Last week, we reported that the number of housing construction companies declared insolvent had reached a nine-year high, signaling an “insolvency Armageddon” for the country’s home builders.
According to Michael Bleby at The AFR, builders behind more than 5200 homes, worth a collective $2.2 billion, have collapsed since 2021.
So far this financial year alone, 1672 home builders have failed, the most since 2014, according to ASIC data:
With two months left in the financial year, the number of insolvencies will most certainly exceed the amount recorded in 2014.
The Australian Bureau of Statistics (ABS) issued data on loans for the purchase and building of new homes on Friday, adding to the dismal news.
The number of loans provided to buy or build a new home was down 31% year on year and is now at its lowest level in 15 years:
This week’s ABS dwelling approvals data likewise revealed plummeting buyer demand, with house approvals crashing to March 2013 lows and unit approvals tanking to February 2012 lows:
Just when you thought it couldn’t get worse for Australia’s housing construction industry, another major home builder went into liquidation this week.
Interface Constructions Victoria, which has been running for 35 years and has a mix of residential and commercial projects, went into administration on Tuesday.
Interface’s demise follows Porter Davis Homes (PDH), one of Australia’s major construction conglomerates, which went into administration in March, with over 1500 homes partially completed.
EQ Construction, a premium apartment builder in New South Wales, also went into administration in February.
Whereas LDC, a major Queensland building company, went bankrupt in January, following WA Housing Group in December.
“It’s the grimmest I’ve ever seen in 45-odd years in the industry”, veteran Tamawood home builder Robert Lynch told The AFR.
“It’s going to be a very tough 18 months to two years. We’re going to see a lot more pain”.
“They’ve been so slow to build they’re finishing off a lot of houses now that are going to lose a lot of money. I see that being a huge problem.”
Neil Harding, chief executive of contractor Adco, believes “we will continue to see a high level of insolvency in the industry for another 18 months or so”, due to ongoing cost pressures.
It is stating the obvious that the housing construction downturn has arrived at the worst possible time, considering that home demand is surging as a result of the Albanese Government’s unprecedented net overseas migration.
Australia’s rental shortage and homelessness will only worsen as demand continues to surpass the industry’s ability to supply new homes.
We are witnessing the start of a housing calamity.
