Perth’s construction woes show no sign of abating after six companies were forced to shut up shop in only a matter of weeks.
Western Australian home builder Start Right Homes fell into liquidation this week, sending another 24 disgruntled customers off to join the thousands of other Aussies out-of-pocket with incomplete home builds.
The collapse of the self-described “specialist architecture” home builder comes only days after another Perth builder, Western Luxury Homes, was also placed into liquidation, with both representing only the latest in a long line of businesses crumbling under the pressure of outstanding payments.
According to data released this week by the Australian Bureau of Statistics, 110 construction WA companies have collapsed so far this financial year. Almost 2,100 have gone under nationally.
In an interview on Perth radio, Building and Energy Executive Director Peter Stewart said homeowners 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.”
Mr Stewart added that although building cost inflation was easing, many more company failures were still highly likely due to the legacy debt owed to the ATO.
A recent annual Corporate Insolvency Index, produced by Insolvency Australia, revealed there was a 57 per cent increase nationally in the total administration appointments made to help businesses dig themselves out of a financial hole in Q4 of the 2022-23 financial year.
The report found that 3008 businesses had been appointed administrators compared with the previous corresponding period when only 1921 were assigned.
Stalled development
Across Perth, rising construction costs and red tape continue to make construction and development difficult, with a number of high-profile projects running behind schedule.
Development projects across the city have been put into limbo, including the Kings Perth Hotel complex in the CBD, which was initially purchased in May 2010, Fremantle’s historic heritage building Elders Wool Stores and South Fremantle Power Station site.
The spate of building also promises to derail any plans the state might have had in to meet its National Housing Accord targets. Projections put WA on track to fall more than 15,000 homes short over the next five years.
Daniel Walsh, Director of Your Property Your Wealth, said that the ever-growing 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.
“You simply can’t have such a significant gap between demand and supply without it resulting in soaring property prices,” he said.
“The last time there was such a supply and demand imbalance between population growth and building approvals was decades ago.”
In addition to interest rates, Walsh also pointed toward rising construction costs as exacerbating factors, claiming the pressures could see a shortfall of nearly 90,000 dwellings per annum as population growth continues to boom.
“I wouldn’t be surprised if it took a decade for the equilibrium to be restored,” he said.
