More builders under scrutiny as new home sales plunge

Two major Western Australian builders are under tax and regulatory scrutiny, while nationally new home sales have gone into reverse and the Victorian building industry is described as being under extreme pressure.

In Perth, Nicheliving, which has completed more than 3,000 homes since 2002, has attracted the attention of the Fair Work ombudsman over worker pay and entitlements, all while a class action lawsuit continues as a result of complaints of homes not being completed after three years or more.

Another building company feeling the heat in the west, Inspired Homes, has drawn complaints from customers that homes that were signed up in 2020 are still far from completion.

Media reports in WA revealed that the builder had also struck difficulties with the tax office, with debt of $301,000 having been paid last week following the lodgment of a default notice.

Owner Vas Spaseski told media he hoped to complete 30 of the outstanding homes by Christmas.

The Inspired Homes website describes the company as “a strong, stable and reliable force for developers in the residential construction industry” although it’s not a view shared by dozens of complainants waiting years for their build while being forced to rent elsewhere.

Mr Spaseski said a lack of skilled trades remained a major issue but progress was being made as conditions improved.

“With the improvement of the weather, the government lifting the ban on unvaccinated trades on site, opening the borders to allow skilled trades back into the State, and a raft of other measures, good progress is now being made,” he was quoted as saying in the media.

According to the Australian Bureau of Statistics more than 20,000 houses are still under construction in WA. Three building companies in the west folded earlier this month along with another in Victoria.

The problems besetting the building industry in Western Australia are familiar to other states as well.

Phil Dwyer, President, Builders Collective of Australia, told Victorian radio listeners on Monday (20 November) that the picture for Victoria’s building industry was bleak.

Mr Dwyer said a shortage of workers was leading to corners being cut in order to complete jobs.

“The building industry is not an industry you want to be involved in at the moment,” he said.

“Problems have been building for 15 years and it’s now very bad.

“We have a lot of people lacking the necessary skillsets, we’re not getting the apprentices into the system like we used to, and parents of builders and plumbers are deterring their own kids not to work in the industry – there are so many problems in the industry.

“We don’t have the regulatory oversight needed to regulate the industry and that’s our biggest problem.”

He added that customers are now wary of taking on new builds.

“The Victorian Building Authority need more funds to regulate properly, even if it leads to some added costs - if we don’t have a regulator, it will go off the rails.”

New home sales slump

New home sales took a backward step in October, down by 8.1 per cent for the month.

New home sales across Australia in the three months to October fell by 5.8 per cent compared to the same quarter in the previous year.

Sales were down in South Australia (-20.1 per cent), New South Wales (-17.4 per cent), Queensland (-15.0 per cent) and Victoria (-13.8 per cent) but in Western Australia increased by 42.2 per cent compared to the same three-month period in 2022.

Housing Industry Association Senior Economist, Tom Devitt, said the spike in sales that emerged in September, caused by regulatory changes in NSW, was more than reversed in October.

“Buyers rushed to get ahead of NSW regulations that will add significantly to the cost of a new home, causing an extraordinary spike in sales in the state in September.

“This drawing forward of home purchasing decisions is anticipated to continue weighing on sales over coming months.

“The sales performance in October was consistent with the weakness observed throughout 2023 and will see new house starts continue to decline.

“Interest rates continue to weigh on confidence, with the industry headed for its weakest year of new house commencements in over a decade.”

Queensland grant increase may stretch builders

In Queensland, a doubling of the first home buyer grant to $30,000 has been welcomed by young, aspiring home owners but has elicited a warning from the Real Estate Institute of Queensland (REIQ) wary of more strain being placed on builders.

REIQ Chief Operating Officer Dean Milton said South East Queensland alone requires in excess of 40,000 houses per annum and incentives on the demand side are unlikely to assist in delivering this target.

“We’re facing some significant challenges in the real estate and housing sector at the moment that can’t be solved by providing a cash boost to some buyers,” Mr Milton said.

“We’ve seen in recent times, especially in response to COVID-19, an array of new grants at both a federal and state level. 

While that’s great in theory, from a construction perspective it’s brought forward high demand and put pressure on the cost of building supplies and the ability to access tradespeople.

“We generally support initiatives that give first home buyers a leg up towards home ownership, however at a time when the RBA is doing its best to tame inflation, we question whether now is the right time for more demand side stimulus,” he said.