WA's largest home builder, BGC, freezes new home sales

Western Australia’s largest homebuilder, BGC Housing Group, has announced it will no longer accept any new home sales orders to allow it to complete a massive backlog of commercial and residential projects.

The revelation on Monday (3 April) that labour shortages have made it impossible to meet deadlines comes as a class action lawsuit is before the federal courts, initiated by hundreds of disgruntled customers frustrated by long delays in the building of their new homes.

The class action will allege that home owners suffered building delays and extensions “outside of what is fair and reasonable”, as well as building contract issues with the group and price increases following the commencement of construction delays.

BGC, also Australia’s fourth largest home builder, has also run into problems with the structural defects besetting its major apartment complex project called Shenton Quarter that is under construction in Shenton Park.

A union representative from CFMEU told API Magazine that it had serious concerns about the development, which is also 12 months behind schedule.

Without singling out BGC specifically, CFMEU added that numerous large WA construction companies were now susceptible to higher costs because they had attracted business at a point that was barely viable even at the time.

No fixed date to end BGC sales freeze

BGC has been gradually reducing its new orders over the past year, culminating in the complete freeze now initiated.

In July 2022, BGC Housing Group placed a cap on its new home sales to allow the business to focus on completing homes already under construction.

The company issued a statement Monday saying ongoing labour shortages in the construction sector were to blame and would result in some job losses.

In it, Michael Bartier, Executive General Manager, BGC Housing Group, said the sales halt would be reviewed when the availability of labour improves and a decision on recommencing sales will be based on market conditions at that time.

“This decision, effective immediately, will allow us to focus all our resources entirely on existing customers, many of whom we know have experienced frustrating delays,” Mr Bartier said.

“The decision will impact some jobs in the business’ sales and administration departments and wherever possible, redeployment opportunities will be offered.”

BGC declined to answer additional questions asked by API Magazine.

BGC Housing Group includes Aussie Living Homes, Homestart, Smart Homes for Living, Now Living, Terrace and Ventura South West.

Other major developers continue to make acquisitions, however, with Perth developer Hesperia progressing its East Perth revitalisation plans. It this week acquired a site for a $100 million apartment project.

New home construction across Australia has been significantly impacted by the pandemic, global supply chain issues, labour shortages, and natural disasters affecting the availability of materials and rising costs due to inflation.

Last week, two major builders - Porter Davis Homes Group and Lloyd Group - collapsed, leaving thousands of projects in limbo in Victoria, New South Wales and Queensland.

Building delays also prompted the federal government to extend the deadline for people to submit their Homebuilder documentation to help those who have been affected by supply constraints and construction industry delays.

Construction woes long time coming

A highly experienced Perth-based roof carpenter, Scott, who declined to give his surname to protect his employment status, said the state and federal grants that caused a massive building boom were largely responsible the current plight of the industry.

“When Covid hit it was obvious that supply chains were going to dry up and prices would skyrocket because we rely on imports for nearly everything required to build a home, so the artificially created boom was the stupidest thing I’ve ever seen in my professional career,” Scott told API Magazine.

“Companies large and small were taking the piss, grabbing as much work as they could with no regard for workers who, due to labour shortages, were working six or seven days a week.”

If this is being played out across the country, it’s no wonder builders are folding.

- Scott, Perth-based roof carpenter

Scott said it had led many to abandon careers in the Perth building sector and seek better conditions and pay in the state’s resources sector in the Pilbara, worsening an already dire labour scenario and the housing crisis as a whole.

“So now builders are struggling to find plasterers, white setters and gyprock setters, and roofers, carpenters and bricklayers are in short supply, so this has all had a snowball effect on the whole building process.”

He said that the predictable inflation was still rampant, despite prices levelling out a little in recent months.

“A sheet of mesh used by a concreter used to cost $30 and is now $90, while timber, even pine, is at ridiculous prices.”

Within his own trade specialty, he said a roof timber pack had gone from $7,000 to $13,000 within a month.

The result is that around 70 per cent of new dwellings approved in WA between June 2020 and December 2021 are yet to be completed, according to a survey of Perth’s largest local governments conducted by the Department of Mines, Industry Regulation and Safety.

“Some, not all but some, builders got greedy early on and now they’re struggling to meet costs when they deliver a project.

“Some of the big players now need to drop their costs by 20 per cent just to make the project anything close to viable, so that’s where you start to get build quality issues, which I’ve seen plenty of unfortunately.

“If this is being played out across the country, it’s no wonder builders are folding – I don’t see the situation improving quickly,” Scott said.