollongong and now the mid-north coast this year and are taking a proactive approach to ensure building projects are appropriately licensed and complying with the right standards.

Inspectors found a “reasonable level of compliance” however found there are still traders out there that do not hold the appropriate licences for the work being undertaken.  

In addition to the $11,000 worth of fines issued, seven matters were placed under investigation, including a stop work order on the developer of a Forster apartment building complex, following their visit to more than 70 building sites on the mid-north coast in the past month.

“Increased proactive compliance of specialist building practitioners is one of NSW Fair Trading’s regulatory priorities for 2023, with a focus on certifiers, electricians, engineers, and plumbers,” Mr Whitton said.

“These inspections are part of the Construct NSW transformation strategy to restore confidence in our residential building market.”