This city has seen its sixth building company collapse in as many weeks; can the industry recover?
Perth's building industry is enduring a spate of company collapses, mirroring a nationally dire situation that is showing few signs of abating.
The tsunami of building company collapses continues unabated, with Perth housing customers suffering losses and delays as a sixth builder has collapsed in just weeks.
Western Australian home builder Start Right Homes has been sent into liquidation with another 24 hapless customers of failed builders joining the ranks of the disgruntled.
The Osborne Park building company, which mainly constructed single-storey houses and was first registered in 2014, described itself as a specialist in architectural stylings.
The company’s website and social media pages have been taken down.
In an interview on Perth radio Peter Stewart, Executive Director, Building and Energy said home owners with incomplete or defective projects should contact QBE to discuss their home indemnity insurance policy.
“Home indemnity insurance provides financial protection for homeowners in situations such as the insolvency of their builder,” he said.
“Contacting the insurance provider enables homeowners to begin the process of engaging another registered builder to complete the work or managing other remedies to which they may be entitled.”
Affected subcontractors are urged contact the appointed liquidator, Anthony Warner from CRS Insolvency Services.
Mr Stewart said that although building cost inflation was easing, many more company failures were still highly likely.
About 110 construction WA companies have collapsed so far this financial year, according to data released this week by the Australian Bureau of Statistics. Almost 2,100 have gone under nationally.
The spate of building company collapses could not come at a worse time, with any prospect of the state coming close to meeting its National Housing Accord targets seemingly out the unfinished window.
WA is currently on track to fall more than 15,000 homes short of its Accord target.
Master Builders Australia today released its 2024 building and construction industry forecasts which, for the first time, cover the full five-year period of the Accord.
From 1 July 2024 until 30 June 2029, Master Builders forecasts 1,087,325 new home starts.
Matthew Pollock, CEO, MBAWA, said the situation was growing increasingly dire but some signs of life offered the chance of eventual improvement.
“One positive is we are seeing inflation starting to near its target range and we expect interest rate cuts that will have a significant influence on the overall economy,” said
“But although the Federal Government has announced a raft of housing measures that focus on increasing supply in social and affordable housing and the rental market, there is still cause for concern.
“The biggest challenge industry faces remain with the workforce shortages, and the impacts of industrial relations changes cannot be overstated.
“What these forecasts show is that capacity constraints in the industry are going to mean we fall short of the Federal Government housing targets.
“At a federal level, the government’s priority should be growing the building and construction workforce and not making industrial relations reforms that make it hard to build homes.
“Domestically, we cannot fill this gap. We need to think outside of the box with far better apprenticeship incentives, reskilling migrants already here, and a targeted international campaign to bring in skilled migrants.
“The (WA Roger) Cook Government has made positive steps to address the labour and skills shortages, but we need to see the Federal Government put as much effort in building the human capital in our industry if we are going to meet their targets.
“Productivity in the industry has fallen drastically over the last decade. Training investment and more flexibility in workplace conditions are required to fix this decline.
“Without urgent supply side reforms, every state in Australia is on track to miss its targets,” Mr Pollock concluded.
Property prices could rise from lack of building approvals
The yawning gap between demand and massive undersupply is propping up prices at a time when interest rates remain stubbornly high and should be putting downward pressure on prices.
Population growth was only adding more fuel to the property price fire.
Daniel Walsh, Director, Your Property Your Wealth, said Australia is set for a prolonged period of surging property prices.
He that with annual building approvals tracking at only about one quarter of population growth, capital growth was inevitable.
“You simply can’t have such a significant gap between demand and supply without it resulting in soaring property prices,” he said.
“Plus, the latest monthly building approvals show that the situation is just getting worse, with high interest rates and construction costs decimating the building industry and with it any semblance of a balanced market.
“The last time there was such a supply and demand imbalance between population growth and building approvals was decades ago.”
Further analysis found that there is a shortfall of nearly 90,000 dwellings per annum given the average household size in Australia is 2.5 persons.
“I wouldn’t be surprised if it took a decade for the equilibrium to be restored,” he said on Tuesday (9 April).
