More builders hit the wall, further industry pain expected

The collapse of Adelaide's 7 Star Construction, Queensland's Chelbrooke Homes and two Perth builders are the latest hits on an embattled building industry.

A Chelbrooke Homes new home on sloping site in Brisbane.
Chelbrooke Homes had prided itself on its home builds on unusual and sloping blocks of land. (Image source: Chelbrooke Homes)

Well established building companies in Adelaide, Gold Coast and Perth have entered into administration, leaving more disgruntled customers with half-built homes and progressive pre-payments in limbo.

South Australia’s 7 Star Construction and 25-year-old building company Chelbrooke Homes, which operated in Brisbane, Gold Coast and northern NSW, have called in liquidators.

The Queensland firm had once completed $24 million worth of work in a year but more recently had found business had dried up. The company had promoted itself as having particular skill at working on sloping sites and unusual block sizes.

The collapse of Chelbrooke comes a week after Brisbane construction company DCB Developments, founded in 2008, also called in liquidators. That company had completed commercial hospitality projects for companies of the ilk of KFC, Guzman y Gomez and Hungry Jacks. It also follows the collapse of 40-year-old Gold Coast-based builder GCB Constructions.

The demise of 7 Star Construction in South Australia followed the licence suspension of company owner Qamil Veseli as week earlier in the wake of dozens of complaints being made to the South Australian Government’s Consumer and Business Services.

Customers told media they had waited as long as three years for builds to resume or take place and had little or no communication from the company.

The lengthy delays of residential projects in Modbury and Plympton had seen sites left unfinished and exposed to the weather for up to three years.

A statement released by Mr Veseli stated, “Everything has gone out of control, at the moment we're under big pressure.”

Regulations differ from state to state but in the event a builder goes bust, buyers should be protected by a mandatory insurance that is compulsory for builders to take out ahead of construction beginning.

In Perth, a dozen homeowners have been impacted by the liquidation of residential builder Western Luxury Homes. Affected property owners were urged to contact the company’s home indemnity insurance provider, QBE Insurance.

A smaller builder, Royal Construction and Design, has also gone into liquidation.

Red tape strangling building industry

Speaking to API Magazine, former builder Lex Wilkie of Port Macquarie, said it was more than just building costs that were breaking building companies.

“The amount of red tape, lack of trades workers, site difficulties are just some more added obstacles all builders now face. 

“It’s both a building and an admin’ nightmare with so much government intervention and major added fees and costs - building materials are only part of the picture.”

Mr Wilkie said a large renovation project he was working on for his own property portfolio would be his last building endeavour.

“Too much time is wasted on unrelated matters.

“The industry is being crushed by government interference and a lack of apprentices coming through the system, so I fear the housing crisis is only going to get worse.”

The cost of building a home continues to rise but the rate of inflation for building materials is easing.

Plunging steel prices have helped bring building product price inflation to its lowest in almost three years.

During the June 2023 quarter, the cost of building materials increased by another 0.6 per cent, the smallest quarterly increase since the end of 2020.

Total building construction prices rose 1.0 per cent in the June quarter and 6.5 per cent over the past 12 months predominately driven by labour shortages

More construction pain to come

Master Builders Australia CEO Denita Wawn said the difficult times for builders looked likely to continue.

“The uptick in higher density approvals in May was short-lived with approvals returning to low levels not seen since before the pandemic.

“Right now, many new home building projects are failing to get off the ground due to the combination of high costs and a declining investment appetite, inflamed by rising interest rates.

“We need to see governments working to make it easier for new projects to get the green light by kickstarting private investment and reducing development costs and delays.

“Taxes, regulations and the industrial relations environment all have an impact on the cost of construction.

“The building and construction industry continues to implore the Opposition and crossbench to pass the Housing Australia Future Fund legislation,” Ms Wawn said.

Article Q&A

Why are so many building companies collapsing?

The uptick in higher density approvals in May was short-lived with approvals returning to low levels not seen since before the pandemic. Many new home building projects are failing to get off the ground due to the combination of high costs, labour shortages, administrative red tape, a declining investment appetite, all inflamed by rising interest rates.

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